TUPE: Change in location

In this month’s ENews we consider whether cost can ever be used as a measure to justify discriminatory treatment; the circumstances in which a workplace comment could amount to direct race discrimination; a decision that deals with marriage discrimination and whether a change of location in a TUPE transfer situation could amount to a material detriment.

Is cost saving a legitimate aim in discrimination cases?

In the case of Woodcock v Cumbria Primary Care Trust, the Court of Appeal confirmed that in certain circumstances cost can be a legitimate aim, capable of justifying discrimination.

In this case the Claimant, Mr Woodcock, was the Chief Executive of the Trust whose job was eliminated following a large-scale reorganisation of the NHS. His employer subsequently became the newly constituted NHS Trust, and, as he had not been successful in obtaining alternative employment with the new Trust, he was given 12 months’ notice of dismissal on the grounds of redundancy. The notice was given shortly before his 49th birthday and before a formal consultation process had begun.

The Claimant issued a claim for age discrimination. He claimed that he had been due to receive a large windfall in the form of a pension enhancement upon attaining the age of 50. Mr Woodcock claimed that the timing of the service of the notice was discriminatory. The Employment Tribunal held that the timing and effect of the notice did constitute less favourable treatment on the grounds of age. However held that it was justified as a proportionate means of achieving a legitimate aim, namely, the dismissal of an employee to save costs.

On appeal to the Employment Appeal Tribunal, the Claimant’s dismissal was found to be automatically unfair since the notice was served before a consultation meeting had taken place.

However the EAT dismissed the appeal in relation to the age discrimination claim. The EAT ultimately found that the timing of the dismissal was not based on cost alone but saw merit in the requirement to dismiss a redundant employee who would otherwise have benefited from a windfall.

The Claimant subsequently appealed to the Court of Appeal. Giving judgement, Rimer LJ acknowledged that there were two lines of authority here; the first was that a body (who had a ‘notionally bottomless purse’) could not be permitted to justify discriminatory social policy on the grounds of cost, the other, following the decision in a previous case, was that an employer could not justify discrimination solely on the grounds of cost. The Judge also commented that every decision made by an employer would be associated with cost.

Ultimately, when considering whether the treatment was a proportionate means of achieving a legitimate aim, the Judge confirmed that the Employment Tribunal had taken the correct approach; the treatment of the Claimant was aimed at carrying out a cost saving exercise and the dismissal of a redundant employee, coupled with trying to save a public body a substantial amount of money, was a legitimate aim and one which could be justified on all counts. Mr Woodcock’s appeal was therefore dismissed.

The decision highlights that future cases which raise a cost issue, will be likely to turn on whether the treatment could reasonably constitute a proportionate means of achieving a legitimate aim. The decision should serve as a comfort to employers who could legitimately cite cost as a factor when embarking on a particular course of action against an employee. However, one should always consider that every case will turn on its own facts.

A suggestion that an employee was “playing the race card” did constitute direct discrimination

In Royal Bank of Scotland plc v Morris the Employment Appeal Tribunal (EAT) considered what amounted to race and disability discrimination.

The Claimant, Mr Morris, a black employee of the Royal Bank of Scotland (RBS), had worked for the company for several years as a software engineer. Following several incidents between him and his manager Mr Tigue, he met with Mr Tigue’s manager Mr Arnett. At the meeting, Mr Arnett suggested that the Claimant had suggested that Mr Tigue’s treatment of him was racially motivated. The Claimant denied this and claimed that the remark was unfair. He also resented the suggestion that he was “playing the race card”. He submitted a grievance against the two managers. The investigating officer produced a report, which rejected Mr Morris’ criticisms of Mr Tigue and did not address Mr Morris’ complaint against Mr Arnett. The grievance was not upheld and an appeal was also rejected.

Whilst on long-term sick leave, the Claimant resigned and brought claims for race discrimination and constructive unfair dismissal together with a claim for failure to make reasonable adjustments in respect of his return to work.

An Employment Tribunal found that the Claimant had been unfairly dismissed due to a breach in the implied term of trust and confidence. It found that the Claimant had also been unlawfully discriminated on the grounds that Mr Arnett’s suggestion that the Claimant’s comment against Mr Tigue had been racially motivated did constitute direct race discrimination. In addition, the tribunal found that the Respondent’s failure to properly investigate the complaint also constituted direct discrimination. It also concluded that the Claimant was disabled within the meaning of the Disability Discrimination Act 1995 and the Respondent had failed to make reasonable adjustments.

