ABG Employment Newsletter – December 2011

Employment law reform

The Government has announced plans for a number of major reforms in Employment Law as well as a number of other possible changes which are under consideration.

    • As from April 2012 the qualifying period for unfair dismissal claims will increase from one year’s service to two years’ service.
    • All potential claimants will be required to submit their claim to ACAS for pre-claim conciliation to take place before a Tribunal claim can be issued.
    • Subject to consultation, it is planned to introduce a system of “protected conversations” which will allow employers to have conversations with their employees about any workplace issue in an open way, free from the worry that it will be used later as evidence in support of a Tribunal claim.
    • There will be consultation on introducing fees for anyone wishing to make a claim to a Tribunal, with the possibility of a higher fee for claims worth more than £30,000.
    • he Government will look at the possibility of a “rapid resolution” scheme to provide quicker and cheaper decisions in low value straightforward claims, such as for holiday pay.
    • There will be a fundamental review of Tribunals’ Procedural Rules with a view to simplification. This could include Employment Judges sitting alone in unfair dismissal cases (instead of a panel of three) and Witness Statements being taken “as read” in all cases.
    • Compromise Agreements will be simplified with a model agreement for use by smaller businesses. Agreements will be renamed “Settlement Agreements” and will be able to cover all existing and future claims.
    • There will be a review of the TUPE Regulations in order to consider whether the Regulations unnecessarily gold-plate the Acquired Rights Directive and should be simplified.
    • The ACAS Code of Practice will be reviewed with a view to introducing simpler and quicker dismissal procedures.
    • There will be a review of the collective redundancy rules, including the possibility of reducing the 90-day consultation period for 100 or more redundancies, to 60, 45 or 30 days.
    • The Government will introduce a system of financial penalties which Tribunals can levy on employers who are found to have breached employment rights. The penalty will be payable to the Exchequer, but employers will not be penalised for inadvertent errors. The penalty will be half of the total award made by the Tribunal, with a minimum of £100 and a maximum of £5,000. This penalty will be reduced by 50% if paid within 21 days.
    • The Government will close a loophole in the whistle blowing legislation contained in the Public Interest Disclosure Act which currently allows employees to bring whistle blowing claims based on breaches of their own employment contract or employment rights.
  • There will be an increase in the maximum limit for Deposit Orders from £500 to £1,000. In addition the limit for costs which may be awarded by a Tribunal will increase from £10,000 to £20,000.

In a separate initiative Employment Tribunals have adopted a new Listing Policy under which all standard unfair dismissal claims are now being listed for a one day hearing which will take place within 16 weeks of a claim being issued. This policy follows a successful pilot in the Manchester area. When the claim is issued, a hearing date will be fixed at the outset and there will also be standard Case Management Directions for preparation of an agreed Hearing Bundle and the exchange of Witness Statements.

This new policy applies only to stand-alone unfair dismissal claims and unfair dismissal claims which are combined with short-track claims such as for holiday pay. Claims which are more complex and which involve allegations of discrimination and whistle blowing are not subject to this new policy.

Holiday pay for workers on sick leave

There has been another ruling from the EAT on the unnecessarily complex issue of whether workers on long term sick leave are entitled to be paid statutory holiday pay under the Working Time Regulations even though they have remained off work due to sickness and have not taken holiday in the normal sense.

In this most recent case, Fraser v South West London St George’s Mental Health Trust, the EAT ruled that workers are only entitled to statutory holiday pay if they take statutory holiday or give notice to their employer that they wish to take statutory holiday. The EAT said it would be contrary to the purpose of the Regulations if workers could receive statutory holiday pay regardless of whether they take time off.

In giving this ruling the EAT acknowledged that in the Pereda case the European Court had said that workers have a choice either to take statutory holiday while off sick or to ask for their holiday to be deferred until their return to work. However the EAT said that, if a sick worker wishes to defer taking their statutory holiday to a subsequent leave year, they should make a request to this effect to their employer. If they do not do so, untaken holiday entitlement will be forfeited at the end of the holiday year and will not be carried forward.

In arriving at this decision the EAT reviewed a number of earlier cases decided in the UK and in the European Court. It decided that at least one of the previous UK cases was wrong and made it clear that holiday pay entitlement for a worker on long term sick leave will not automatically roll forward from one leave year to the next: the worker must make a request to take holiday (whilst off sick) or expressly ask for their holiday entitlement to be deferred. The EAT suggested that if a worker on sick leave requested deferred statutory holiday, then their employer might be obliged to accede to that request.

TUPE and changes in employment terms

Under the TUPE Regulations any variation in contractual terms for employees who are subject to a TUPE transfer will be void, even though it is an agreed variation, if the sole or principal reason for the variation is either the TUPE transfer itself or a reason connected with the transfer which is not an ETO reason (i.e. not an economic, technical or organisational reason entailing changes in the workforce).

The key factor is whether or not the variation is connected with the transfer. In the case of Smith and others -v- Brooklands College the EAT ruled that an agreed variation of pay rates for a number of employees following their TUPE transfer was not void because the variation was not because of the transfer or for a reason connected with it.

The Claimants in the case were part time teaching assistants at the College. Although they only worked part time, they were nevertheless paid as full time employees. This did not correspond with the practice elsewhere in the education sector and was contrary to their Union’s guidance.

Following a TUPE transfer to another college when the two colleges merged, the HR Director came to the conclusion that the full time pay rates were being paid by mistake and did not reflect standard practice. Following negotiations the teaching assistants reluctantly agreed to reductions in their pay rates.

They then brought claims for unlawful deductions arguing that the variation in their contracts was void as being in breach of TUPE. However the Tribunal and the EAT rejected the claims because the reason for the reduction in pay rates was not a reason connected with the TUPE transfer. The reason for the change was because the previous pay rates were being paid by mistake and were out of step with the rest of the sector. That was the cause of the reduction in pay, not the TUPE transfer.


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

Christopher Gigg 
+44 (0)115 934 3310

Kathryn Meir
+44 (0)115 934 3308