Redundant Shop Workers Suffer European Setback

WoolworthsThousands of shop workers who were made redundant when their employers went bust in the recession have suffered a set-back in their fight for compensation after the European Court of Justice (ECJ) clarified a crucial issue of law in relation to collective redundancies.

The workers lost their jobs when nationwide retailers Woolworths and Ethel Austin became insolvent. Trade union USDAW applied to an Employment Tribunal (ET) for protective awards in favour of its redundant members on the basis that the collective consultation procedure prescribed by the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA) had not been followed.

That procedure was only triggered if it could be shown, amongst other things, that the number of redundancies was 20 or more ‘at one establishment’. The ET made protective awards in respect of some workers, but denied them to about 4,500 others on the basis that fewer than 20 people were employed at the shops where they worked.

In challenging that decision before the Employment Appeal Tribunal, the union argued that the ET had erred in law in treating the workforce at each shop as an independent entity. It was submitted that, in order to give effect to EU Council Directive 98/59EC, which TULRCA is intended to implement, the expression ‘at least 20 at one establishment’ should be interpreted as referring to the number of redundancies across a business as a whole.

The employers appealed to the Court of Appeal, which referred that issue of law to the ECJ for an opinion.

Stressing the need for legislative uniformity across the European Union, the ECJ has ruled that where an undertaking comprises several entities, it is the entity to which the workers made redundant are assigned to carry out their duties that constitutes the ‘establishment’, not the business as a whole. The term ‘at least 20’ requires account to be taken of the redundancy dismissals in each establishment considered separately. 

 It remained for the Court to determine whether the stores could be classified as separate establishments.

Limited Term Contracts and Redundancy – Supreme Court Guidance

Limited term contract (LTC) workers, who were amongst those who lost their jobs during a round of cost cutting at a university, were entitled to the same consultation rights as their permanent colleagues, the Supreme Court has ruled.

The university planned to make 140 of its permanent staff redundant during a period of 90 days or less and the duty to consult their trade union under the Trade Union and Labour Relations (Consolidation) Act 1992 was therefore triggered.

However, the university took the view that it did not have to include in the collective consultation process those workers whose LTCs came to an end during the consultation period. A union representing four of those workers mounted a challenge to that decision but the Inner House of the Court of Session ruled that, although they had been dismissed, they had not been made redundant.

In allowing the union’s appeal, the Supreme Court noted that it was common ground that the workers were dismissed when their LTCs expired and were not renewed. The reason for their dismissal was not related to their individual circumstances but to the university’s need to cut costs. By failing to offer them new LTCs, the university had made them redundant and the obligation to consult the union therefore arose.

Final Warnings Must Be Given in Good Faith to Have Any Effect

In a guideline decision, the Court of Appeal has ruled that final warnings given in bad faith are not to be taken into account when assessing whether there was sufficient reason for dismissing an employee.

A contracts manager had been given a final warning in respect of alleged breaches of his employer’s recruitment policy. He was said to have assisted his ex-partner’s son to obtain a position with the company. The warning was still on his file when he was later found to have used his work computer to send inappropriate emails.

He was dismissed for gross misconduct and, in rejecting his unfair dismissal claim, an employment tribunal (ET) found that the disciplinary procedure followed by the company was fair and reasonable and that dismissal was within the band of reasonable responses. That ruling was subsequently upheld by the Employment Appeal Tribunal.

In allowing his appeal, however, the Court of Appeal found that the ET had wrongly failed to consider the man’s arguments that the final warning had been given in bad faith. He claimed that the disciplinary proceedings had been initiated to cover up a more senior employee’s part in the matter and that he was told that it would ‘pay him to forget about the whole thing and move on’.

The Court ruled that a warning given in bad faith could not be relied upon for the purpose of determining whether there was a good enough reason to justify the man’s dismissal. His case was therefore sent back to a freshly constituted ET for reconsideration.

Whistleblowers Benefit from Tribunal Test Case

In a guideline decision which will come as a comfort to workplace whistleblowers, the Employment Appeal Tribunal (EAT) has ruled that the recurring issue of whether a disclosure is ‘in the public interest’ – and thus protected by law – depends not upon some empirical formula but upon the state of mind of the employee concerned.

