Since lockdown we have been keeping our clients up to date on almost a weekly basis in relation the Government’s furlough scheme. I know from the requests for advice and support we have received, these are very challenging times for businesses and are likely to remain so for the foreseeable future, particularly when the furlough scheme comes to an end on 31 October 2020. The Employment Team at Taylor Walton is available to assist your business whether in relation to the furlough scheme, returning to work arrangements, flexible working or with redundancy advice. As the old saying goes, prevention is better than cure, so please contact us at the commencement of any plans you may have rather than half way through or after problems have arisen!
In the meantime, as lockdown gradually eases, the Courts and the Employment Tribunals are adapting to working virtually although there remains a considerable backlog of cases to be dealt with in the Tribunals with some cases not being listed for hearings until late 2021 and 2022. We have put together a selection of the most recent cases which are relevant to employers which I hope you will find interesting plus details of a recent COVID19 related amendment to the Statutory Sick Pay Regulations.
Head of the Employment Department
TUPE and the ARD – the ECJ considers Transfers to Multiple Transferees
What happens where there is a transfer of an undertaking which is transferred not only to one entity, but to two or more entities? What happens if a service provision changes takes place and the activities carried out by one entity are then carried out by two new separate entities? In particular, what happens to the individual assigned to that undertaking, business or those activities? These were the questions posed recently to the European Court of Justice (ECJ) in ISS Facility Services v Govaerts (Case C-344/18).
The Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) transposes the Acquired Rights Directive (ARD) into English law. Both the ARD and TUPE confirm that where there is a transfer of an economic entity which retains its identity, a relevant transfer from one legal entity to another will have deemed to take place. The ARD and TUPE also provide that in the event of a relevant transfer, the obligations of the transferor arising from a contract of employment or employment relationship existing on the date of the transfer shall be transferred to the transferee. As such, the rights of the employees who are deemed to have transferred will be protected.
However, neither the ARD nor TUPE deal with what happens to those contracts of employment where a transfer takes place to more than one transferee. In the UK, it has been established in previous case law that the most appropriate outcome in this situation is the employee’s contract should transfer to the transferee which takes on the principle part of the activities carried out pre-transfer. However, this approach has now been called into question.
Facts and Decision
In this case, originating in Belgium, ISS Facilities Services NV (ISS) was responsible for the cleaning and maintenance of city buildings in the City of Ghent split into 3 categories: (1) museums and historical buildings; (2) libraries and community centres; and (3) administrative buildings. Ms Govaerts was employed by ISS as the project manager of all three categories.
In mid-2013, ISS lost the contract to clean and maintain the buildings in Ghent. Categories (1) and (3) were to be carried out by Atalian NV (Atalian) and category (2) was awarded to Cleaning Masters NV (CM). ISS told Ms Govaerts that her employment would transfer to Atalian and issued a certificate of unemployment to her notifying her employment had transferred as at 13 September 2013. Atalian, on the other hand, disputed that Ms Govearts employment had transferred to them and stated they did not have a contract with Ms Govaerts.
Ms Govaerts brought a claim against both Atalian and ISS in relation to contractual payments due to her. In relation to her claim against Atalian the Labour Court in Belgium ruled that as Ms Govaerts undertook administrative work and not cleaning work which was subject of the transfer, her claim against Atalian failed. Ms Govearts claim against ISS was successful.
Conversely, on appeal by ISS, the Higher Labour Court of Ghent found that Ms Govearts employment had transferred to Atalian and also to CM by virtue of the transfer of an economic entity which retained its identity of which Ms Govearts was a part. However, what remained unclear was how a transfer to multiple employers would work in practice.
The Higher Labour Court put forward three alternative options to the ECJ, namely, an employment contract for an employee that works in various parts of an undertaking that are transferring simultaneously to multiple transferees should either:
Transfer to each transferee on a pro rata basis by reference to the extent of the employee’s employment that related to the relevant part of the undertaking that had been acquired;
Transfer in its entirety to the transferee that acquired the part of the business in which the employee was principally employed; or
Not transfer at all.
As set out above, the leading UK cases have favoured approach 2. However, the ECJ rejected this approach on the basis that the transferee would be acquiring a full time employee where the employee only worked in that part of the business part-time.
Instead, the ECJ favoured the first option, namely that the employee’s employment should transfer to each transferee on a pro-rata basis. The ECJ stated that it would be for the national courts to determine how the actual distribution of the contract would take place but that, in principle, this would make it possible to ensure a fair balance between the rights of the employees and the transferees. However, the ECJ went on to state that where such a division is impossible or renders the employees working conditions to be severely deteriorated the contract could be terminated.
Employers will need to be aware that where they are transferring parts of their business to two or more transferees, which is most likely to occur in the case of a service provision change, the current UK accepted method may be open to challenge and the Tribunals may look to dividing the employment contracts between the transferees.
Unfair dismissal – Dismissal without procedure – Gallacher v Abellio Scotrail
The Employment Appeal Tribunal (EAT) has considered whether the Employment Tribunal (ET) was correct to conclude that an irretrievable break of the relationship between a claimant and her manager was a fair reason for not following any procedure before the employee was dismissed.
The Claimant (Ms Gallacher) was a senior manager working as a Head of Customer Experience and Standards at Abellio Scotrail (the Company).
