Employment Review - March 2009
In this month’s review we look at the decision in Child Support Agency (Dudley) v Truman, which followed the decision in the Malcolm case on the comparator in disability related discrimination cases; we examine transferees’ obligations following a TUPE transfer on the terms of a collective agreement on pay made before the transfer; we discuss the tightening of immigration controls and its effects on the UK labour force; we review “sham” contracts; and the requirements of outlining whether the employee is at risk of dismissal in a step 1 letter under the Statutory Dismissal and Disciplinary Procedures; we look at the threat of cloned CVs, and the new website launched by the Health and Safety Executive on helping employers to deal with work related stress.
Jagruti Gohil
Threat of cloned CVs
“British workers first” by tightening immigration controls
Website launched preventing work-related stress
Cases
Contents of Step 1 letter under the SDDPs
Sham Contracts
Collective Agreements the “Dynamic” approach
Security experts claim that organised criminals are using cloned career histories to enable them to work in positions where they are able to commit fraud. A survey by credit information specialist Experian found that 63% of professionals posted details of their career histories and CVs in their profiles on social networking sites, with 1 in 10 even posting their full CVs. Such people are at risk of CV cloning.
Avis Easteal, general manager of Experian Background Checking has said that better anti-fraud measures have forced organised criminals to look for other approaches, meaning that there is more and more risk that they will take on identities and career histories of third parties in order to secure employment where they can commit fraud.
Employers are warned not to accept CVs at face value and to be cautious about those applicants they appoint to positions of trust. It is also recommended that companies have strong anti-fraud policies and protection measures in place.
Robust recruitment policies and detailed questions at interview should enable employers to spot those candidates using cloned CVs..
“British workers first” by tightening immigration controls
The Home Secretary Jacqui Smith has announced that the rules relating to the admission of foreign workers into the UK will be tightened from 1 April 2009. Under the Tier 1 category, there will be a equirement for the applicant to hold a master’s degree and that they should have earned at least over £20,000 in a 12 month period.
The rules relating to Tier 2 have also been tightened. Now, all vacancies must be advertised in Jobcentre Plus in order to satisfy the test that the vacancy cannot be filled by the UK resident labour force. In addition, the job must be skilled at NSVQ3 level or above and it must be paid at the appropriate rate. Furthermore, whenever a shortage occupation list is created, a review will have to be conducted by the Migration Advisory Committee on how these skills can be developed for the resident labour force.
Whilst this may be seen as a sigh of relief, the real effect of limiting highly skilled migrants may have little impact on the UK economy. Some argue that they are valuable assets to the UK economy, usually paying high levels of tax to the HMRC! In addition, the complaints have focussed on low skilled jobs, usually below the Tier 1 category, and therefore limiting the impact of the tightened controls.
Website launched preventing work-related stress
The Health and Safety Executive has launched a new website aiming to aid employers in preventing work-related stress. The site was launched as a result of the growing problem of stress in the workplace. Last year 13.5 million working days were lost due to work related stress, which of course has had an effect on the performance of business and the health and safety of employees.
Website - www.hse.gov.uk/stress
In the case of Child Support Agency (Dudley) v Truman, the EAT has confirmed the decision in Malcolm v London Borough of Lewisham on comparators for disability-related discrimination claims.
In Malcolm, the House of Lords held that the correct approach when considering disability related discrimination was to compare the treatment of the complainant with that of a non-disabled person who is otherwise in the “same circumstances”. The effect of this was that it narrowed who the comparator could be for the claimant, thereby making it much harder for the claimant to succeed.
Malcolm was decided on the housing provisions of the Disability Discrimination Act 1995 (DDA). In this case, Mrs Truman argued that the Tribunal should not apply the same narrow comparator principles in an employment context. She argued that in the employment case of Clark v TDG Ltd t/a Novacold, the Court of Appeal held that the comparator need not be “in the same or similar circumstances” as the disabled complainant. The effect being that the comparator could be much wider.
The EAT concluded that the Malcolm test applied equally to housing and employment claims and gave the following reasons:
The test for disability related discrimination as it applies to housing cases in the relevant housing provisions of the DDA, is identical to the test that applies in the employment context in the DDA.
The Lords by a majority stated that no distinction should be drawn between the two areas.The wider comparator in Novacold should not be used unless and until the DDA is amended by Parliament.
Any policy argument for having a wider comparator for employment claims and a narrower one for housing is a matter for Parliament, not the courts.
It followed that the appropriate comparator for Mrs Truman’s disability-related discrimination claims was a non-disabled employee, who apart from the fact of disability, shared her circumstances.
In the subsequent recent case of Stockton-on-Tees Borough Council v Aylott, the EAT again confirmed that the Malcolm comparator approach must be applied. Here, the EAT pointed out that although this approach makes it more difficult for claimants to demonstrate disability-related discrimination, it does not prevent them from establishing discrimination by the employer’s failure to make reasonable adjustments.
These cases show that the Tribunals will follow a narrow comparator approach in employment cases. As a consequence the focus of most disability claims in employment will be on the employer’s duty to make reasonable adjustments. Once employers are aware of an employee’s disability, they must actively consider what reasonable adjustments need to be made.
Contents of Step 1 letter under the SDDPs
Although the statutory dismissal and disciplinary procedures (SDDPs) will be repealed from 6 April 2009, this case remains applicable during the transitional period. In Zimmer Ltd v Brezan, the EAT had to determine if the SDDPs require a step 1 letter to include the fact (if appropriate) that the employee is at risk of dismissal.
