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.
Abler v Sodexho, ECJ
ECJ rules that change of catering contractor was a transfer of an
undertaking
* * * A hospital had outsourced catering services for patients and staff to
an external contractor. The contractor
prepared and served meals on the hospital’s premises. A new contractor, Sodexho, was appointed. The ECJ rejected Sodexho’s argument that,
because it provided its own menus, stock, recipes, and staff and so took over
none of the previous contractor’s workforce or assets, there was no transfer of
an undertaking on the change of contractor.
Key points
Previous ECJ rulings, such as Suzen, have indicated that, in outsourcing
cases, there can be no transfer of an undertaking without a transfer of assets
or employees. Here, the ECJ held that
the catering services were not labour-intensive services, characterising the
catering operation as being asset-reliant rather than based on manpower.
Consequently, the absence of a transfer of staff was not determinative. The issue was whether assets had
transferred. The ECJ ruled that Sodexho
had taken over assets, namely the right to use the hospital’s premises and
utilities as well as equipment provided by the hospital for preparing meals and
washing up. These assets were
indispensable to the service. Their
transfer was sufficient to indicate a transfer of an economic entity.
This case may not have a major impact in the UK where case law favours a
wider approach than that adopted in previous ECJ rulings.
Nonetheless, in many outsourcings, contractors are given the use of premises
and equipment. This ruling clarifies
that this may be decisive in determining whether TUPE applies.
What you should do
– Assume that TUPE applies to a change of contractor
– Clients should ensure service contracts contain appropriate provisions
governing the application of TUPE on change of contractor and when the contract
terminates. These would include
indemnities to future contractors and provision for the exchange of workforce
information during retendering exercises
– Incoming contractors should protect themselves against transferring
liabilities under TUPE, either in the contract price or via indemnities.
Dillon v Ford Motor Company Ltd, EAT
Indirect discrimination claim fails because applicant could not show detriment
* * * Ford’s Dagenham sites were divided into two parts, the north and south
estates. The more desirable jobs were
mainly on the south estate.
The proportion of ethnic minority staff on the north estate was considerably
higher than that on the south estate. Ford’s policy was to advertise vacancies
internally in the estate in which they were located. This disadvantaged workers in the north estate, by reducing their
opportunity to apply for the better jobs on the south estate.
This policy was applied during a redundancy exercise in which the
applicant’s position was made redundant.Â
He succeeded in showing that the policy was indirectly discriminatory as
its effect was that redeployees from the north estate were not given the
opportunity to apply for posts on the south estate. The policy was not justified on objective grounds. However, the applicant’s complaint
failed. He could not demonstrate that
he had suffered a detriment, in particular failing to demonstrate that he would
have applied for any of the vacant jobs on the south estate. The EAT upheld the decision.
Key points
The decisive element here was the applicant’s inability to demonstrate that
the policy was a personal detriment. However, the case is an important reminder
of the potential for policies and practices to have a disproportionate impact
on employees of particular races and ethnic backgrounds.
Employers should note that from July 2003, a new and wider test of indirect
discrimination was introduced. This
applies to any policy, practice or criterion that puts persons of a particular
race, ethnic origin, or nationality at a particular disadvantage when compared
with other people.
This test no longer requires statistical comparisons of the proportion of
people from different ethnic groups who can and cannot comply.
The test of justification is also more narrowly defined than before. However, applicants must still show that the
policy, practice or criterion puts them at a disadvantage. The outcome in this case would probably be
the same had it been decided under the new rules, but only because the
applicant was unable to identify any job for which he would have applied.
What you should do
– Do not underestimate the importance of the new definition of indirect race
discrimination. It is an easier test
for applicants to satisfy and makes it harder to establish justification
– Review all employment policies and practices, particularly those relating
to recruitment, promotion, career progression, pay and redundancy/redeployment
– Ask if these rules disadvantage particular groups of workers and are they
necessary
– Remember that effective workforce monitoring is critical for detecting
potentially discriminatory practices
– Ensure that vacancies are advertised widely, both internally and
externally, to ensure that people from all ethnic groups have an opportunity to
apply.
Preston v Wolverhampton Healthcare NHS Trust, EAT
Allonby v Accrington and Rossendale College, ECJ
Two important rulings in part-time pension litigation
* * * * The EAT and the ECJ have issued important decisions affecting the
60,000 equal pay cases brought by part-time workers in respect of their
exclusion from pension schemes.
Key points
In Preston, the EAT ruled that: the Equal Pay Act (EPA) is breached where
part-time workers are excluded from pension schemes but membership is
compulsory for full-time employees; there is no breach where pension scheme
membership is compulsory for full-time staff but optional for part-time staff;
the EPA can be breached by a failure to inform part-time staff that the
exclusion on membership of the pension scheme has been withdrawn.
However, it must be shown that the employer’s policy was not to inform and
that this policy had a disproportionately adverse effect on female staff; where
employees have been subject to a TUPE transfer, liability in these cases cannot
transfer under TUPE.