Ms Gallacher began reporting to her direct manager, Ms Taggart, back in 2011. However from 2014, the relationship progressively deteriorated due to a number of workplace disagreements including the Claimant unsuccessfully requesting a pay rise, Ms Taggart adding the Claimant to the on-call rota which the Claimant did not agree she was required to do and disagreements regarding a new hire to their working team and who would be reporting to the Claimant.
The Claimant went on sick leave for a period of 7 weeks at the end of 2016. As part of a return to work process, a number of meetings took place where the breakdown in a relationship was discussed. Alongside this, the Employer had posted a trading loss and Ms Taggart needed to be able to rely on the Claimant and her team due to mounting pressure. Ms Taggart was looking for other positions within the company for the Claimant, but none were suitable, and the Claimant was doing the same.
Ms Taggart dismissed the Claimant during her annual appraisal meeting on the grounds that the trust and confidence had been lost and there had been an irretrievable breakdown of the relationship between Ms Taggart and the Claimant. The Claimant was dismissed without any notice that the meeting would be used to dismiss her, and no right to appeal was given. It was noted by the ET that the Claimant also did not raise a grievance or show any interest in salvaging the relationship.
The ET decided that the Claimant had been dismissed for the potentially fair reason of “some other substantial reason”, namely that there was an irretrievable lack of trust and confidence between two senior managers which was a barrier to delivering the objectives of the business. With respect to the question of procedural fairness the ET held that any procedure would not have served a useful purpose and, if anything, it would have worsened the situation. As such, the ET concluded that dismissal without following a procedure was within the band of reasonable responses. The ET therefore held that the decision to dismiss was substantially and procedurally fair. The Claimant appealed.
The EAT held that although it is well-established that formal procedures should be followed before dismissing, it recognised that there may be cases, albeit rare, “where the procedures may be dispensed with because they are reasonably considered by the employer to be futile in the circumstances”. As such, it agreed with the ET that the dismissal without following any procedures fell within the band of reasonable responses and the Appeal was dismissed.
Employers should exercise great caution in choosing to dismiss employees without following the proper procedures. Failing to do so will more than likely lead to potential claims for unfair dismissal and, if such a claim is successful, could also lead to an increase in the amount of compensation awarded to the Claimant. Nonetheless, this case has demonstrated that dispensing with the procedures on the very rare occasion where is could be considered reasonable may not inevitably render the dismissal unfair.
Unfair dismissal – Claims with no value
The EAT has recently held in Evans v London Borough of Brent that a claimant is entitled to pursue a claim for unfair dismissal despite there being no prospect of the claimant being awarded any compensation in relation to the dismissal due to his gross misconduct.
An Employment Tribunal had struck out an unfair dismissal claim from Dr Evans, a deputy head teacher, who was dismissed for financial mismanagement. One of the reasons for the claim being struck out was that there was no prospect of any monetary award being made to Dr Evans due to his conduct.
However, it was recognised by the EAT that receiving the judgment that a claimant has been unfairly dismissed, if only on procedural grounds, holds value for the claimant. For employers, this decision is important in circumstances where although the decision to dismiss may have been fair due to the conduct of the employee, it could still be found to be unfair by the Employment Tribunal on the grounds that the employer failed to follow a fair procedure.
A Week’s Pay – what should be included?
Under the Working Time Regulations 1998 (WTR 1998) a worker is entitled to receive 5.6 weeks annual leave and be paid at the rate of “a week’s pay” for each week of leave. How a week’s pay is calculated is governed by the provisions of the Employment Rights Act 1996 (ERA) and is determined by reference to what the worker actually receives in the normal working week. By way of example, a week’s pay will include the employee’s basic pay but can also include guaranteed overtime, commission and bonus.
However, in the recent case of Econ Engineering v Dixon the EAT held that a “profitability bonus” should not be included in the calculation for a week’s pay despite the claimant having a contractual right to receive the bonus and this being paid as a supplement to their hourly pay. This decision was due to the fact that the pay the employee was entitled to receive would not vary by reference to the amount of work done but by reference to profit being achieved. This was held to not meet the provisions of the (ERA) for calculating a weeks’ pay because it was not a fixed sum which would be paid on completion of the normal working hours in a given week.
SSP and Self-Isolation for Operations
Another amendment has been made to the Statutory Sick Pay (General) Regulations 2020. The Statutory Sick Pay (General) (Coronavirus Amendment) (No 6) Regulations 2020 which came into force on 26 August 2020 amends the SSP Regulations to state that those who are required to self-isolate-prior to admittance to hospital for surgery (whether this be planned or elective) in England, Scotland and Wales will be eligible to receive SSP. This is because they will be incapable, or deemed to be incapable, of doing work by reason of Coronavirus.
Where an employee is deemed incapable of work by reason of Coronavirus, the usual three “waiting days” have been removed so that SSP payable from day one of the employee’s absence from work. Further, if the employee is being paid SSP due to Coronavirus, employers may be able to claim up to two weeks’ work of SSP per employee. Employers can check if they are eligible to claim SSP on the Government website (https://www.gov.uk/guidance/claim-back-statutory-sick-pay-paid-to-employees-due-to-coronavirus-covid-19).
The information given in this update was, at the time of publication, believed to be a correct statement of the law. However, readers should seek specific legal advice on matters arising, and no responsibility can be accepted for action taken solely in reliance upon such information.