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Www.emlawshare.co.uk Employment Law Issues for Local Government Lawyers.

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1 www.emlawshare.co.uk Employment Law Issues for Local Government Lawyers

2 www.emlawshare.co.uk Alternative Service Delivery Models Managing the Employment and Pension Risks Kim Howell, Partner Geldards LLP

3 www.emlawshare.co.uk Why Look Now? An unprecedented need to find savings – massive pressure on public services The “NICE” decade is over- Meryvn King May 2008 Unprecedented cuts to Local Government budgets in England – £6.68 billion between 2010 and 2015 – 45% reduction in government grants – 500,000 jobs lost

4 www.emlawshare.co.uk Why Look Now? Wide ranging responses to sustain service delivery through transformation on all levels:- –New Operating Models –Service area redesign –Process redesign - tighter debt and asset management What, How, So What?

5 www.emlawshare.co.uk Work in Progress Further budget implications in next spending round –£2.1 billion cut in Government funding in 2015/2016 Employment matters? –Pay bill lion’s share of budget –At the heart of effective service redesign

6 www.emlawshare.co.uk Work in Progress Challenging implications –Less low hanging fruit –More confusing media messages re economic health of UK –Increasing frustration with pay constraint –Increasing risk of industrial unrest –If services disappear, jobs gone for a generation or longer –Youth unemployment at all time low –Public sector recruitment constraints adversely affecting the future generation

7 www.emlawshare.co.uk Employment Matters! Obligation or Opportunity Obligations - avoiding the pitfalls! Setting up ASD vehicles fraught with governance and legal issues Limited scope to change terms and conditions (especially in TUPE context)- invalid change equals contingent liability Redundancy (costs!) triggered where change of location, material change in duties or where job disappears Test for Suitability of alternative employment very employee orientated

8 www.emlawshare.co.uk Employment Matters! Obligation or Opportunity Obligations - avoiding the pitfalls! Transfer to ASD vehicles often triggers bulk transfer of pension benefits and triggers deficit crystallisation Case law complications –Rules out pragmatic TUPE avoidance measures such as Secondments- Celtec [2006] 4 All ER 27 –Aggregates multi site redundancies for collective consultation purposes- Ethel Austin [2013] All ER (D) 17 Governance in times of adversity- austerity and bad news is the new normal!

9 www.emlawshare.co.uk Employment Matters! Obligation or Opportunity Opportunity Why and How does choice of Alterative Delivery Vehicle matter? Redundancy –Has your policy been adapted to suit the current challenge? –Do you use voluntary severance appropriately? –Do you have optimum flexibility to retain the best? –Is your discretionary compensation policy effective, affordable and non discriminatory? –Do you distinguish between “suitability of alternatives” when assessing eligibility for statutory and discretionary compensation?

10 www.emlawshare.co.uk Opportunity Changing terms and conditions –Has this opportunity been explored as a preferable alternative to job cuts? –“There is little point having the best terms and conditions if you don’t have a job or no company left to pay them!”- Unite and GMB –Are the changes that TUPE 2012 delivered fully understood and utilised? –Is the limited but valuable scope to achieve changes to terms and conditions in a TUPE scenario fully understood and factored into the change management programme? Employment Matters! Obligation or Opportunity

11 www.emlawshare.co.uk Opportunity Have Equal Pay risks been identified, assessed and managed? Are Governance arrangements fit for purpose and sufficiently open and transparent? Employment Matters! Obligation or Opportunity

12 www.emlawshare.co.uk Why & How Does Choice of ASD Matter Practical Considerations Who will run the service? Who will work in the service? Does the preferred model facilitate/restrict potential savings? Political considerations Major implications for Democratic control –Access to NNDR relief eg 80%/20%;some VAT relief –Eligibility for Charitable Status –Procurement implications

13 www.emlawshare.co.uk Legal Considerations Procurement –Contract for services- Part A/B distinction short lived –Teckal Benefits- passport the service Can rule out eligibility for reliefs because control retained Likely to constitute control for equal pay purposes Why & How Does Choice of ASD Matter

14 www.emlawshare.co.uk Legal Considerations State Aid –Might be difficult to cut umbilical cord with confidence –New 2014 State Aid concessions only available if provide selected in open and transparent way £2m pa Operating Relief £15m Investment Relief Charitable Status –Choice of model affects eligibility –Choice of model and level of resource can affect ability to manage the governance obligations Why & How Does Choice of ASD Matter

15 www.emlawshare.co.uk Financial Considerations Significant! Understand the key drivers and “select for success” Why & How Does Choice of ASD Matter

16 www.emlawshare.co.uk Making the Most of a Restructure Compensation policy Statutory obligation for regular review 104 weeks maximum but policy limit Termination for “redundancy” or “interests of efficiency” –Are both covered in policy? –Are terms defined? Is there a fair and defensible balance between cost / benefits for under / over 55s?

