Case law round-up May 2014

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UK law on industrial action does not breach Human Rights legislation – RMT v United Kingdom [[2014] ECHR 366]
In a welcome decision for employers, the European Court of Human Rights (ECHR) has held that the ban in the UK on secondary industrial action (otherwise known as ‘sympathy strikes’) does not breach the right to freedom of association contained in Article 11 of the European Convention on Human Rights. The Court agreed with the union (RMT) that the ban did ‘interfere’ with Article 11 rights, however, the interference pursued the legitimate aim of protecting the rights and freedoms of others, including the employer and the wider interests of the public, and so it was therefore proportionate. The Court found that the union had, in any event, been able to exercise its Article 11 rights in other ways by taking primary strike action and by collectively bargaining with the employer over terms and conditions.

The RMT had also argued that the UK’s balloting and notification requirements were ‘unnecessarily burdensome’ and amounted to a breach of the right to freedom of peaceful assembly and of association with others set out in Article 11 of the ECHR. This argument was also unsuccessful.

Walker Morris comment: This decision is clearly welcome news for employers with unionised workforces. It ends a long legal campaign by unions to try to reverse the UK’s prohibition on secondary strikes. Critics of the decision argue that the trend towards outsourcing in the public sector reduces employees’ collective bargaining power. For example, in a dispute with a private sector contractor operating within a public sector organisation, the union can only ballot the contractor’s employees and not the employees in the wider organisation.

In a related development, following reports of alleged union intimidation of managers during last year’s Grangemouth oil refinery industrial dispute, the Government has launched an independent review to consider so-called ‘extreme tactics’ used in such disputes and the effectiveness of the current law in preventing inappropriate or intimidatory actions.

Share sale triggered a TUPE transfer – Jackson Lloyd Ltd and Mears Group plc v Smith and others [UKEAT/0127/13]
On a share acquisition, there will normally be no change in the identity of the employer and therefore no TUPE transfer. This case demonstrates that there can occasionally be cases that disprove this general rule.

Jackson Lloyd Ltd (JL) employed around 450 employees. It had an employee representative committee (ERC) on which representatives served 12-month terms of office but there had been no elections since 2009.

The shares in JL were purchased by Mears Ltd (M Ltd), a subsidiary of Mears Group plc (M Group), and at that point the members of JL’s board resigned and were replaced by M Group nominees.

JL’s employees were told that M Group had acquired the company and would be embarking on a programme of integration as a result of which they would move over to M Group. A team of integration managers and support staff from M Group then arrived at JL’s sites to assess existing working methods and oversee the integration. The team was overseen by an integration consultant who reported to the CEO of M Group. His role was to revive the JL brand using M Group’s systems, policies, procedures, methods and central services.

There was no TUPE consultation at all. Tribunal claims were brought by individual employees against JL and M Group for failure to consult.

The Employment Appeal Tribunal (EAT) held that, in determining whether TUPE applied, it was important to take all factors into account including what happened to the assets and employees. JL had retained its identity after the transfer and there had, on the particular facts, been a transfer from one company to another. It found that the share sale had effectively triggered a ‘co-extensive but separate’ TUPE transfer to M Group.

The EAT also held, on the facts of this case, that the ERC representatives’ mandate had expired when their 12-month term of office had expired. The workforce had not consented to the representatives continuing to represent them after this time. As such, the employees were entitled to bring employment tribunal claims for failure to inform and consult in their own names.

Walker Morris comment: In most cases, straightforward share sales will not give rise to a TUPE transfer. This case shows that a share sale can trigger a TUPE transfer in circumstances where control and day-to-day running of a business is effectively assumed by another company. It demonstrates the importance of considering any TUPE implications at the outset in this type of transaction.

The case also highlights the importance of ensuring that employee representative bodies have an up-to-date mandate to represent staff, whether in a TUPE or a collective redundancy situation. It is worth checking the constitution of your employee representative body to make sure terms of office have not expired.

