Irwin Mitchell | Focus on Employment | Winter 2016

Does TUPE apply if a majority shareholder takes over the activities of a subsidiary which has been wound up?

Yes, according to the ECJ in the case of Ferreira da Silva e Brito and others v Estado Portugues.

Background

TAP was the majority shareholder of Air Atlantis which provided a number of charter flights. Air Atlantis was wound up after the winding up had been completed, TAP started to operate some of the routes that Air Atlantis had previously operated using the aircraft, offices, equipment and employees of Air Atlantis.

A number of employees had been dismissed due to redundancy when Air Atlantis had been wound up, and they brought a claim that they should have transferred to TAP and they sought compensation.

Decision of the CJEU

This was a transfer of an undertaking. The key point was that the entity had kept its identity - TAP had taken over routes, aircraft, activities and employees. Although they had been integrated into TAP’s activities, there was a clear link between the assets and employees and the activities that they had carried out whilst working for Air Atlantis.

How does this affect your business?

In a situation where the business, or part of the business being taken over, has been wound up do not presume that a transfer situation will not arise. It is essential to look at the nature of the business before the winding up and to compare this to the business that remains. In some cases it is possible to differentiate between asset reliant undertakings and labour intensive ones. In this case, the transfer of key assets (the airplanes) was decisive.

TUPE: Do employees who are temporarily laid off work at the time of a service provision change transfer to the subsequent contractor?

The EAT held that they might in the case of In Inex Home Improvements Ltd v Hodgkins.

Background

There must be an ‘organised grouping of employees’ in a transfer situation. If, for example, there is a change of service provider but there is not an organised group of employees working on that service, no-one will transfer.

What happens if there has been a temporary lay-off situation?

Here a group of employees worked for Inex on a contract referred to as the ‘Sandwell’ contract. The work under this contract was released in a series of tranches. There was a gap between one tranche of work being completed and the next being released and, as a result, the employees were temporarily laid off.

It was then decided that the next tranche of work would not be given to Inex but to Localrun, another provider. The employees argued that they should transfer to Localrun, but it disagreed because they had been laid off. It argued that they were not part of the organised grouping of employees immediately before the transfer.

Decision

The EAT made it clear that a temporary absence from work, or a temporary cessation of the relevant activities does not, in itself, deprive employees who had been involved in the relevant activities of their status as an organised grouping of employees.

How does this affect your business?

This case was remitted back to the Tribunal to determine if these employees were an organised group immediately before the transfer. It is likely that the Tribunal will find that they were.

The key question will be to determine if the workers who have been laid off were an organised group who were assigned to the part of the business being transferred. If they are then they will transfer to the new employer. It is probably safer to assume that workers who are temporarily laid off and who worked on the transferring contract, will transfer and treat them in the same way as those who are on holiday or ill at the time of the transfer.

Dismissal: Is it fair to dismiss a disabled employee for refusing to follow a return to work plan?

The EAT said that it was fair on the facts in the case of Rochford v WNS Global Services (UK) Ltd and others.

Background

The Claimant was a senior manager who suffered from a disabling back condition. He was absent from work from February 2012 on generous sick pay (which lasted until his dismissal). Some months later his position was medically assessed, leading to the conclusion that there should be a phased return to work. The employer decided that he should return to restricted duties which formed part of those he was contractually obliged to undertake. He refused to do so, considering that this was a demotion.

The employer did not make it clear that the long term aim was for the employee to return to his previous role. Despite a number of discussions, the employee continued to refuse and was warned that he would be dismissed if he did not agree. He was eventually dismissed and brought claims for disability discrimination, unfair dismissal and wrongful dismissal.

Decision

The Tribunal upheld some elements of the discrimination claim (but not those linked to the dismissal) and also found that the dismissal was substantively fair but procedurally unfair. The wrongful dismissal claim was dismissed.

Following an appeal, the EAT agreed with the Tribunal’s conclusions. The reason for Mr Rochford’s dismissal was because of his conduct – not his disability. He had refused to do any work, despite having been warned about the consequences of doing so. His conduct amounted to gross misconduct and his employer was entitled to dismiss him without notice.

The EAT did note that if the employee thought that the employer was acting unreasonably, he could have resigned and claimed constructive dismissal or worked under protest. To simply refuse to do any work was not acceptable.

How does this affect your business?

The case demonstrates that the fact that there has been an element of unlawful discrimination does not mean that any ultimate dismissal must be unfair (but often will be).

It is good practice, when an employee is returning from a long term absence to try to agree a return to work plan to avoid these types of problems. However, as long as the employee is medically fit to undertake the work set out in a return to work plan, you can discipline and ultimately dismiss if the employee refuses to do so.

Dismissal: Can a trade union representative be dismissed whilst participating in union activity for a non-union related reason?

The EAT found that the employer had fairly dismissed an employee in Azam v Ofqual because the employee had been dismissed for misconduct and not because she was a union representative.

Background

Ms Azam was the employee union representative (and later the Branch Chair) of the PCS union which was recognised by the employer. She had raised a number of grievances on behalf of members (some of which remained unresolved).