17 www.emlawshare.co.uk Redundancy policy Guide not a straight jacket –Ensure Pool appropriate –Implications of “ melting pot” approach Select for success –Less of the same Select out of role Looking back Williams v Compair Maxim [1982] IRLR 83 –New and Different Roles Appoint into role- new terms and conditions? Looking to the future Darlington Memorial NHS Hospital _EAT 1995 Making the Most of a Restructure

18 www.emlawshare.co.uk Redundancy policy Make your SAE policy “suitable” –Consider setting restrictions on access to discretionary compensation Making the Most of a Restructure

19 www.emlawshare.co.uk Changing For The Better Securing effective change Why? –Staff costs lion’s share of budget so key target for savings –Redundancy avoidance measure How? –Collective Agreement –Dismissal and Re-engagement Nicholls v Coventry CC [2009] All ER (D) 15 (Mar) What is your SOSR?

20 www.emlawshare.co.uk Changing For The Better Securing effective change Ask the Audience! –Individual Agreement –Pragmatic Responses The Motor Industry 2008 “There is little point having the best terms and conditions in the world if you don’t have a job or no company left to pay them!” Unite and GMB 2008 Local Authorities When? –When necessary TUPE complications!

21 www.emlawshare.co.uk Service Redesign in a TUPE Scenario Preliminary Considerations? Does TUPE apply? Is there a transfer of an economic entity? –Is there an interruption to service delivery? –Is there an organised grouping of employees wholly assigned to the service? Does the current contract provide sufficient protections on service handover!!!!

22 www.emlawshare.co.uk Service Redesign in a TUPE Scenario Risks if uncertainty over who will transfer –Will there be a workforce to run the service on day 1? –Will the transferee inherit too many staff? –What is the impact of potential redundancy costs on sustainability of new service? State aid implications if financial support an after thought Consider due diligence of own arrangement and consider requiring agreed protocol that exceeds TUPE requirement

23 www.emlawshare.co.uk TUPE – Scope to Restructure and Change T’s and C’s Since January 2014, greater scope to change Previously - if dismissals or changes to T’s and C’s –“By reason of” transfer- always unlawful and void –For a reason “connected with” transfer-unlawful only if no ETO reason Little clarity as to whether “by reason of” or “connected with” transfer Uncertainty increased risk and acted as inhibitor to change

24 www.emlawshare.co.uk TUPE – Scope to Restructure and Change T’s and C’s Since January 2014, greater scope to change Now ETO reason is the key consideration –Provided the sole or principal reason for dismissal or changes to T’s and C’s is an “economic, technical or organisational reason, entailing changes in the workforce (numbers, functions, location) dismissal not automatically unfair Scope to reach agreement –Collectively after a year if no less favourable –Individually provided ETO reason applies

25 www.emlawshare.co.uk TUPE – Scope to Restructure and Change T’s and C’s Transfer related restructures potentially fair Transfer related changes to T’s & C’s lawful by agreement Where not agreed –Consider dismissal and re-engagement on new terms –But ensure ETO reason “entailing changes in work force” valid at time

26 www.emlawshare.co.uk TUPE – Scope to Restructure and Change T’s and C’s Beware Manchester University scenario –Phased programme by agreement with Trade Unions, driven by cost –Restructure - voluntary severance – 200 job losses –Subsequent need to change T’s and C’s by D and R –Dismissals unfair as no ETO reasons at time –Numbers/ functions/locations of workforce did not change Plan a holistic approach to ensure ETO reason prevails

27 www.emlawshare.co.uk Maximising Employment Flexibility (within the law) Secondment Loan of employee by employer to another organisation Designed to be short term Traditional TUPE avoidance route to overcome –Uncompetitive salaries –Risk of losing accrued service benefits in the event of future redundancy exit –Pension transfer issues