TUPE and service provision change – Qlog Limited v O’Brien and others [UKEAT/0301/13]
A recent decision of the Employment Appeal Tribunal (EAT) provides a reminder that, in outsourcing situations, it is possible that TUPE can be triggered even when only part of the operation is outsourced to the new service provider.

Qlog (a logistics company) had taken over a contract to transport and deliver packaging within the UK for a company (R). The outgoing contractor had employed lorry drivers, a transport manager and four warehouse staff to carry out the services. Unlike the outgoing contractor, Qlog did not provide transport services itself, but acted as a ‘middle man’ and engaged independent hauliers on a sub-contracted basis where necessary. The outsourcing agreement with Qlog stated that R wished to “transfer the provision for part of its transportation, delivery and distribution services” and the agreement specifically stated that Qlog would carry out “transport and logistics services” (envisaged as arranging the transport services either on its own account or through external hauliers). Importantly, Qlog took responsibility for risk in the goods until the point of delivery.

Qlog had accepted that the warehouse staff and the transport manager transferred to it under TUPE because they continued to work in the same way after the transfer. However, Qlog argued that the lorry drivers had not transferred to it under TUPE because Qlog did not actually provide the transport services itself.

The EAT disagreed. It held that the correct approach was to focus on the substance of the activity being undertaken post-transfer, even if the actual modes of operation were different. It also held that the way in which the post-transfer ‘activities’ were defined in the contractual documentation between the parties was highly relevant. Although there were some practical differences in the way in which the services were provided by Qlog after the transfer, the documents clearly confirmed that it was contractually required to undertake the same services as the outgoing provider.

Walker Morris comment: This case demonstrates how tricky it can be to assess whether TUPE applies where some, but not all, of the pre-transfer operation transfers to the new provider. The new 2014 TUPE Regulations (in force since 31 January) define post-transfer ‘activities’ (for the purposes of the service provision change rule) as “activities which are fundamentally the same as the activities carried out by the person who has ceased to carry them out”. In this case, the EAT was prepared to find that the activities were fundamentally the same when looking at the operation in the round. The good news is that where ambiguity in the commercial arrangements gives rise to a TUPE risk this can normally be provided for by using tailored indemnity protection in the commercial agreement.

Admissibility of covert recordings – Punjab National Bank (International) Ltd and others v Gosain [UKEAT/0003/14]
In this technological era, it is a question asked more and more often – can covert recordings of disciplinary or grievance meetings made by employees be referred to or relied on as evidence at a Tribunal hearing? As a rule of thumb, covert recordings of a disciplinary panel’s private deliberations will not normally be admissible. However, the EAT has recently held that such covert recordings may be admissible where the comments made by the employer were not part of its ‘private deliberations’. In this case, the comments by the panel were recorded during a break in the grievance hearing and included the employer’s managing director giving an ‘off the cuff’ instruction to dismiss the employee and the manager hearing the grievance saying that he was deliberately skipping the key points raised by the employee (that she was not allowed a proper lunch break and issues concerning her pregnancy).

Walker Morris comment: A tribunal always has the ultimate discretion to admit covert recordings in evidence (even if the disciplinary procedure specifically prohibits recordings being taken without consent). It is important to ensure that discussions at disciplinary and grievance hearings are appropriate and would not lead to embarrassment if aired at a tribunal. This is especially so given that most people are now able to make recordings on their mobile phones.

Commissioning mothers in surrogacy arrangements are not entitled to maternity leave – CD v ST and Z v A Government Department and the Board of Management of a Community School [C-167/12 and C-363/12]
Although rare, there are times when an employee becomes a ‘commissioning’ mother under a surrogacy arrangement. This raises the question whether the commissioning mother is entitled to maternity leave given that she has not actually given birth to the child. The European Court of Justice (ECJ) has recently held that she is not. It held that under the European ‘Pregnant Workers Directive’ maternity leave is granted on the basis that the worker has actually been pregnant and given birth. The ECJ also held that refusing maternity leave to a ‘commissioning mother’ is not sex discrimination. This is therefore the current position although it may change if, as is possible, the UK Government changes the law to provide for statutory adoption leave to be made available where a Parental Order (something that a commissioning mother could apply for) is in place.