The employer argued on the strict interpretation of the legislation the SDDPs did not require the employee to be told that they were at risk of dismissal. The EAT held that a step 1 letter should tell an employee if they are at risk of dismissal.
Despite the SDDPs life now being short, employers should continue to ensure that if an employee is at risk of dismissal or another sanction, it must be set out in the step 1 letter. Furthermore, regardless of the abolition of the SDDPs it is good practice to set out in any first letter the possible sanctions that may be imposed on the employee.
This is an interesting case going to the root of the employment status of an individual. Whether a person is an employee or self-employed is a question of fact and there are a number of factors relevant to the question of an individual’s employment status. In this case Mr Szilagyi claimed he was an employee despite the fact the he had entered into a “partnership agreement” and claimed unfair dismissal.
Partnership vehicles are commonly used to reduce or avoid tax and national insurance contributions, and in the case of Protectacoat Firthglow Limited v Szilagyi, Mr Szilagyi had entered into a “partnership agreement” with another colleague and thereafter a contract for services between the partnership and Protectacoat.
Mr Szilagyi was given a health and safety induction card, was sent out with existing workers to learn the job and was paid cash in hand. Protectacoat was not obliged to provide the partnership with work, but when work was available, it would tell them where to go and agree a fee in advance. The partnership was liable to pay national insurance and tax, was not obliged to work particular hours or provide specific equipment.
After a dispute over scaffolding, Protectacoat terminated the contract with the partnership. Mr Szilagyi brought a claim for unfair dismissal. The Employment Tribunal held that the “partnership agreement” was a sham and that Mr Szilagyi was an employee.
The Court of Appeal clarified the correct test for establishing a “sham” and the following principles emerge:
Look at the true legal relationship between the parties.
Consider whether the words of the written contract represent the true intentions or expectations of the parties both at the beginning and as time goes by.
See whether a document is “designed to deceive” and if so it will be wholly disregarded in deciding the true relationship between the parties.
The Court of Appeal has provided useful guidance when contractual arrangements are a sham. In particular it will not be sufficient to list factors for and against the existence of an employment relationship. It is important for employers to be careful when establishing a contractual relationship with employees or contractors, that they set out the true relationship. Tribunals will look further than the contract where it considers it is not reflective of the relationship between the parties. It will then focus on the relationship itself to define the contract.
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Collective Agreements the “Dynamic” approach
In Alemo-Herron and others v Parkwood Leisure Limited the EAT considered whether employers are obliged to comply with the terms of a collectively agreed employment contract in force between the transferor and the trade union after the TUPE transfer.
The employees were employed by the London Borough of Lewisham on a standard contract which provided that their terms and conditions were in accordance with collective agreements negotiated by the National Joint Council for Local Government Services (NJC) and that they were paid according to pay scales agreed by the NJC.
The employees were TUPE transferred to CCL Limited in 2002 and received pay increases in line with the NJC collective agreement from 2001 - 2004. They were then TUPE transferred to Parkwood Leisure Limited (Parkwood) in May 2004. A new collective agreement was negotiated in 2004 which took place after the transfer. Although Parkwood gave increases in line with the agreement in 2005, it did not thereafter. The employees brought a claim for unlawful deduction of wages arguing they should also have been given the pay increases from 2006 - 2008.
The employees argued that under the 1981 TUPE Regulations the employer was bound by existing clauses relating to pay because they had been continually in force since the date of the original transfer. The Employment Tribunal found in favour of Parkwood and held that the 2004 agreement was a new agreement and that employees were not entitled to receive pay rises in line with the 2004 agreement. The employees appealed to the EAT.
Two main points were put forward. The employees argued the domestic position of the “dynamic” approach under Whent and Others v T Cartledge, was that it was possible for Parkwood to be bound by a system under which it pays wages which are determined by a third party. Parkwood argued the position had changed by an ECJ decision, the “static” approach in Werhof v Freeway Traffic Systems Gmbt & Co KG, that they will only be bound by the terms of the collective agreement until the termination or expiry of the collective agreement.
The EAT considered both the domestic law and European directives. The EAT found in favour of the employees on the basis that the aim of the Directives were to safeguard employee rights and that the transferee will be bound by the terms of a collective agreement which was in force at the time of the transfer. However, it gave Parkwood the leave to appeal and an appeal was lodged at the start of February 2009.
The outcome of this case is that transferees may be bound by terms of a collective agreement in force at the time of the transfer in which they have had no input. We will have to await the decision of the Court of Appeal on the level of exposure on transferees who are transferring across employees in a collective agreement.
This update is only a summary of the law in force at the present time and is not exhaustive, nor does it contain definitive advice. Specialist advice should be sought from a member of the Freeth Cartwright Employment Team in relation to any queries that may arise.
David Potter
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Nottingham NG1 6HH
Tel: 0115 936 9389
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david.potter@freethcartwright.co.uk
Joanne Kay
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Cardinal Square,
10 Nottingham Road,
Derby DE1 3QT
Tel: 0845 634 1724
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joanne.kay@freethcartwright.co.uk
Julian Middleton
One Colton Square,
Leicester LE1 1QH
Tel: 0116 248 1115
Fax: 0845 634 2595
julian.middleton@freethcartwright.co.uk
Pat Jones
First Floor,
St James Building,
61-95 Oxford Street,
Manchester M1 6FQ
Tel: 0845 634 2561
Fax: 0845 634 2541
pat.jones@freethcartwright.co.uk
Vanessa DiCuffa
One Victoria Square,
Birmingham B1 1BD
Tel: 0845 634 2584
Fax: 0845 634 2576
vanessa.dicuffa@freethcartwright.co.uk
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