28 www.emlawshare.co.uk Maximising Employment Flexibility (within the law) Secondment Where employee is assigned to service that transfers, contract of employment transfers by operation of law unless –Formal objection under TUPE –Celtec v Astley and Others [2006] 4 All ER 27 Consider formal Retention of Employment arrangements where business case supports this

29 www.emlawshare.co.uk Equal Pay Implications Glasgow City Council CPG and Cordia v Unison and Fox Cross Claimants [2014] CSIH 27 Cross employer comparison where employers are “associated” “Associated” – where one employer is a company of which the other, directly or indirectly, has control Are LLPs indistinguishable from companies? Was the Council a “Single Source”, responsible for difference in pay under Art 157 TFEU? –Responsible for the inequality and which could restore equal treatment

30 www.emlawshare.co.uk Equal Pay Implications Glasgow City Council CPG and Cordia v Unison and Fox Cross Claimants [2014] CSIH 27 Council had 4 out of 5 seats on Board of LLPs so had “control” LLPs indistinguishable from companies for purpose of s16 EPA Single Source- –Not necessary to determine this but –Implied that control that met Teckal test, was sufficient to meet single source test

31 www.emlawshare.co.uk Equal Pay Implications Glasgow City Council CPG and Cordia v Unison and Fox Cross Claimants [2014] CSIH 27 Ensure any pay difference can be explained and evidenced by reference to a Material factor defence Where disparate impact in gender terms, also necessary to objectively justify pay differences

32 www.emlawshare.co.uk Pensions ‘A Fair Deal for Pensions’ Service providers must allow employees to remain in their existing public service pension scheme Best Value Authorities Staff Transfers (Pensions) Direction 2007 Local Government Pension Scheme May qualify either as: –Scheme employer; or –Non-scheme employer as admission body Implications for New Joiners

33 www.emlawshare.co.uk Governance in Times of Austerity A New Era More risk Different risks- as boundaries pushed and sometimes crossed New deal for Officer/ Member accountability

34 www.emlawshare.co.uk Governance in Times of Austerity Scope for conflicts of interests Obligation for Council to deliver services and balance budget –As provider or commissioner –Having regard to all stakeholders –Beware over reliance on views of only some e.g. trade unions –Consider new ways to discharge consultation obligations to widen stakeholder engagement

35 www.emlawshare.co.uk Governance in Times of Austerity Scope for conflicts of interests Recent emergence in misconduct in public office prosecutions linked to officer conflicts Ensure Chief Officer Disciplinary and Grievance Procedures and linked governance arrangements in place and appropriate

36 www.emlawshare.co.uk In Summary Employment Matters! Key factor in delivering sustainable service transformation Be part of preliminary debate about service transformation options Shape the strategy Manage to facilitate not inhibit change Deliver the solutions!

37 www.emlawshare.co.uk Social media – the employment issues Andrew Tomlinson Solicitor, Weightmans LLP Tel: 0116 242 8902 andrew.tomlinson@weightmans.com Faye Reynolds Solicitor, Weightmans LLP Tel: 0121 200 5754 faye.reynolds@weightmans.com

38 www.emlawshare.co.uk Introduction The importance of a Social Media Policy The “defences” raised by employees in context

39 www.emlawshare.co.uk a)Sets down rules on what is acceptable and what is not b)Gives Managers confidence when dealing with the issue c)Should ensure consistency of approach The Social Media Policy – why have it?

40 www.emlawshare.co.uk Not allowed to make derogatory/negative comments about: -Colleagues -The employer thereby damaging its reputation -End users (even if made outside of work, but which affect the employees’ ability to do his/her job) The Social Media Policy – what should it contain?