A branch director who worked for a leading estate agency firm had complained that the costs and liabilities of running the office had been deliberately mis-stated and that this had had a downwards impact on his bonus and those paid to 100 senior managers. An employment tribunal (ET) found that the disclosures were protected and that he had been unfairly dismissed as a result of making them.

In challenging that ruling before the EAT, the agency pointed to the requirement in Section 43B(1) of the Employment Rights Act 1996 that disclosures have to be made in the public interest in order to be protected. It was submitted that the disclosures related to the personal contract of each of the 100 senior managers and so did not qualify as having been made in the public interest. 

In dismissing the appeal, however, the EAT found that the public interest test could be satisfied even where the basis of the disclosure turned out to be wrong or where there was in fact no public interest in it being made. What mattered was whether the particular worker’s belief that the disclosure was in the public interest was objectively reasonable. The amount of the man’s compensation will be assessed at a later date.

Putting 2014/15 to bed: Notes for Employers

Although the 2014/15 tax year has come to a close, there are still some tasks that employers may need to do in order to put the year to bed.

RTI reporting

Under real time information (RTI) you need to tell HMRC that your final FPS submission for the tax year is the last one for that year. This should have been done when submitting your FPS at or before the time of the last payment in the 2014/15 tax year. If you have not yet done your last FPS, this should be done as soon as possible as it is now late. Don’t forget to tell HMRC the late filing reason.

If you still need to make your final submission for 2014/15 or need to correct anything submitted on an earlier FPS, after 20 April 2015 this must be done by means of an earlier year update (EYU). This must reach HMRC no later than 19 May 2015.

Any PAYE or NIC outstanding for 2014/15 must be paid over to HMRC as soon as possible as the payment deadline has now passed. Penalties are charged if PAYE is paid late on more than one occasion in the tax year. Interest is also charged on late-paid PAYE.

P60s

The P60 is the certificate of pay and tax deducted which you must give to each employee employed by you on 5 April 2015. The deadline for giving your employees their P60s is 31 May 2015. The P60 can be in paper or electronic form.

Expenses and benefits reporting

If you have provided your employees with non-cash benefits or expenses, you need to tell HMRC about them by 6 July 2015. Form P11D is used to report details of benefits and expenses provided to employees earning at a rate of at least £8,500 a year and to directors, irrespective of their earnings level. Benefits provided to employees earning at a rate of less than £8,500 a year should be reported on form P9D. Remember to take account of the cash equivalent of any benefits provided to employees when deciding which form to use.

You must also file form P11D(b) by the same date. This is Class 1A return.

The forms can be filed electronically using a commercial software package, HMRC’s PAYE online service or HMRC’s Online End of Year Expenses and Benefits. Alternatively, paper forms can be filed if preferred.

You must also pay your Class 1A National Insurance by 22 July if you make the payment electronically. An earlier deadline of 19 July applies if you make the payment by cheque.

You should also give your employees a copy of their P11D or P9D by 6 July 2015.

Need to know It is important to meet the deadlines to avoid penalties and late payment interest.

Paid Leave for Public Office Holders – Tribunal Guidance

Employers are bound to give workers paid leave so that they can hold public office. However, a tribunal has questioned whether it was right for a city mayor to be paid as a school mentor for two years after he devoted himself to politics full time.

The man had stopped working at the school when he became leader of the council and then mayor. However, his local authority employers allowed him to take 208 hours of paid leave annually, paying him about £4,500 per annum. That was the maximum paid leave permitted by the Local Government and Housing Act 1989.

After the school became an academy, independent of local authority control, its governors resolved to stop the payments. On the basis that the mayor had provided no services to the school for two years, they took the view that his paid leave ‘appeared to be an inappropriate use of school funds’.

The mayor succeeded in an unfair dismissal claim before an Employment Tribunal (ET), which found that he had been given no chance to have his say and that the procedure followed by the school was ‘woefully deficient’.

However, he was denied a compensatory award on the basis that he had contributed culpably to the termination of his employment and that, had correct procedures been followed by the school, his dismissal would have been fair. The ET found that it was ‘seriously remiss’ of him not to have contacted the school to ascertain whether his election as mayor – a four-year commitment – would make a difference to his paid leave.