On appeal the EAT found that the comment of Mr Arnett did amount to race discrimination but considered that the failure to properly investigate did not. It also rejected the claim in respect of the Respondent’s failure to make reasonable adjustments.

The case highlights that such comments as the one above, when considered in isolation, should properly be dealt with through a company’s grievance procedure or an informal apology rather than by way of litigation.

Marriage discrimination: less favourable treatment must be marriage specific

In Hawkins v Atex Group Ltd and others, the EAT confirmed that an employment judge had been right to strike out a claim of direct marriage discrimination on the grounds that it had no reasonable prospect of success.

Under the Equality Act 2010, discrimination on the grounds that someone is married or in a civil partnership is prohibited.

The Claimant, Mrs Hawkins, commenced employment at the Atex Group in 2010. She was dismissed within her first year of employment as her employment was in breach of an instruction to her husband who was Chief Executive of the Group. She submitted a claim for sex discrimination on the grounds of marriage, both because she felt that her treatment was discriminatory and also because she then had recourse to claim automatic unfair dismissal.

The Employment Tribunal struck out the Claimant’s claim on the grounds that it had no reasonable prospects of success. It considered that the treatment afforded to the Claimant was not on the grounds of her marriage but because of whom she was married to.

The Claimant appealed and the case went before the Employment Appeal Tribunal who dismissed the Claimant’s claim.

The EAT confirmed that the discrimination must be on the basis of the marriage itself rather than because of who the Claimant is married to. In addition, the EAT held that the Claimant did not have a reasonable prospect of success, thus dismissing the claim.

The case highlights the importance of causation in discrimination. Under the Equality Act 2010, the discrimination complained of must be due to a person’s protected characteristic rather than any other reason.

TUPE: Change in location was substantial change to the employee’s material detriment

The case of Abellio London Limited (formerly Travel London Limited) v Musse and others illustrates that a proposed relocation as a result of a TUPE transfer could constitute a material detriment and entitle employees to resign and claim constructive dismissal.

Five Claimants were employed as bus drivers for CentreWest, which operated the 414 bus route from the Westbourne Park depot. The drivers were informed that the contract with Transport for London would be transferred to Abellio and would be operated from a depot in Battersea. It was accepted that this constituted a service provision change under the TUPE regulations and therefore a relevant transfer had taken place.

The Claimants raised concerns that the journey to and from the new depot would extend their working day by between one and two hours and subsequently resigned.

The Employment Tribunal found that there was a substantial change to the Claimants’ working conditions to their material detriment, as a result of the transfer. As a result the Claimants were entitled to consider themselves automatically unfairly dismissed as a result of a reason connected with the transfer.

In addition, the move was a repudiatory breach of contract since Battersea did not fall within the remit of the mobility clause in the Claimants contracts of employment.

The EAT upheld the tribunal’s decision.

The case highlights the importance of communicating with employees if a TUPE transfer is being considered. Similarly, it seems that transferees will usually have to accept the risk of automatic unfair dismissal claims upon transfer to a different location and should try to seek an indemnity from the transferor – which may be difficult to do.

In the News…..

Unfair Dismissal and Qualifying Period

As from 6th April 2012, the qualifying period for unfair dismissal claims increases from one to two years for those employees whose employment begins on or after 6th April 2012.

Budget 2012

The government in the 2012 Budget announced the following measures, which may be relevant for HR practitioners:

  • Increase in the personal allowance for under 65s in 2013 – 2014 to £9205;
  • Will reduce the 50% rate of income tax to 45% in April 2013;
  • Will consult on proposals to require the office holders and controlling persons who are integral to the running of an organisation to have PAYE and NIC’s deducted at source;
  • Will introduce a package of measures to tighten and simplify the IR35 rules.

Sejal Raja
sejal.raja@rlb-law.com
© RadcliffesLeBrasseur
March 2012

If you have any questions please do not hesitate to contact Sejal Raja at sejal.raja@rlb-law.com or 0207 227 7410.


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.