41 www.emlawshare.co.uk The Social Media Policy – what should it contain? (continued) That such comments will lead to disciplinary action and may result in dismissal Restrictions on internet usage Monitoring of internet usage (data protection/privacy issues)

42 www.emlawshare.co.uk The Social Media Policy – how to implement Use of work place representatives or Trade Union representatives Be aware of impact on other policies such as: a)Disciplinary policy – gross misconduct b)Equal opportunities policy c)Bullying and harassment policy

43 www.emlawshare.co.uk The employee “defences” in context “I did not know we had a Social Media Policy so you can’t get me into trouble” Crisp v Apple Retail (UK) Ltd (ET Case No 1500258/2011)

44 www.emlawshare.co.uk “My Facebook settings are private so only my “friends” can see what I say so no harm done” Preece v JD Weatherspoons (ET Case No 2104806/2012) The employee “defences” in context (continued)

45 www.emlawshare.co.uk “My Facebook settings are private so only my “friends” can see what I say so no harm done” Mrs J Reid v Royal Mail Group (ET Case No 2803020/2011) The employee “defences” in context (continued)

46 www.emlawshare.co.uk “My Human Rights mean I can say what I like on Social Media sites” Daniel Joseph Teggart v TeleTech UK Limited (Northern Ireland ET Ref 704/2011) The employee “defences” in context (continued)

47 www.emlawshare.co.uk “The comments did not identify my workplace so how can I have brought the organisation into disrepute?” Whitham v Club 24 Ltd t/a Ventura (ET Case No 1810462/2010) The employee “defences” in context (continued)

48 www.emlawshare.co.uk I immediately removed my comments when I found out it was wrong; I’m sorry” Stephens v Halfords Plc (ET Case No 1700796/2010) The employee “defences” in context (continued)

49 www.emlawshare.co.uk “That is clearly my personal Twitter account, so my employer does not need to get involved.” Game v Laws (UKEAT/0188/14) The employee “defences” in context (continued)

50 www.emlawshare.co.uk Conclusions Have a robust and flexible Social Media Policy Take each “defence” on its merits

51 www.emlawshare.co.uk Restructuring Kim Howell, Partner Geldards LLP

52 www.emlawshare.co.uk Setting the Scene Taking Tough Decisions Different mind set –Extent of challenge –Extent of options –Timescale for delivery of outcomes All change!

53 www.emlawshare.co.uk Understanding the Options Traditional responses –Voluntary redundancies –Collectively agreed changes Sustainable solutions −Restructured services −Affordable terms and conditions −Sharing with thy neighbour!

54 www.emlawshare.co.uk Understanding the Options Identifying Solutions Relevant considerations –Business case/ reason –Powers and governance –Stakeholder consultation –Contingency planning –Assessing true cost of change versus status quo! –Identifying potential obstacles - legal pitfalls!

55 www.emlawshare.co.uk The Legal Pitfalls Identifying legal pitfalls Obligation or opportunity –Redundancy vs Restructuring What you do; and How you do it

56 www.emlawshare.co.uk The Legal Pitfalls Managing Redundancy Issues Legal principles Practical application

57 www.emlawshare.co.uk Redundancy Access to employment protection insurance Statutory redundancy pay Enhanced redundancy compensation Access to unreduced pension Collective consultation obligations-S188 suitable alternative employment obligations A fair reason for dismissal

58 www.emlawshare.co.uk Redundancy “Redundancy” - S139 ERA 1996 The employer has ceased or intends to cease –To carry on the business for the purpose for which the employee was employed –Or to do so at the place so employed Requirements of business :- –For employees to do work of particular kind; –Or to do so at place so employed –Have ceased or diminished, or are expected to do so, either permanently or temporarily and for whatever reason

59 www.emlawshare.co.uk Redundancy What does this mean? –Dismissal must be wholly or mainly attributable to Business closure by the employer Workplace closure by the employer Need for number of employees to carry out particular work has diminished Need for work of a particular kind has diminished

60 www.emlawshare.co.uk Redundancy Redundancy Pay Costs Mandatory –Statutory - Capped at £13,920 –Over 55’s:- Immediate access to unreduced pension (mandatory) under LGPS Plus any discretionary pay

61 www.emlawshare.co.uk Redundancy Redundancy Pay Costs Discretionary (under Local Government Regulations) –Up to 104 weeks permitted but capped –Under 55’s - X weeks full pay –Over 55’s - variable re pensions strain gap with Under 55 limit Significant cost Relevant factor in cost reduction strategy!

