On appeal

Continuing our series on the implications of recent significant cases, Sue
Nickson, partner and national head of employment law at Hammonds Suddards Edge,
looks at the issues

The last month has seen important appeal cases covering the appeals courts’
favourite subject, TUPE, the HR’s least favourite subject, Working Time
Regulations, and the academic’s favourite, the Convention on Human Rights.

Timing of the transfer
Astley and Others v Celtec Limited – (2002) EWCA Civ 1035

Civil servants employed by the Department of Employment were seconded to
work in the Training and Enterprise Council (TEC). This formed part of a 1990
Government initiative to transfer the management of training and enterprise
facilities to the TEC from government control.

At the end of the secondment in 1993 staff were given the option of
returning to the civil service or resigning and remaining with the TEC. The
applicants resigned and became employees of the TEC and continued to do the
same work as before. When a redundancy situation subsequently arose they sought
to establish that there had been a relevant transfer under TUPE so that they
would be regarded as having continuous service from the date of the
commencement of their employment in the civil service.

The Employment Appeal Tribunal held that continuity of service had been
broken as the transfer was probably complete in September 1990 and the
applicants had remained employees of the Civil Service until some three years
later. The employees appealed.

The Court of Appeal allowed the appeal, ruling that the skills of the
employees formed part of the undertaking that was transferred to the TEC. Those
skills were available to the TEC whether the employees resigned immediately
from the Civil Service and became directly employed by the TEC or whether they
preferred to be seconded initially. The fact there was evidence that a transfer
took place in 1990 did not prevent the employees from being protected under
TUPE. The transfer process could take place over a period of time, which might
extend to several years, and in this case extended to the time that the
secondment contract came to an end.

In the case of Key Communications v Rose & others, EAT, 5 July 2002,
(unreported) the EAT had to consider which company was liable for the
redundancy payments/unfair dismissal claims of employees not transferred on a
protracted sale of a business. Key Communications bought an insolvent business
from receivers. During the negotiations Key Communications agreed it would sell
the business on to another company, Impact, which had not been able to raise
funds quickly enough to meet the demands of the receivers.

On the purchase of the business by Key Communications the employees were not
taken on. The business was then sold to Impact four months later. The
Employment Tribunal held that as Key Communications did not employ the staff at
the time of transfer, they did not transfer across to Impact. This left Key Communications
liable for redundancy payments and potential unfair dismissal claims.

Key Communications appealed and the EAT held that a transfer had occurred
via "a series of two or more transactions" despite the fact there had
been a four-month gap between transfers. Accordingly the employees transferred
across to Impact which was now liable for any resulting claims.

Allowances for holiday pay
Blackburn and Others v Gridquest (t/a Select Employment) – (2002) EWCA
Civ 1037

The employees claimed their employers, Gridquest, had failed to comply with
the requirement in the Working Time Regulations to provide them with four weeks
paid leave. Gridquest defended the claim on the grounds that the entitlement to
paid annual leave had been incorporated into the employees’ pay.

The Employment Tribunal held that there was no contractual agreement for
annual leave to be included in the pay at a ‘rolled-up’ rate. The Employment
Appeal Tribunal then allowed Gridquest’s appeal on the grounds that any money
paid over and above that due under the contract for work done could be offset
against the employer’s liability to pay holiday pay.

The employees appealed and the Court of Appeal reinstated the decision of
the Employment Tribunal. An employer could not unilaterally decide that pay
included an element of holiday pay. If there was no agreement for payment of
holiday pay by way of a rolled-up rate it was not open for the employer to
claim that it had nevertheless paid a rolled-up rate to include holiday pay and
claim credit for this.

This decision makes it clear that an employer should at the very least
ensure that the contract of employment contains a clear term allowing for a
‘rolled-up’ rate to be paid. Unfortunately, it does not answer the more
fundamental question of whether such an arrangement is in conflict with the
Working Time Regulations as found by the EAT in the recent case of MPB
Structure Ltd v Munro EAT/1257/01 unreported, 28 March 2002. Therefore it
leaves the door open for employees to challenge such an arrangement, even where
there is an appropriate clause in the contract.

Protecting union members
NUJ and Others v The UK, 2002, The Times 5 July

The European Court of Human Rights had to consider if UK legislation
protecting an employee’s right to union membership was sufficient to comply
with Article 11 of the Convention on Human Rights: "Freedom of peaceful
assembly and to freedom of association with others, including the right to form
and join trade unions for the protection of his interests".

The Trade Union and Labour Relations (Consolidation) Act 1992 provides
protection for union members insofar as "an employee has the right not to
be subjected to any detriment as an individual by any act, or any deliberate
failure to act, by an employer" on the grounds of union membership.
However, UK courts have distinguished between actual union membership and union
representation. Therefore an employer is allowed to offer financial incentives
to employees who agree to waive rights to collective bargaining, as this is not
a detriment on grounds of union membership.

The ECHR found that this meant UK legislation allowed employers to treat
less favourably employees who were not prepared to waive a right that was an
essential feature of union membership. This was a restraint on the use by
employees of union membership to protect their interests. It concluded that the
UK legislation failed to adequately implement the protection required by
Article 11.

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