Case round-up

Our resident experts at Pinsents bring you a comprehensive update on all the
latest decisions that could affect your organisation, and advice on what to do
about them.

Landeshauptstadt Kiel v Jaeger, ECJ
The latest ECJ ruling on on-call hours and working time

* * * * The claimant was a German doctor who was required to work six
periods of on-call duty (worked at the end of a normal days’ work) each month.
During the on-call hours, the doctor had to remain at the clinic and carry out
his professional duties as required, although he could sleep when not working.
The doctor did not actually work for more than 49 per cent of the on-call
hours. He successfully argued that the on-call hours constituted working time
and, consequently, that his working pattern contravened the Working Time
Directive as he was not receiving the full daily rest periods to which he was
entitled.

The ECJ followed its earlier decision in Simap, in which it ruled that time
spent on-call amounted to working time if the worker was required to remain at
the place of work, on the grounds that the worker was "working, at the
employer’s disposal and carrying out his activities or duties". In Jaeger,
the clinic tried to argue that the ability of the doctor to sleep when not
working made a difference, especially as less than 50 per cent of the on-call
hours were spent actually working.

This argument was rejected by the Court, which reconfirmed that the hours
would count as working time if the employee was required to be at the place of
work, regardless of whether or not the employee could spend some of those hours
asleep.

There had been no restriction on the amount of time the doctor could be
asked to work, he was required to be present at a place determined by the
employer and to be available to provide services immediately on demand.  The arrangement meant that the doctor had to
remain apart from his family and social environment and had less freedom to
manage his time. National legislation could not designate these hours as
falling outside the "working time" definition.

The working pattern therefore contravened the entitlement to rest breaks.

The ECJ confirmed that working time and rest periods are mutually exclusive.

Even working time spent asleep by the doctor could not be counted as part of
a rest period. Jaeger was entitled to a daily rest period of 11 hours, unless
one of the exceptions in the Directive applied. The relevant derogation permits
a reduction in the daily rest period entitlement on the express condition that
the worker receives an equivalent period of compensatory rest. Compensatory
rest periods must immediately follow the extra working time that they were
supposed to counteract.

What you should do

– Remember that what counts as "working time" is relevant not only
to the weekly working time limit but also for other rights under the Working
Time Regulations, such as rest periods

– Examine carefully the impact of on-call or overtime hours on compliance
with the Working Time Regulations

– If full rest periods are not given, ensure that the worker receives an
immediate compensatory rest period before starting work again

– Remember that the opt-out from the 48-hour average weekly working time
limit was reviewed in November and the European Commission may decide to
abolish it.

Case of the month by Chris Mordue
Employees transferred under TUPE keep early retirement benefits

Martin v South Bank University, ECJ
ECJ decides that early retirement benefits transfer under TUPE

* * * * * The applicants transferred to South Bank University
from their National Health Service employer, under Transfer of Undertaking
(Protection of Employment) regulations. Their NHS contracts incorporated terms
in a collective agreement (the Whitley Council terms), section 46 of which gave
them rights to certain payments in the form of lump sums and annuities on
voluntary early retirement and early retirement. These payments were not
replicated under the university’s pensions scheme. The employees were offered
new contracts by the university and told they would not be able to continue
their membership in the NHS pension scheme. The applicants chose to remain on
their NHS contracts, rejecting  new
contracts, but joined the Teachers’ Superannuation Scheme. The applicants
accepted an offer of early retirement but asserted entitlements to receive the
payments under the NHS pension scheme. The ECJ ruled that the NHS pension
rights transferred under TUPE and formed part of the applicants’ transferred
rights, which could not be varied to their detriment on the transfer of the
undertaking.

This case follows the ECJ ruling in
Beckmann last year in taking a narrow approach to the exclusion of occupational
pension benefits from the transfer of rights and obligations under TUPE. The
ECJ confirms that only rights in relation to old age, invalidity or survivor’s
benefits are not transferred under the Acquired Rights Directive on which TUPE
is based. The payments in this case were not old age benefits as they were not
"benefits paid on the departure of an employee at the end of his or her
normal working life as laid down by the general structure of the pension scheme
of which he or she is a member".

These payments were triggered by the grant of early retirement
arising from the contract of employment, an employment relationship or a
collective agreement. The university had the power to decide to grant early
retirement and remained bound, like the transferor, by the rights and
obligations laid down as the consequence of such a decision.

The scope of this decision is unclear. It affects all
transferees who have taken on staff from the NHS under TUPE where staff were
entitled to the benefits of section 46 of the Whitley Council terms. In these
cases, potentially expensive obligations to make lump sum and annuity payments
will be triggered – not just on redundancy after the age of 50 but on the grant
of early retirement. The proviso to this is that the obligations in this case
were set down in a collective agreement and would not survive the termination
or re-negotiation of the collective agreement.

The ECJ considered it unnecessary to elaborate on the
circumstances under which terms and conditions can be changed to the detriment
of employees on or after a transfer. It concluded that merely harmonising the
terms of transferring staff with those of the transferee’s existing workforce
would indicate that the variation was connected with the transfer and therefore
invalid.

What you should do

– Transferees who have taken on staff from the NHS whose
pre-transfer terms and conditions included Whitley Council terms should be careful
before offering early retirement or making redundancies. Such actions would
seem to trigger entitlements to lump sums and annuity payments, which the
employer would have to fund

– A more extreme option would be to terminate the transferring
contracts and offer employment on new conditions. This would be effective to
change the contracts but would generate automatic unfair dismissal liabilities
under TUPE. Employees would have only a limited time to bring unfair dismissal
claims and the quantification of loss may be difficult to establish. Such
action should not be considered without specific legal advice

– Transferees should be careful to obtain indemnities against
early retirement liabilities. This should be done in all TUPE scenarios whether
the transfer involves a business purchase or outsourcing/contractor changeover,
and whether the transferor is in the public or private sectors

– The case confirms the difficulty of changing terms and
conditions after a TUPE transfer. Transferees should consider effecting such
changes other than as a mere harmonisation of the transferring terms with those
of its pre-transfer workforce, for example by waiting to revise contracts
across its workforce.

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