Employment Law Podcast: September 2010

This is the first in a series of quarterly employment law podcasts, looking at the practical implications for local government employers arising from some recent cases and key items of new legislation.

The September podcast includes:

• an important ruling on the effect of TUPE on collective agreements
• an interesting report on a male employee claiming sex discrimination during redundancy selection, and
• top tips to prepare for the new Equality Act.

To play the video, click the play button on the video player below. If you can't see this then you may need to install Flash player on your computer. A transcript of the podcast is below the video, and an mp3 of the podcast will be available here soon.

Podcast transcript

Luann Donald, Principal Employment Relations Advisor, LG Employers, Employment Relations Unit

(Time: 00.11 - 01.04)

Hi, My name is Luann Donald, welcome to the first in a series of podcasts from Local Government Employers, where we're going to look at some recent developments in employment law. During the podcast myself and Phil Bundy will talk you through some important cases for local government that we've reported on recently in the Advisory Bulletin. And we'll help you understand the impact of these cases on your HR policies and your management practices.

So in today's podcast we've got three topics. The first of those is TUPE and we're going to talk you through some cases that have affected collective agreements and what happens to them during TUPE transfers. The second topic is a really important one for local government at the moment and it's how to agree redundancy selection criteria. And lastly we'll be talking about the new Equality Act and how to get ready for that coming in the autumn of this year.

TUPE

Luann Donald

(Time: 01.05 - 01.15)

So Phil we're all pretty familiar by now with the main legislation around TUPE, but there have been quite a few cases that we've reported on recently in the Advisory Bulletin, can you tell us what's happening around TUPE and what local authorities need to be aware of?

Philip Bundy, Principal Employment Relations Advisor, LG Employers, Employment Relations Unit

(Time: 01.16 - 01.42)

Sure, there's one case that's particularly important for authorities who are looking at outsourcing a lot and that's the case of Mr Worrall and Wilmot Dixon Partnership (See Advisory Bulletin 567). Now, this case is important because it helps employers to understand what happens when their employees TUPE out to a private sector contractor and their terms and conditions are governed by a collective agreement. If changes are made to that collective agreement after the transfer, is the new employer - the outsourced employer - bound by those changes as well?

Luann Donald

(Time: 01.43 - 01.44)

What happened in the Worrall case?

Philip Bundy

(Time: 01.45 - 02.32)

Mr Worrall worked for a local authority and whilst he was there some agreed terms were put in place between the authority and the union that gave him a fairly generous severance package in the event of a redundancy. He than TUPEd out to the private sector, and TUPEd again as tends to happen and ended up with the defendant in this case the Wilmot Dixon Partnership.

He then applied for voluntary redundancy and said "Hey can I have my voluntary severance terms?" Wilmot Dixon, the defendant, said "No sorry you don't get them, you get a limited amount because after you transferred out, legislation was passed by Parliament which limited the amount that local authorities are allowed to pay on redundancy. And that limit applied to the scheme that transferred with you so you don't get your generous terms."

Luann Donald

(Time: 02.33 - 02.33)

So what did Mr Worrall do?

Philip Bundy

(Time: 02.34 - 02.50)

Well he wasn't happy so he went to the employment tribunal, but they agreed that the employer was correct to apply that statutory limit to the enhanced redundancy terms. Mr Worrall then went to the employment appeal tribunal and they agreed with the employment tribunal, the statutory limit applied to the terms.

Luann Donald

(Time: 02.51 - 02:57)

Does this mean that all changes affecting a collective agreement are now binding for the new employer?

Philip Bundy

(Time: 02.58 - 03.34)

No, and this is a crucial point. The changes in the Worrall case came because of legislation passed by Parliament. If the changes come as a result of an agreement between the old employer and the trade unions under the previous bargaining arrangements, which the new employer who has the transferred employees isn't a part of then the case of Parkwood and Alemo-Herron (see Advisory Bulletin 561) says that they won't apply. Now you can see a logic to this: if a law is passed by Parliament, then why should certain employers be exempt by it? But then on the other hand if an agreement is made to change the collective agreement and you are not one of the parties who signed up to that agreement then why should you be bound by it?

Luann Donald

(Time: 03.34 - 03.37)

So what do local authorities need to do as a result of these cases?

