ABG Employment Newsletter – November 2010

Collective Redundancy Consultation

The Court of Appeal has decided to refer the case of United States of America v Nolan to the European Court of Justice for clarification of when the employer’s duty to enter into collective consultations over redundancies is triggered. This is because the Court of Appeal considered that it is unclear from the European Court’s earlier decision in the Fujitsu case whether the obligation to consult collectively arises when an employer proposes to make a strategic business or operational decision that will foreseeably or inevitably lead to collective redundancies or whether it arises only once the employer has made that strategic decision and is proposing consequential redundancies as a result.

In this case the United States did not enter into collective consultations when it was proposing to close a military base in Hampshire which would inevitably result in redundancies. The Employment Tribunal and the EAT ruled that as a result it was in breach of its obligation to enter into collective consultations over proposed redundancies. The United States has appealed these rulings to the Court of Appeal. The Court of Appeal has confirmed that the UK collective redundancies legislation (section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992), must be applied in the light of the European Court’s decision in Fujitsu. However, it considered that the ECJ’s decision in that case was ambiguous in that some of the comments tended to indicate that the consultation obligation is triggered when an employer is proposing a strategic decision which will lead to redundancies, whilst some of the other comments in the case suggested that the obligation arises only when the decision has actually been made and the employer is then proposing redundancies.

It is believed that it will take at least a year for the European Court to address this issue. In the meantime cautious employers should proceed on the basis that collective consultation is required when they are proposing to take a course of action, such as the closure of a factory or department, which will inevitably produce at least 20 redundancies.

Age Discrimination and Justification

In the case of Woodcock v Cumbria Primary Care Trust the EAT has upheld the Employment Tribunal’s decision that the PCT was not guilty of unlawful age discrimination when it dismissed its Chief Executive on redundancy grounds shortly before he qualified for substantially enhanced pension payments. The EAT has confirmed that the employer’s actions were justified as the enhanced pension payout would have been a windfall and the Trust was entitled legitimately to safeguard public funds by avoiding this.

The Trust had already been generous towards the Chief Executive by delaying the issue of notice of redundancy and in these circumstances it was entitled to avoid the further additional costs which would have accrued if his redundancy was delayed until he attained the age of 50 (the date when he qualified for enhanced pension).

In the earlier case of Cross v British Airways the EAT had doubted that costs alone could be relied on to justify discrimination. However, in the Woodcock case the President of the EAT has doubted the ruling in Cross that costs alone can never provide objective justification in a discrimination case. He suggested that it should be possible to justify discriminatory treatment if the cost involved is disproportionate in comparison to the effect of the discriminatory action.

Age Discrimination and Discriminatory Adverts

In the case of Berry v Recruitment Revolution and others the EAT has ruled that an individual cannot bring a discrimination claim based on an advert for a job which he has no interest in taking. There can be no discrimination where the individual would not have applied for the job in question as he has not suffered any adverse treatment.

In this case the Claimant had brought a large number of claims against recruitment agencies and employers complaining about job adverts using terminology suggesting that they were targeted at younger people. For example, referring to a job as being a junior role or suitable for school leavers. The Claimant was in his fifties.

Although some respondents settled his claims, other respondents defended them and his claims against those respondents were either struck out or were dismissed. The EAT has confirmed that the tribunals were right to reject the claims and issued a warning that individuals who, purely for financial gain, bring claims over job adverts in which they have no interest are at risk of having costs awarded against them.

Although the ruling in this case is welcome, nevertheless employers should continue to be wary about how they word job adverts. A genuine older applicant who was actually deterred from applying for a job in which he would be interested – or who applies for the job and is rejected in favour of a younger applicant – would still have grounds for a claim.

PHI Payments and Holiday Pay during Long Term Sick Leave

In the case of Souter v Royal College of Nursing the Claimant went on long term sick leave and, after the first 12 months, was paid PHI benefits of 50% of salary. Whilst off sick she neither requested holiday nor took any holiday.

After she had retired approximately 9 years later, she brought a claim alleging unlawful deductions from wages in an attempt to claim additional holiday pay under the Working Time Regulations for the years she had been on long term sick leave.

On termination the employer had made a payment in lieu of statutory holiday which had accrued during her final year of employment. In these circumstances, her claim for holiday pay for the earlier years was ruled as being out of time as it was brought more than three months after the last of the series of deductions.

More significantly the Tribunal went on to rule that in any event her contract of employment had been varied when she started receiving PHI benefits of 50% of her salary and the effect of this variation was to provide for the newer lower salary level. Therefore, even if she had been entitled to statutory holiday pay whilst on long term sick leave, her holiday pay would have been equal to the PHI benefits and she would not have been entitled to any additional payment.

The comments in this note are of a general nature only. Full advice should be sought on any specific problems.

ABG Employment Newsletter – August 2010

Christopher Gigg 
[email protected] 
+44 (0)115 934 3310

David Hardstaff
[email protected]
+44 (0)115 934 3323

Kathryn Meir
[email protected]
+44 (0)115 934 3308