The Queens Speech

Queens SpeechA National Insurance Contributions Bill, addressing the cost of employing people, and measures aimed at furthering the Government’s deregulation agenda feature in the Queen’s speech, which sets out legislation planned for the coming year.

The National Insurance Contributions Bill will introduce a new employment allowance, giving all businesses, including charities, a reduction of £2,000 per annum from their employer national insurance contributions from April 2014. The measure is intended to help small businesses in particular with the cost of employing people. The Government states that around 450,000 employers will be taken out of paying employer national insurance contributions altogether. The introduction of the employment allowance had previously been announced by the Chancellor of the Exchequer in the 2013 Budget.

The Deregulation Bill will introduce measures intended to reduce the burden of excessive regulation on busineses. The proposed measures include:
• removing the power of employment tribunals to make wider recommendations in successful discrimination cases under the Equality Act 2010; and
• exempting from health and safety law those self-employed people whose work activities pose no potential risk of harm to others.

Other announcements of relevance to employers in the Queen’s speech include measures to:
• increase the availability of childcare for working parents and reduce childcare costs;
• make it easier for businesses to protect their intellectual property;
• introduce greater flexibility in pay for teachers;
• strengthen the reserve forces;
• increase access to traineeships and apprenticeships for school leavers; and
• double the level of fines for employers using illegal workers.

With extensive employment law reform measures already provided for under the Enterprise and Regulatory Reform Act 2013 and other legislation, the speech included fewer announcements directly relating to employment law than in previous years.
• The Queen’s Speech 2013 Read the full text of the Queen’s Speech on the UK Government website.
• Queen’s Speech 2013: Background briefing notes Background briefing notes on the announcements in the Queen’s Speech are available on the UK Government website.

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No TUPE consultation required with employees who did not transfer

The Employment Appeal Tribunal (EAT) has handed down an interesting decision about the obligations of the employer to consult over a TUPE transfer where part of an insolvent business is sold as a going concern, but the other part of the business is not and the employees in that part of the business are consequently made redundant.

The case involved a company providing services to the film industry. The company provided two distinct services and there was little crossover between the two different groups of employees assigned to the two different services. Upon insolvency, the ‘viable’ part of the business (one service) was sold as a going concern while the other part was liquidated.

The employees of the part of the business that was liquidated brought a claim for breach of Regulation 13 of TUPE (the duty to inform and consult). They argued that they were ‘affected employees’ in connection with the TUPE transfer as, at an early stage, their part of the business too was subject to discussions over acquisition. In addition, they argued that the sale of the other part of the business (which everyone accepted was a TUPE transfer) effectively sealed their fate and resulted in their dismissals.

This argument succeeded at the Employment Tribunal. However, the EAT held that the claimants were not ‘affected employees’ within the meaning of Regulation 13 (1). The EAT concluded that their dismissals flowed not from the sale of the other part of the business but from the liquidation of their part of the business. Consequently the obligation to inform and consult under Regulation 13 was not triggered in this case.

Perhaps the more interesting aspect of the judgment was the additional finding of the EAT that, in any event, the duty to inform and consult with this group of employees was not engaged because, in the end, they were not subject to a TUPE transfer. On a fair reading of the relevant Regulations, this conclusion appears to be inescapable.

Therefore, where a proposed transaction to which TUPE is likely to apply falls through before completion, the effect is that the transferor and transferee will be treated in law never to have had any obligation to inform and consult with the affected employees, regardless of how deficient the consultation process may have been.

The judgment also acknowledged the possibility that parties who discover they have not complied sufficiently with the TUPE Regulations in respect of information and consultation might agree to delay the completion of a transaction, in order to comply with their obligations.

It is important to recognise that this contrasts sharply with the position in relation to collective redundancy consultation, where the obligation to consult is triggered by the proposal of 20 redundancies or more at one establishment within a 90 day period, regardless of whether the redundancies are actually carried out or not.

(Case name: I Lab Facilities Ltd v Metcalfe & Ors (Transfer of Undertakings : Consultation and other information) [2013] UKEAT 0224_12_2504 (25 April 2013)

Full case can be found here:

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Continuity of employment starts when employee begins actual ‘work’ under the contract

The Employment Appeal Tribunal (EAT) has recently determined that continuity of employment will be deemed to start from the date upon which the employee begins work under the contract, and not at the point at which the employee undertakes activities for an employer. However, the EAT also confirmed that this will be a question of fact and degree, having regard to the nature of the activities performed.

In this case, the employee, at the employer’s request, attended a meeting before her contractual start date. She argued that by attending this meeting, her start date for the purposes of calculating her continuous employment had been brought forward, thereby giving her sufficient service to claim unfair dismissal.

The EAT held that the employee’s attendance at the meeting did not bring her start date forward. In reaching this conclusion, the EAT had regard to the fact that:
• she had not been obliged to attend the meeting;
• she was not there in the capacity of an employee;
• she was not paid for her attendance; and
• she went to the meeting entirely of her own choice.
(Case name: Koenig v The Mind Gym, EAT UKEAT/0201/12/R)

Full case can be found here:

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Employee owner status: model documentation and draft Regulations

The Department for Business, Innovation and Skills (BIS) has announced that draft Regulations, which are intended to make it simpler for employers to buy back shares from ‘employee owners’, are to be released soon. The Regulations are likely to include a provision that allows employers to buy back shares in instalments.

In the interim, BIS has released draft legal templates for businesses to refer to in order to become employee-owned. It is proposed that these templates will be subject to further development before becoming widely available for use.

For full details, please see:

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Dismissal for political opinions or affiliations

On 25 June 2013, the Enterprise and Regulatory Reform Bill 2013 will introduce a provision to remove the unfair dismissal qualifying period where the reason or principal reason for the employee’s dismissal is, or relates to, the employee’s political opinions or affiliation. This change is to bring the UK into line with the European Convention on Human Rights.

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Protective awards are punitive, not compensatory

In a recent decision, the Employment Appeal Tribunal (EAT) has reaffirmed that, when assessing protective awards made under the TUPE Regulations for failure to inform and consult prior to the transfer of an undertaking, an employment tribunal’s focus should not be on compensating the employee, but on punishing the employer.

In this case, the employer called an election at 14.00 with an instruction that voting was to be completed by 17.00 the same day. Consequently, the EAT found that the employer had not complied with its duty to take reasonable steps to ensure that the election was fair, and as such, upheld the employment tribunal’s decision to make a protective award against the employer.

The EAT went on to state that the punitive purpose of the protective award is to ensure that employers remain mindful of their obligations to inform and consult, particularly in circumstances in which there may be time pressures. However, where there is evidence that an employer has taken at least some steps to comply with its obligations, the punishment should not be as great as for an employer who has taken no steps at all.

(Case name: Shields Automotive v Langdon & Brolly UKEATS/0059/12/BI)

Full case can be found here:

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Government announces further measures to tackle unpaid internships

The government has announced that it is planning to take more aggressive steps to clamp down on employers who do not pay the national minimum wage after successfully reclaiming £192,808 in unpaid wages owed to interns, volunteers and work experience workers over the last tax year.

The Department for Business, Innovation and Skills (BIS) has confirmed that over the coming year it plans to:

• Launch a social media campaign to encourage people to identify employers for investigation.
• Produce a booklet to make graduates aware of their employment rights.
• Fast track calls made by unpaid interns to the government’s pay and work rights helpline.
• Enable unpaid interns to claim back payment for placements which they have undertaken in the past six years.

For further information, please see:

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