Transfer of Undertaking (Protection of Employment) Regulations 2000

In this month’s Employment Law news, we look at what consultation needs to be undertaken when TUPE applies, who is the correct comparator in disability cases and whether imposing a cap on redundancy payments amounts to age descrimination.

Case Round up

Transfer of Undertaking (Protection of Employment) Regulations 2006

Under the Transfer of Undertakings (Protection of Employment) Regulations 2006, an organisation is obliged to consult with its employees only if “measures” are being undertaken.

The transferor and transferee shall be required to inform the representative of the respective employees affected by the transfer of the following:­

  • the date or proposed date of the transfer;
  • the reason for the transfer;
  • the legal, economic and social implications of the transfer for the employees;
  • any measures envisaged in relation to the employees

in good time before the transfer is carried out.

Accordingly, if any organisation is not going to take any measures, then the only requirement is to inform employees. “Measures” is not defined in the Regulations, but case law has established that it is a word of the widest import which includes any action, step or arrangement. But it must nevertheless be something deliberately done by the new employer over and above what necessarily occurs as a consequence of the transfer itself. Failing to comply with the regulations in respect of information and consultation may expose the employer to a claim of up to 13 weeks uncapped pay for each affected employee.

In the case of Dodd ­v­ Strain and Others, the Employment Appeal Tribunal has held that changes to pay arrangements following a TUPE transfer amounted to “measures” which therefore meant that the organisation was obliged to consult rather than simply inform its employees of the transfer.

In this case, Ms Todd was the owner of a care home, which was transferred to Care Concern GB Limited in January 2008. In November 2007, Mr Todd had called a meeting without notice to inform staff that an offer had been made for the home that could not be refused, but that everyone’s job was safe. No detailed information was given at the meeting, which only about one­third of the staff attended. Apart from some minor communications with one employee, S, there was no further consultation with staff prior to the transfer. 32 care home employees subsequently complained to an Employment Tribunal that Ms Todd and Care Concern GB Limited failed to inform or consult under the Regulations.

One of the changes was the change in the payment date, which was a departure from what would otherwise have occurred, and it appeared that the change was a welcome one. It was nevertheless a measure and required consultation. This is an important decision because the decision seems to draw a distinction between administrative changes that are a inevitable consequence of a TUPE transfer and which do not give rise to the obligation to consult and administrative changes that represent a departure from what would have normally have occurred which the employer must inform and consult about. Employers, in light of this decision, should consider consultation to avoid falling foul of the legislation.

If you would like a briefing note dealing specifically with the obligations to consult pursuant to a TUPE transfer, then please contact:­ sejal.raja@rlb­-law.com

Disability Discrimination

In the case of JP Morgan ­v­ Cheeidan, Mr Cheeidan, an Executive Director at JP Morgan, suffered a back injury whilst skiing and had to reduce his working hours. As a result of this injury, his ability to travel and to entertain existing and prospective clients were also reduced. This consequently meant that he received a lower bonus than his colleagues. JP Morgan went through a redundancy exercise and he was dismissed on the grounds of redundancy. He brought a claim for disability discrimination on the grounds of his selection for redundancy and for failure to pay his last bonus.

The Employment Tribunal held that he had not suffered disability ­related discrimination under the Disability Discrimination Act 1995. It held that another non-disabled person in the Claimant’s position and was limited to similar working hours and subject to the same restriction in terms of travelling and client entertainment would also have been paid a lower bonus and subject to redundancy.

This case demonstrates the narrow scope of disability­ related discrimination claims following The London Borough of Lewisham ­v­ Malcolm. In this case, the House of Lords decided that the correct comparator was someone in a similar situation but who was not disabled. Accordingly, the disability­related discrimination has been replaced by “discrimination arising from disability” under the Equality Act 2010. The new type of claim is based on unfavourable treatment, so the isabled person will not need to establish that their treatment is less favourable than that by a comparator. The employer will still be able to rely on the defence of objective justification. The amendments to the Disability Discrimination legislation by the Equality Act 2010 will make it easier for an employee to show that they are disabled and claim disability discrimination.

Age discrimination

In the case of Kraft Foods UK Limited ­v­ Richard Hastie, Mr Hastie brought a claim against his employers stating that they had discriminated against him on the grounds of his age because they capped the redundancy payment. The cap resulted in Mr Hastie receiving £13,600 less than what he would have received had the cap not been in place.

Mr Hastie, 62, had worked as a process operator in the coffee processing department since 1969 and opted for voluntary redundancy under the scheme. When he was made redundant in December 2008, he had been employed by Kraft for nearly 40 years.

The scheme entitled employees to 3.5 weeks actual pay for each year of service, subject to a cap that the redundancy pay could not exceed the salary which they would have earned had they remained in employment until age 65.

Mr Hastie’s redundancy entitlement was capped at £76,560. Without the cap, his entitlement would have been a significantly higher figure of approximately £90,000. The cap amounted to a provision criterion or practice and the Employment Tribunal rejected the employer’s justification that it was intended to prevent employers from receiving a windfall. The case was appealed to the Employment Appeal Tribunal. It was held by the Employment Appeal Tribunal that the object of the scheme had been to compensate employees for the loss of earnings they had a legitimate expectation of receiving if their employment had continued. Unless the scheme incorporated a cap, it would result in payments exceeding what was necessary to achieve that objective particularly in cases where the employee was close to retirement age. It was held that the provision criterion or practice was a proportionate means of achieving a legitimate aim.

Sejal Raja
sejal.raja@rlb­law.com
© RadcliffesLeBrasseur
November 2010


Disclaimer

This briefing is for guidance purposes only. RadcliffesLeBrasseur accepts no responsibility or liability whatsoever for any action taken or not taken in relation to this note and recommends that appropriate legal advice be taken having regard to a client's own particular circumstances.

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