6 February 2006 Employment Law Enews

Welcome to the latest edition of employment law enews.

FAILURE TO CONSULT WITH EMPLOYEES UNDER TUPE - A COSTLY BUSINESS

When a company buys another company and continues to run the same business as previously run by the seller, the purchase/sale is likely to amount to a "transfer of undertakings" under the Transfer of Undertakings (Protection of Employment) Regulations 1981 ("the Regulations"). A transfer can also occur when a contractor loses a labour intensive service contract to another contractor. The seller and the outgoing contractor will be the transferor and the buyer and the incoming contractor will be the transferee.

Both the transferor and the transferee have a duty to inform appropriate representatives of any employees who may be affected by the transfer of:

• The fact that a transfer is going to take place;
• When the transfer will take place;
• The reasons for the transfer;
• Any legal, economic and social implications for the affected employees; and
• Whether the transferee envisages taking any measures (changes to terms and conditions, redundancies) in relation to the employees.

If the transferee envisages taking measures, both the transferor and the transferee will also have to consult with the employee representatives with a view to seeking the employees' agreement to the measures. The information listed above should be provided and the consultation should take place in good time before the transfer occurs. The employee representatives can be a recognised trade union or any other body of representatives previously elected by the employees and which has authority to be consulted on behalf of the employees on transfers. If there is no recognised trade union or an elected body, the affected employees have the right to elect representatives to be consulted with on their behalf. If the employees chose not to elect representatives, the transferor and the transferee will have to consult with each affected employee.

Similar consultation obligations apply when a business is contemplating making 20 or more employees redundant within a period of 90 days or less ("collective redundancies").

Affected employees have the right to claim a protective award in the employment tribunals if the employer fails to comply with the information and consultation obligations under the Regulations or under the legislation governing collective redundancies. The maximum compensation each employee can claim for failure to inform and consult under the Regulations is 13 weeks' pay (90 days' pay in collective redundancies).

A recent case decided by the Court of Appeal (Susie Radin v GMB and Ors, CA 2004) established that the purpose of the protective award in a collective redundancy situation is "to provide a sanction for breach by the employer of the consultation obligations" and not to compensate the employees for loss which they had suffered in consequence of the breach; that the tribunal had a wide discretion to determine what compensation was just and equitable in all the circumstances, but the focus should be on the seriousness of the employer's default; and that a proper approach in terms of calculating compensation in a case where there had been no consultation was to start with the maximum period and reduce it only if there were mitigating circumstances justifying a reduction.

The Employment Appeal Tribunal have now confirmed in the case of Sweetin v Coral Racing that tribunals should adopt the same approach when assessing compensation for failure to consult under the Regulations, as that adopted when assessing compensation for failure to consult in collective redundancies. This means that a tribunal should award a maximum of 13 weeks' pay per employee as compensation if the employer failed to consult with the affected employees prior to the transfer of undertakings, unless there are mitigating circumstances justifying a departure from the maximum award.

LAPSED WARNING LETTERS

The Court of Session (the Scottish equivalent of the Court of Appeal) has recently considered the problem which faces many employers, that of the reliance that can be placed on a lapsed or expired disciplinary warning in deciding to dismiss an employee?

The Court held in fairly emphatic terms that it would be unreasonable for an employer to rely on an expired disciplinary warning in coming to a decision to dismiss an employee.

On the facts of the case (Diosynth v Thompson (2006) CSIH5 XA25/05) the dismissal of Mr Thompson was held to be unfair notwithstanding the fact that he had been responsible for a serious lapse in health and safety having been warned only 17 months earlier about an identical lapse in health and safety procedures. Mr Thompson was one of several employees guilty of the same offence but he was the only one who was dismissed. He was dismissed on the strength of the fact that only 17 months earlier he had been warned about the self same lapse in health and safety.

In practical terms, therefore, an employer should take careful steps to ensure that if they are relying on a previous written warning they should ensure that the currency of that warning has not lapsed. Although the point was not dealt with in that case it seems that in light of the fact that an employer should not place reliance on lapsed warnings, under the Data Protection Act 1998, such lapsed warnings should be culled from the personnel file.

DRAFT REGULATIONS - MATERNITY, PATERNITY AND ADOPTION LEAVE

The DTI has published for consultation its draft regulations on maternity, paternity and adoption leave. The regulations are due to take effect in April 2007 and will provide as follows:

• An extension of statutory paid maternity leave from six months to nine
• A new right for mothers to transfer a proportion of their maternity leave and pay to fathers
• An introduction of "keeping in touch" days to enable mothers to work for a limited number of days during their statutory maternity pay period without losing entitlement to statutory pay or ending their leave.
• An extension of the right to request flexible working to carers from April 2007, a "carer" being defined as someone who cares for an adult who is either their spouse or civil partner, a relative or a person living at the same address.

The closing date of consultation on the draft regulations is 18 April 2006.

This article copyright © 2006 Steeles Law. All rights reserved.