62 www.emlawshare.co.uk Expiry of Fixed Term Contracts 2002 Regs - greater protection for Fixed Term and Limited Term contracts –Included “task specific” contracts as FTC –Removed waiver of right to redundancy pay –Non renewal of FTC can create redundancy where reason for non renewal meets definition in S 139 ERA Consider continuity of service between contracts and between employers for LGPS! Consider unfair dismissal obligations and SOSR Plan ahead re fair reason for non-renewal

63 www.emlawshare.co.uk Redundancy Fair reason for dismissal Not selected for automatically unfair reasons; Is not unfair in all the circumstances- S98(4) –Unlikely to be unfair if follow agreed / customary procedure –Duty to consult under S 188 TULRCA, a factor

64 www.emlawshare.co.uk Collective Consultation S188 TULRCA 1992 Broad definition –Applies to all dismissals not related to the individual concerned –Includes classic redundancy scenario –Covers changing terms and conditions if dismissal contemplated implementation mode

65 www.emlawshare.co.uk Collective Consultation S188 TULRCA 1992 Applies when “proposing to dismiss”, “within a 90 day period” –20 or more affected - at least 30 day consultation period –100 or more affected - at least 45 days consultation period –Before first dismissal takes effect NB “at a single establishment”

66 www.emlawshare.co.uk “Establishment” What is an establishment in a Local Authority setting? No statutory definition Courts adopt a “ purposive” approach –Will look at autonomy and resources –Need not have legal, economic, technical autonomy Mills and Allen v Bullwich EAT 154/99 - yes MSF v Refuge Assurance EAT/1371/99 [2002] IRLR 324 - no

67 www.emlawshare.co.uk “Establishment” What is an establishment in a Local Authority setting? Autonomous unit with budget, resources and decision making power- e.g. School Directorate responsible for multi-site offices? Corporate approach could be determinative

68 www.emlawshare.co.uk The Woolworths Case Woolworths went into administration in November 2008 Large scale redundancies Breach of information and consultation obligations Complaints to ET seeking protective awards Each store “separate establishment” Duty to inform and consult not engaged in respect of stores with fewer than 20 employees

69 www.emlawshare.co.uk The Woolworths Case Section 188(1) TULCRA 1992 Employers are obliged to inform and consult collectively where they propose to dismiss as redundant 20 or more employees at one establishment within a period of 90 days or less TULCRA incompatible with directive Not possible to interpret TULCRA purposively –MSF v Refuge Assurance plc and others [2002] IRLR 324 –Renfrewshire Council v Educational Institute of Scotland [2013] IRLR 76

70 www.emlawshare.co.uk The Woolworths Case EAT accepted that 188 TULCRA is more restrictive than ECRD The words “at one establishment” should be deleted from section 188 altogether If an employer is proposed to dismiss 20 or more employees in any 90 period then the collective consultation duty arises regardless of the location of the proposed dismissals COA referred to the ECJ

71 www.emlawshare.co.uk What a difference a year makes! City of Edinburgh v Wilkinson and others –Equal pay case –Court of Session determined that Claimants were not employed at the same establishment as their comparators –Overturned Scottish EAT decision

72 www.emlawshare.co.uk What a difference a year makes! Renfrewshire Council v Educational Institute of Scotland (2012) Scottish EAT overturned decision that for collective consultation purposes “establishment” was Education and Leisure Services of Council Not individual schools EAT stated that this “flew in the face of reason and was perverse”

73 www.emlawshare.co.uk Renfrewshire Council The judge at first instance did not consider that a school was a distinct entity Concentrated on contractual rather than factual decision Rather than focussing on where the teachers did their work, judge placed emphasis on place from where employment was controlled.

74 www.emlawshare.co.uk Renfrewshire Council EAT observations on meaning of “establishment” Decision is factually dependent Establishment is likely to be less than whole undertaking Establishment connoted physical presence There must be sufficient links with other establishments to recognise it as part of a larger whole

75 www.emlawshare.co.uk Collective Consultation Collective consultation information Reasons Numbers and descriptions Total number of employees Proposed method of selection Proposed method of carrying out dismissals Proposed method of calculating any redundancy

76 www.emlawshare.co.uk Collective Consultation S188 Requires meaningful consultation about:- –Avoiding dismissals –Reducing the numbers to be dismissed –Mitigating the consequences of dismissals –Must be undertaken with a “view to reaching agreement” Does this widen the obligation to explore changes to terms and conditions that could achieve similar cost reductions?

