Employment news round-up, February 2014

This month's Employment news round-up is brought to you by James Gutteridge and covers: an update on tribunal fees, the latest changes taking effect under the government programme of employment law reform, annual compensation rate increases, an update on TUPE and redundancy collective consultation cases and, finally, how the Francis Report continues to make its impact felt.

Employment tribunal fees survive challenge

Fees for the use of the employment tribunals and Employment Appeal Tribunal, introduced last July, have survived a challenge by Unison; but it is unlikely that this is the last we have heard about this development.

As we reported in our Alert, the High Court rejected Unison's arguments that tribunal fees breach European Union law and are potentially discriminatory and prevent access to justice. The full judgment can be found here. In brief, the High Court said that it was too soon to assess the impact of employment tribunal fees (the hearing concluded in November 2013, only three months after the fees were introduced).  The High Court also said that the remission scheme, which allows for a full or partial refund of fees for employees on low incomes, meant that access to justice was maintained.

In making its decision, the High Court said that employment tribunals should not request that hearing fees (which are much higher than the initial application fee) are paid until after the exchange of witness statements, when the parties have the benefit of full information about the case. 

Although the High Court's decision means that fees will remain in place for the time being, the door has been left open to further challenge: Unison has announced that they intend to appeal the High Court's decision to the Court of Appeal; and it may be that a fresh challenge will be launched later this year, when more information the impact of fees is available.  It is interesting to note that the Senior President of Tribunals Annual Report for 2014 shows that appeals to the Employment Appeal Tribunal are down by a third since the introduction of fees. 

And in a separate development on tribunal fees, the Employment Appeal Tribunal has said in Portnykh v Nomura that the unsuccessful party should usually pay the EAT fees incurred by the successful party - after consideration of, and subject to, the means of the paying party to make such a payment. 

Early Conciliation – 6 April / 6 May 2014

Compulsory early conciliation regulations have now been published and will come into force on 6 April 2014. Under the new rules, claimants will be required to contact Acas and obtain an 'EC Certificate' before they will be allowed to commence a tribunal claim.  An EC Certificate will only be issued by Acas after it has contacted the respondent and

• tried to promote settlement for one calendar month; or 
• found that no agreement is possible. 

An extension of the one month time limit is possible if the parties are close to reaching agreement.  There is, however, no obligation on the parties to engage in conciliation.

To allow time for conciliation to take place, for most claims the period starting the day after a claimant contacts ACAS and ending the day they receive an EC certificate will be ignored for the purposes of calculating the time limit within which claimants must begin their claims.

Acas will be conciliating claims under the new EC arrangements from 6th April 2014 - i.e. claimants who contact Acas will need an EC certificate in order to present a tribunal claim and the new EC extension of time will apply.  An EC certificate will only be mandatory for new claims presented on or after 6 May 2014.

Financial penalties for employers – 6 April 2014

Also on 6 April 2014, new financial penalties for employers who lose an employment tribunal will be introduced. The amount of the penalty must be 50% of any financial award, subject to a minimum of £100 and a maximum of £5,000. However, the penalty will be reduced by up to 50% if paid within 21 days. The payment is paid to the State rather than the claimant. 

Financial penalties are not mandatory so they will not apply in all cases.  They may be ordered at the discretion of the Employment Judge in the claim and only if there are "one or more aggravating features" to the case. The ability to order payment of a penalty will only apply to claims presented on or after 6 April 2014. 

Annual increases - 6 April 2014

From 6 April 2014, new limits will apply to the compensatory award and the amount of a 'week's pay' for the purposes of calculating statutory redundancy payments and certain employment tribunal awards. The new maximum compensatory award for unfair dismissal will increase to £76,574 (curently £74,200) - subject to the cap (introduced last year) of the lower of 52 weeks' pay or the statutory cap. The new maximum amount for a week's pay will increase from £450 to £464.

 

TUPE & harmonisation of terms

The Court of Appeal has, this month, in Hazel v Manchester College upheld the decision of an employment tribunal which took a strict approach to the circumstances in which employees' terms and conditions may be changed after a TUPE transfer.  Please see our October 2012 Report for details of the facts of this case and the original decision. The Employment Appeal Tribunal said that, although the reason for the employees' dismissals was an "economic, technical or organisational reason" it did not entail changes in the claimants' functions, or "changes in the workforce" generally, as required by the TUPE Regulations – notwithstanding that the revised terms were offered during a cost-saving exercise which also included redundancies. 

The Court of Appeal also upheld the tribunal's order for re-engagement of the employees at their old rate of pay, with the proviso that they would not receive any pay rises until their colleagues (who had agreed to the new terms) had caught up.

Note that this case was decided under the old TUPE rules (pre-January 2014) and it is unclear what the position would be under the new rules.

Collective redundancy consultation

As we reported back in October 2013, in a case called United States of America v Nolan, the Court of Appeal has been looking at the correct 'trigger point' for collective redundancy consultation.  In had been hoped that clarity on this point would be provided, after the Court of Appeal referred a question to the European Court of Justice on whether the obligation to consult collectively arises either

• when an employer is proposing to make a strategic business or operational decision that will foreseeably lead to collective redundancies, or
• only once the employer has made that strategic decision and is proposing consequential redundancies.

However, the ECJ declined to answer that point, and the Court of Appeal has now said that a further hearing will be necessary. We are, therefore, still awaiting confirmation of the correct approach – please see our October 2012 Report for guidance on what to do in the meantime.

Public sector confidentiality clauses

The Francis Report continues to make its impact felt in the public sector, as the Public Accounts Committee (PAC) reports concerns that these clauses may prevent employees from revealing "serious and systematic failures within the public sector". 
The PAC report recommends that the Cabinet Office should issue guidance on the appropriate use of settlement agreements and special severance payments. It is suggested that the guidance should explicitly require public sector organisations to secure approval from the Cabinet Office for all special severance payments and associated agreements where they relate to cases of whistleblowing. It appears that this would be an extension of the requirement already in place for NHS Settlement Agreements, which currently have to have Treasury Approval – which will not be given unless the agreement explicitly excludes whistleblowing claims (please see our Alert for more details).

Please click here for details of our series of Post Francis seminars. 

Save the date!

Our next series of training sessions will be taking place at our offices in London on 8 May, in Birmingham on 13 May and Bristol on 15 May. The topic will be TUPE transfers. Further details will be emailed to Employment Eye readers and published on our website shortly.