Philip Bundy

(Time: 03.38 - 04.24)

Well there's two things they need to do. The first one related to the Worrall case is that if they've had people transferred into them and their terms and conditioned by a collective agreement, they need to keep an eye on any legislation that might be passed that impacts on that agreement. A good example of this is in relation to the Learning and Skills Council staff that transferred in to local authorities. They have a civil service compensation scheme, but laws are going through Parliament at the moment which if passed will mean a limit to that scheme.

The second thing they need to do and this relates to the Parkwood case, is that if they are a local authorities outsourcing employees, they can say to the bidders "Well if changes are made to the collective agreement by us through our negotiating mechanism afterwards, such as a change to pay, that won't apply to the employees that transfer."

Luann Donald

(Time: 04.25 - 04.30)

Does this mean that the new employer can make changes now to terms and conditions after a TUPE transfer?

Philip Bundy

(Time: 04.31 - 05.38)

Yes, employers can still make changes after a TUPE transfer. The two cases we talked about are very particularly about collective agreements, but you can make changes after a transfer if they are related to it. If you've got an economic, technical or organisational reason and that reason entails a change in the workforce then it's that change in the workforce that's the tricky bit.

There's been a recent case that helps local authority employers - the case of Nationwide and Benn (See Advisory Bulletin 568) and in that case the employment appeal tribunal said that a change in the workforce which means a reduction in numbers of employees or a fairly big change in job function needn't apply to the whole workforce, it only need apply to a part of it. Now in a big employer such as a local authority, quite often when they make changes that are related to a TUPE transfer, they will only affect a small part of the workforce and the Nationwide case actually offers quite a lot of comfort to local authority employers, that they can, provided that they've got that ETO type of reason and they entail changes in the workforce, go ahead and make those changes.

Redundancy selection

Philip Bundy

(Time: 05.39 - 05.48)

So Luann, we've talked about TUPE and we're now going to have a look at redundancy selection and the case of Mr de Berlin and Eversheds (See Advisory Bulletin 567). Can you tell me why this case is so important?

Luann Donald

(Time: 05.49 - 06.37)

It's a really important case because it highlights how difficult it is for employers to decide on redundancy selection criteria. Eversheds were putting together a redundancy policy and had a scoring system for different parts of the job that their lawyers did. One of the scores was for how quickly their clients paid their bills. Eversheds policy awarded automatically the highest score for this particular element to women who were on maternity leave. Now the employment tribunal said unfortunately what that does is treat male employees less favourably when their actual score is lower than the automatic high score for these women. So Mr de Berlin was in essence sexually discriminated against and the tribunal decided his selection for redundancy was unfair.

Philip Bundy

(Time: 06.38 - 06.42)

But doesn't the law give women who are pregnant special protection in a redundancy situation?

Luann Donald

(Time: 06.43 - 07.09)

Yes it does, but crucially only once they've been selected for redundancy. The law says employers must give priority to women on maternity leave when looking for suitable alternative employment opportunities. But what it doesn't mean is that women are insulated and protected from redundancy generally. The difficulty with Eversheds was that they over-protected a woman on maternity leave at the expense of other employees.

Philip Bundy

(Time: 07.10 - 07.22)

Luann we all know that local authorities are facing severe financial pressures at the moment and they're having to look at the issue of redundancies. What are the particular points that you want to make that they must be careful about when they are looking at selection criteria?

Luann Donald

(Time: 07.23 - 08.15)

This is one of the most important parts of the process and it's really important to take time to plan and agree with the trade union on what criteria you're going to use. And equally importantly you have to apply those criteria objectively and fairly. A really good tool for local authorities is to do an equality impact assessment on your criteria and look beyond your obvious groups of male and female. Really assess whether part-time workers or fixed-term workers or anyone who's absent from the workplace is going to be adversely affected by these criteria. And the reason that it's so important is that there's some very obvious pitfalls for local authorities if they discriminate against particular groups or unfairly select particular groups as a result of the wrong criteria. And it's really important for staff to feel that the criteria are fair or else they're going to be quite demoralised throughout the process.

Philip Bundy

(Time: 08.16 - 08.21)

So apart from planning their selection criteria carefully, what other things must authorities pay careful attention to?

Luann Donald

(Time: 08.22 - 08.45)

It's important to remember that we have still got some ways to avoid making compulsory redundancies, for example local authorities can ask for volunteers who may want to retire early or who may want to volunteer for redundancy. And also we can still make compulsory retirements of employees who've reached age 65 and above, at least until the law changes next year.

Philip Bundy

(Time: 08.46 - 08.50)

And finally, this is obviously this is a really important topic, where can authorities go to get more information on it?