77 www.emlawshare.co.uk Collective Consultation Reasons Must inform of genuine reason for dismissal, not convenient sham –Cost driven when claimed H&S reason for closure was breach of duty! If reason outside S139 definition, note need to establish SOSR –Relevant to unfair dismissal –Could avoid expectation of LGPS pension access

78 www.emlawshare.co.uk Selection Issues Pool Criteria –Selecting less of the same –Appointing to something different –Bumping! Validating the process

79 www.emlawshare.co.uk Selection Issues The Pool Composition of pool vulnerable to challenge –Does the pool include all employees doing similar work/interchangeable? –Does pool include employees doing unconnected work e.g. where different drivers for termination? –Are there factors that indicate employee was selected for pool for non relevant reasons? –Should the pool be limited to a location? –Should pool comprise all in department when restructuring? –Should be consistent with approach with establishment

80 www.emlawshare.co.uk Selection Issues Redundancy Selection Williams v Compair Maxam 1982 [IRLR] 83 –“Criteria should not be based on opinion of selector” –“Should be objectively assessed” –Matrix approach –Looking back?

81 www.emlawshare.co.uk Selection Criteria Typical selection criteria –Training –Knowledge/experience/qualifications –Key skills and competencies (must define precise nature) –Attendance (consider period carefully and reasons for non-attendance) –Disciplinary records (consider period carefully) –Performance (must define precise nature) –Length of Service (consider carefully – age discrimination)

82 www.emlawshare.co.uk Restructuring Reshaping services –New roles –New responsibilities –New terms and conditions –Selection implication

83 www.emlawshare.co.uk Restructuring Selection Darlington Memorial NHS Hospital v Edwards- EAT/678/ 95 –“ET direction that choice of staff for new posts must be based on similar principles to selection for redundancy was wholly mistaken” –“Where new jobs/different job description, employer most certainly not under duty to carry out the type of exercise that would be required when deciding who to select for redundancy” Looking ahead?

84 www.emlawshare.co.uk Collective Consultation When Must Consultation Begin? S188 obligation does not arise until a proposal to dismiss is formulated Not triggered when consulting about implementing changes by agreement Once dismissal proposal formulated must begin –“In good time” –Before the dismissals take effect Unison v Leicester County Council 2006 Once there is a “proposal”, consultation must begin speedily thereafter!

85 www.emlawshare.co.uk Alternative Employment General –Legal duty for employer to consider “suitable alternative employment” (“SAE”) –Extend possibility for SAE to all employees within pool of selection –Consideration of SAE should be made during consultation process and following formal notice of redundancy dismissals

86 www.emlawshare.co.uk Alternative Employment Trial periods –If terms of employment differ – employee entitled to at least 4 weeks without prejudice to redundancy rights Refusal of alternative employment –If employee unreasonably refuses – loses right to redundancy payment –Reasonableness depends on terms and conditions of alternative employment as well as employee’s personal reasons

87 www.emlawshare.co.uk Notice When can notice be served? ECJ Junk case – not before end of consultation process??? Cautious approach- only when consultation period expired Robust approach- to coincide with end of consultation period Sensible approach- not before meaningful consultation has either achieved agreement or has been exhausted Likely to vary with circumstances

88 www.emlawshare.co.uk Unfair Dismissal Implications Costs –Compensatory award - £76,574 (Or 12 months pay if lower) –Basic award - £13,920 –Failure to inform and consult -Up to 90 days pay Hassle factor ? Reputational risk ? Legal costs ?

89 www.emlawshare.co.uk Cost Implications Cost implications of alternative approaches Traditional approach –Might exit the wrong people –Might miss opportunity to redesign services Restructure approach –Opportunity to shape wider service, affecting whole groups –Greater flexibility to select for the future –Redesign terms and conditions for sustainability and efficiency –Might avoid redundancy pay by SAE Acceptance or unreasonable refusal !

90 www.emlawshare.co.uk Practical Challenges Select the cost saving measure carefully Make informed decisions Plan ahead –What/when/how/who? –The AA Route Map –Identifying legal and practical pitfalls –What do we have vs what do we need –Incentivise consensus –Contingency plan Ensure solution still “in date”

91 www.emlawshare.co.uk Any Questions? T:+44 (0) 29 2039 1473 M:+44 (0) 7918 673746 E:kim.howell@geldards.com


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