Transferees are liable only if they themselves gave access to pension
schemes to full-time staff but not part-timers. However, the six- month time limit for the employee to bring a
claim against a transferor did not start at the date of transfer. TUPE’s effect was to deem employment with
transferor and transferee as continuous, so that the time limit begins only on
termination of the employment with the transferee.
Allonby is a case on the Teacher’s Superannuation Scheme, which is subject
to statutory regulation. The key point
is that if the statutory rules of the scheme contravene Article 141 of the EC
Treaty, a claimant does not have to show that a comparator of a different sex
has been employed by the same employer and received higher pay for equal work
or work of equal value.
What you should do
Employers involved in this part-term pensions litigation should:
– Review the impact of these rulings on their own cases
– Consider the EAT’s encouragement for the parties in these cases to pursue
realistic settlements
– Look out for the Government Actuary’s Department issuing a formula for
establishing figures to be paid by applicants to join schemes and settle their
disputes.
Connex South Eastern v Kelly
Dismissal for misconduct was outside the band of reasonable responses
* * * A train driver left his train unattended at a station when a relief
driver did not turn up. The driver was
charged with a breach of the Driver’s Rule Book and dismissed for gross
misconduct.
Key points
The tribunal concluded that the employer acted unreasonably in treating this
misconduct as a sufficient reason for dismissal. The employer’s appeal failed.Â
The case illustrates that harsh disciplinary decisions in cases of
isolated acts of misconduct can result in unfair dismissal liabilities.
What you should do
– Make sure that disciplinary rules and standards are clearly communicated
to employees
– If dismissing for single acts of misconduct take a ‘sanity check’ to
ensure that dismissal is a reasonable and proportionate response and that
lesser sanctions are not appropriate.
Case of the month by Chris Mordue
Code of Practice to change after personal data gets redefined
Durant v Financial Services Authority
Court of Appeal restricts scope of Data Protection Rules
* * * * * This is a hugely important decision on the scope and
application of the Data Protection Act 1998 (the DPA). The case followed a
subject access request made by Mr Durant against the Financial Services
Authority (FSA). The FSA investigated
Durant’s complaint against Barclays but closed its investigation without
informing Durant of its outcome, acting under statutory confidentiality obligations.
The FSA refused Durant access to its investigation documents
and papers disclosed to it by Barclays.Â
The Court of Appeal upheld the County Court ruling that Durant was not
entitled to access to the documents under the DPA.Ê
The Court of Appeal ruled on two key issues under the DPA: the
definition of ‘personal data’; and the extent to which manual filing systems
are covered by the 1998 Act.
Key points
‘Personal data’ is the most important concept in the DPA, as the obligations
on data controllers, and the rights of data subjects (including the right to
obtain access to data), apply only to personal data. The Court of Appeal’s restrictive approach reduces the whole
scope of the DPA.
Uncertainty around the interpretation of this term previously
led many data controllers to take a cautious approach, in some cases going so
far as to class as ‘personal data’ any document that refers to an individual by
name. Such an approach increased the
burdens imposed by the DPA, in particular the burden of responding to data
subject access requests.
The Court of Appeal rejected the argument that a document
contains personal data merely because an individual is named in it. The information has to be biographical to a
significant extent and the data subject must be the focus of the information.
On this view, the information held by the FSA on Durant’s
complaint was not personal data, and access did not have to be provided.
The 1998 Act extended previous legislation to cover manual as
opposed to simply electronic filing systems.Â
According to the Court of Appeal, manual records are caught only if they
are of sufficient sophistication to provide the same or similar ready
accessibility as a computerised filing system.
The appropriate test for determining whether manual records
fall under the DPA is whether:
– they contain files that are structured and referenced in such
a way as to clearly indicate at the outset of a search whether specific
information capable of amounting to personal data on the data subject is held
within the system, and, if so, in which file or files it is held;
– and which has, as part of its own structure or referencing
mechanism, a sufficiently sophisticated and detailed means of readily
indicating whether and where in an individual file or files specific criteria
or information about the applicant can be readily located.
The Court of Appeal urged a ‘sensible and practical’
interpretation of the DPA, which minimised the time and cost associated with
data access requests.
In this case, while the FSA’s files contained folders bearing
Durant’s name, they were structured in date order and contained a range of
documentation, some of which was clearly not personal data. Any personal data
could only be identified by a manual trawl through the files.
The requirement to leaf through a number of files to see what
and whether information qualifying as personal data is contained in the files
exceeded the scope of the DPA.
What you should do
– Make sure your data protection officers and HR staff are
aware of this important ruling
– Review your data protection policy, especially any definition
of personal data, and your internal guidance on responding to data protection
requests
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– Consider whether your manual filing systems fall within the
scope of this ruling. You may wish to ensure that documents that clearly
contain personal data are held in specific files or parts of files.
While this may mean that the documents are disclosable, it will
be easier to respond to access requests; watch out for the Information
Commissioner’s Codes of Practice being revised in light of this decision.