Luann Donald

(Time: 08.51 - 09.20)

I'd recommend local authorities to have a look at our website - http://www.lge.gov.uk/employmentrelations - we have quite a lot of thorough information on redundancy, for example we have our document The Thirty-Nine Steps to Redundancy. And we also have a checklist that local authorities can use to make sure that they're paying attention to all the different bits of the process. And we have a new piece of information for authorities, we've got a set of frequently asked questions on redundancy, so all those little quirky things that may come up in redundancy, we've got some information on the website about those.

Equality Act

Luann Donald

(Time: 09.21 - 09.33)

So Phil the final topic today is the new Equality Act, which is coming in in October this year. It's a major new piece of legislation, can you tell us a bit about the background to this act and what local authorities need to know about it?

Philip Bundy

(Time: 09.34 - 09.54)

Well it's bringing together over 40 years of discrimination laws and as you can imagine, as the laws have developed over those 40 years there's been a lot of confusion over which type of laws apply to which areas of discrimination. So the principal aim of the act is about tidying up the laws and this will make it much easier for local authority employers to understand their responsibilities.

Luann Donald

(Time: 09.55 - 09.58)

Will this expand the different types of discrimination that we're all used to managing?

Philip Bundy

(Time: 09.59 - 10.25)

No, and there's a crucial point here: as the act is really about harmonisation and tidying up, in many senses it doesn't actually change the number of characteristics that qualify for protection. You're still looking at things like, age disability, religion or belief and it won't be like when the age regulations came into force in 2006 when employers needed to carry out a fairly root and branch review of some of their policies.

Luann Donald

(Time: 10.26 - 10.34)

Phil, you know we've had a lot of local authorities phoning us to ask us can they still ask about a candidate's health during recruitment. Can you tell us what the act says about this?

Philip Bundy

(Time: 10.35 - 11.53)

Well I can understand why a lot of authorities have contacted us because the restrictions on asking questions about health that are in the act were made as the act passed through Parliament at a fairly late stage. What they say is that a prospective employer can't ask questions about health until they've made the job offer. They can though ask questions if they're for a number of set reasons that are set out in the act. One of them is for example if you need to find out if you need to adjust the interview process because someone's got a certain health condition. The other one would be if the job involves a certain activity that's intrinsic to the role such as heavy lifting and you need to find out whether someone's fit enough to do that.

The important point though that I want to stress to authorities is that the restriction on asking questions about health only applies up until the stage that you make offers. So an employer can still make a job offer on a conditional basis subject to what comes back on the health questionnaire. Now if something comes back and there's a disclosed disability then you'd have to make the reasonable adjustments, but in practice this means that it's not going to alter a lot of local authorities' policies, 'cause we know a lot of the time what they do is they interview people, then they send out the offer and they send out the health questionnaire and the references at that stage. They'll still be able to do that.

Luann Donald

(Time: 11.54 - 11.59)

What tips can you give us on how to get ready for this new act coming in in October?

Philip Bundy

(Time: 12.00 - 12.17)

Well as so much of it is about tiding up and harmonisation there's not a great deal they need to do. But they should have a look at their recruitment processes to make sure they're not sending out questionnaires about health too early. And they should also train managers on the positive action in recruitment process, so that those managers will feel confident about using it where appropriate. [The government is considering how to implement the positive action recruitment provisions. For updates see the Equality Act page of http://www.lge.gov.uk/employmentrelations

Luann Donald

(Time: 12.18 - 12.22)

And finally Phil is there anything else you'd like to add about the act?

Philip Bundy

(Time: 12.23 - 13.00)

There's a consultation out at the moment from the Government which is about the public sector equality duties that are due to come into force form April next year. One of those duties will be about public sector employers publishing details of their workforce equality data. Now the details of that haven't been finalised yet and the consultation which we will be responding to, will give local authority employers an opportunity to influence exactly what that will look like. To take part in that, local authorities can go to the consultation section of our website and get some more details about the consultation, give us their views and we will feed them into our response - go to http://www.lge.gov.uk/consultations

Luann Donald

(Time: 13.01 - 12.22)

Thank you for watching. You can find details of these cases and more information on other HR topics on our website and of course in our Advisory Bulletins. Go to http://www.lge.gov.uk/employmentrelations

The next podcast will be available in December, where we'll be talking you through the really important topic of the removal of the default retirement age will affect local authorities. So until then goodbye.