The employer wished to make significant changes to its pay and grading arrangements and meetings took place with Ms Azam in her capacity as PCP Branch Chair. During those discussions, the employer disclosed a spreadsheet detailing each of the roles in the organisation together with the old and proposed new grades. That information was disclosed to her on the strict condition that it was confidential and should not be disclosed to anyone else, or used for other purposes.

Despite this, Ms Azam emailed copies of the spreadsheet to branch members. She attempted to avoid suspicion by referencing her email with a neutral title. Her employers only became aware that she had done so when they received a complaint by another member of staff that sensitive information had been disclosed to PCS colleagues. Following an investigation, Ms Azam was dismissed for gross misconduct.

She brought a claim arguing that her dismissal was automatically unfair because the real reason for the dismissal was her trade union activities.

Decision

Her claim was unsuccessful. It was held that the real reason for her dismissal was because she had sent out confidential information and not because of her role as a trade union representative.

How does this affect your business?

Many employers tread carefully in trade union matters as unionised workplaces are often quick to defend their members. Here staff went on strike to protest against Ms Azam’s dismissal (the union was unaware that she had breached confidentiality).

If you can prove that a decision to dismiss a union member was genuinely because they committed an act of gross misconduct, the dismissal will be fair.

Dismissing an employee because of their trade union activities will be automatically unfair, meaning that there is no requirement for the employee to have a minimum period of service to bring a claim of unfair dismissal. In addition, dismissal for this reason will attract a minimum basic award of £5,807.

Can an employee claim victimisation by association?

The Tribunal agreed that a claim for associative victimisation is possible (and this aspect of the decision was not appealed) in Thompson v London Central Bus.

Law

Victimisation occurs when an employee is treated less favourably because they have carried out a ‘protected act’. A protected act is when an employee has previously made a complaint or claim of discrimination, or supported someone who has made such a claim.

Background

Mr Thompson was a bus driver who said he had overheard a conversation in which it had been alleged that management had, some 20 years earlier, conducted a campaign to get rid of certain employees who had made allegations of racism against management.

He said that he had recently repeated the conversation to a manager who, shortly afterwards instigated disciplinary proceedings against him which had resulted in his dismissal. Following a successful appeal, this sanction was replaced with conditional re-instatement. Mr Thompson said that he was associated with the protected acts (the allegations of racism) because he had heard about them and therefore had knowledge and that this, coupled with the timing of events, established a causal link. In response, the Respondent produced a clear paper trail demonstrating that the disciplinary action was attributable to Mr Thompson’s contravention and abuse of the health and safety requirements concerning the wearing of hi-visibility jackets.

Decision

The Employment Tribunal decided that the Equality Act 2010 does protect employees against associative victimisation but, in this case, it found that the association between the employee and those who had carried out the protected acts was too weak or ‘of the wrong sort’ for a claim of associative discrimination to be successful and it therefore struck out the claim.

The Employment Appeal Tribunal said that the Tribunal’s reasons for rejecting the case were wrong. The appropriate test was whether the employer subjected an individual to a detriment by reason of the protected acts of others. It stated that there is no requirement for there to be any particular form of association.

How does this affect your business?

This decision suggests a significant shift in the law and a willingness to permit associative discrimination claims to be brought outside of direct discrimination claims (which have been permitted for some time).

If a member of staff (subject to a disciplinary process) alleges that he/she is being subjected to a disciplinary process/sanction because of their previous support for a colleague’s discrimination claim/complaint, you should suspend the disciplinary process and investigate before deciding how to proceed. Do not assume that the employee is making this up (he/ she might be but you won’t know unless you investigate), or that the events took place a long time ago and are therefore irrelevant.

Is an issue which affects only four employees in the public interest (and the disclosure protected by whistle-blowing legislation)?

Possibly, according to the EAT in Underwood v Wincanton Plc.

Facts

Mr Underwood and three of his colleagues made a complaint about the way that overtime was being allocated in their organisation. This complaint was addressed but Mr Underwood was dismissed. He argued that he had been dismissed for making a protected disclosure, but the employer argued that this situation could not be a protected disclosure because the issue relating to overtime only related to a small number of employees and could not, in any event, be an issue that was in the ‘public interest’.

Decision

The EAT said that the case had to go back to the Tribunal to reconsider in the light of the Chestertons case which made it clear that a relatively limited number of work colleagues could potentially constitute the public for these purposes.

How does this affect your business?

Although the public interest bar is not set very high, it is extremely unlikely that Mr Underwood will succeed with his case. It is difficult to see how three individuals can constitute the “public”, or in this case, whether Mr Underwood had any reasonable belief that the public really needed to know how his overtime arrangements were determined.

However, it is probably safer to treat a complaint that refers (even vaguely) to other people within the organisation, and might on a generous interpretation be a protected disclosure, in accordance with your whistleblowing policy.

The best defence to any genuine whistleblowing claim is to demonstrate that the reason you made a decision about the employee was completely unrelated to anything they might have told you.