Employment Law Newsletter – March 2013

Welcome to our second Employment Law Newsletter 2013, keeping you up to date with changes in employment law and informing you of recent case law developments.


Paternity Leave

In respect of legislative developments, it appears the Government has made a few strides to strengthen family friendly rights for employees.

The right to parental leave is available from birth and adoptive parents and anyone else who has parental responsibility for a child. Parental leave has increased from 13 weeks per child to 18 weeks from 8 March 2013. Therefore, an employee with one child will be entitled to 18 weeks’ leave, and an employee with two children would be entitled to 36 weeks’ leave in total.

In addition, the Government started consultation on 25 February 2013 on how the shared parental leave scheme will be administered. Shared parental leave (which will replace maternity and additional paternity leave) is due to be introduced in 2015. Under the new scheme, both parents will be able to share the statutory maternity leave previously only available to mothers. The consultation closes in May 2013 and a response is due to be published in the summer. We will keep you updated with any further developments.


Enhanced Redundancy Payments – Unlawful Age Discrimination?

 The EAT confirmed in Lockwood v DWP that, in a case of direct age discrimination, an enhanced redundancy payment for workers over the age 35 can be objectively justified. The EAT applied the public interest test set out in Seldon v Clarkson Wright and Jakes (a partnership).

The Claimant joined the Civil Service at 18 and took voluntary severance nearly eight years later. His severance payment was considerably less than a colleague aged over 35 with the same length of service.

The EAT decided that this was justified having regard for the comparative difficulties that older workers face on losing their employment. There was no suggestion that DWP stood to benefit from an enhanced redundancy payment for older workers, and being that the aim was to provide some financial security for older workers upon the loss of employment, the justification test was easily met.

Competency Based Questions to select for Redundancy?

In the case of Mental Health Care (UK) Ltd v Biluan and another, the EAT found that an employer acted unreasonably by using HR style competency assessment tests as part of its selection criteria in a redundancy process. The EAT held that these assessment tests were normally used by the employer in a recruitment process and the employer had placed too much importance on the results of the tests.

The employer had to close one of its wards, which would result in 19 redundancies. In order to avoid subjectivity and bias in the selection criteria, it devised a competency assessment test consisting of a written test, an individual interview and a group exercise. The employer used the results to select the employees for redundancy.

The EAT held that this method did not take into account sufficient input from the employees’ managers, the employees’ performance history and other relevant factors. Instead, the employer put ‘blind faith’ into the competency assessment test that did not properly consider the attributions and experience of the employees. The employees’ claims for unfair dismissal therefore succeeded. Following this decision, employers should be wary of departing from conventional approaches in applying selection criteria.

TUPE: Effect of Collective Agreement after the Transfer

In the case of Alemo-Herron and others v Parkwood Leisure Ltd, the EAT considered the effect of TUPE where the transferring employees’ contracts incorporates existing and future collective agreements. The employees worked for the Council. Their employment contracts gave them the right to pay increases in line with the National Joint Council (NJC) for Local Government Services’ collective agreement.

A number of employees were transferred under TUPE to a private-sector employer, Parkwood, in 2004. After the TUPE transfer, NJC agreed to increase its employee salaries and Parkwood refused to honour these agreements. The employees brought claims for unlawful deductions from wages and argued that, as a result of TUPE 1981, Parkwood was obliged to increase their pay in line with the NJC collective agreement under the clauses in their contracts of employment. The employment tribunal dismissed the claims, but the EAT allowed the employees’ appeal.

The Court of Appeal decided that, where employees have a contractual right to pay rises under a collective bargaining process, the transferee is not bound by collective agreements reached after the transfer.

The employees appealed to the Supreme Court, who referred the matter to the ECJ. The Advocate General took the view that EU law does not preclude such contractual clauses from transferring, as long as the employer’s fundamental right to run a business is not breached. Although it is frequently followed, the opinion of the Advocate General is not binding and so the Court of Appeal’s decision is technically the correct current position. However, if the ECJ’s decision in the above case is in line with the Advocate General’s opinion, this position might well be reversed by the Supreme Court.

For the time being, the correct position is that private sector contractors are free not to honour national collective bargaining pay rates and increases agreed after the transfer of the public sector contract.

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