In dismissing the mayor’s challenge to that ruling, the Employment Appeal Tribunal (EAT) noted that the arrangement was akin to ‘a reverse form of zero hours contract’, in that he was entitled to payments from a publicly funded school without any corresponding obligation to provide his services.

The governors were concerned that, if the arrangement became public, significant criticism might follow and that it would be a ‘public relations disaster’ for the school. They were reasonably entitled to regard the arrangement as inequitable and unsustainable and could fairly have dismissed the mayor.

Employment Intermediaries – New HMRC Reporting Requirements

On 6 April 2015, the Income Tax (Pay As You Earn) (Amendment No 2) Regulations 2015 came into force. These aim to crack down on false self-employment and abuse of offshore working by introducing reporting and record-keeping requirements for employment intermediaries/recruitment agencies.

The Regulations require employment intermediaries to submit to HM Revenue and Customs (HMRC) a quarterly report detailing all workers placed with clients where the intermediary does not operate PAYE on the workers’ payments. The report must use the template provided by HMRC and be uploaded using the online service provided.

Intermediaries who only introduce workers to clients or supply workers to other intermediaries, and are not involved in any further arrangements having done so, do not need to submit a report.

Automatic penalties apply for failing to send a report and for sending a late report.

Further information on the requirements can be found here.

Cohabitees Have the Same Rights as Married Couples – No They Don’t

It is a common misapprehension that the legal position of those who live together is nowadays almost identical to that of married couples. A woman who lived for 15 years with a senior RAF officer before his sudden death found out how wrong that assumption is when she was refused entitlement to his £48,000-a-year pension and death in service benefits worth £400,000.

The woman had lived as the air commodore’s wife and had attended official dinners and opened fetes as his consort before his death from a heart attack. She wore his engagement and wedding rings; however, she never married him and, despite their long separation, had never divorced her husband.

Under armed forces rules, she was not recognised as the commodore’s ‘widow’ and benefits were paid not to her, but to his parents and siblings. As a result, she was left in straitened circumstances. The Service Personnel Veterans Agency’s refusal to recognise her claims was later upheld by the Pensions Ombudsman.

Challenging that decision at the High Court, her lawyers argued that, in treating her less favourably than a single person, the agency had violated her human rights. In dismissing her challenge, however, the Court noted that, as an already married woman, she had never been free to marry the commodore. Although the result of the case might seem harsh, the Court found that the service pension rules were clear and that she had suffered no unlawful discrimination.

Manufacturer Fined £200,000 in Corporate Manslaughter Case

factoryA manufacturing company which was convicted of corporate manslaughter after one of its workers was burnt alive in an industrial oven from which he could not escape has been fined £200,000. Its technical director was also hit with a £25,000 penalty and only narrowly escaped an immediate prison sentence.

The factory supervisor was locked into the oven when a colleague switched it on, not realising that he was inside. His body was found at the door, still in the position in which he had desperately tried to prise his way out with a tool. The oven did not have an escape hatch or alarm and was not in the line of sight of the operator. The temperature reached up to 280 degrees Centigrade and the man died of shock.

Following a trial, the company, which employed about 90 people, was found guilty of manslaughter by gross negligence and breaches of health and safety laws. The Court noted that a much bigger financial penalty would have been appropriate for a larger concern. On top of his fine, the technical director received a nine-month prison sentence, which was suspended for two years.

Driving and Drugs

TruckThe Crime and Courts Act 2013 (Commencement No 1) (England and Wales) Order 2014 came into force on 2 March 2015 and sets limits for ‘drug driving’ similar in operation to those used for drink driving.

It is an offence to drive a motor vehicle when unfit to do so through use of drink or drugs. It is now an offence for a person to drive if ‘he has in his body a specified controlled drug and the proportion of it in his blood or urine at that time exceeds the specified limit for that drug…’.

The first important point to note for anyone subject to a roadside test for drug use is that the tests used are not probative and a conviction cannot be upheld using such tests in the absence of a urine or blood test.

One reason why such legislation has been so long in coming is that the amount of time that different drugs remain in blood or urine varies substantially. THC, the active ingredient of marijuana, remains in the blood long after any effect of the drug can be perceived.

For employers who do not already have a suitable drug use policy, it is sensible to consider reviewing the policy to take the new regulations into account.