Restructuring - Guidance for Lawyers

Hello and welcome to this session where we're going to fix on looking at case law relating Teoh the restructuring of organizations on the topic Areas that we're going to focus on primarily are variation of contract redundancy on transfers of undertaking on, and we're going to start off by looking at relocation that covers both variation of contract under redundancy on. Then we're going to take each of these three topic areas and look a specific case law relating Teoh various issues affecting each of them se relocation. I'm all of the first questions that needs to be answered here is whether we're in a redundancy or a variation of contract situation on, and sometimes we have the situation where employees think that they can cheese what they they had, so they can choose to be redundant if they don't want to relocate, or they can choose not to be redundant. If they do want to relocate, that's not true. The situation here is that we need to go back to the definition of the Employment Rights Act 1996 on how redundancy is defined there. Andi, Basically, there are three prongs of the definition. First of all, that the employer has ceased to carry on the business for which the employees employed. So this is the specific work that the employee is employed to do isn't carrying on any longer, or, and this is particularly relevant to relocation, that the employer has ceased to carry on the business at the place where the employee is employed. Or, thirdly, that the requirement for the number of employees has reduced. It's just important to make a note about that last one. That it's a requirement for the number of employees is not necessarily the case that the amount of work has reduced. It's so the amount of work has reduced. Yes, it's how many employees we need to do it. So that could actually be a situation where the workers increased. But because of increased technology or better efficiencies, we actually need fewer employees to do it. So the focus is on how many women, please, We need to do the work No, on the actual of Mount of work that there is now. If the situation meets that off a redundancy, then it is a redundancy. So here we do need to be looking at the contract of employment. If the place of work in the contract for employment is very specific, very specific address on that specific location is is being closed, then probably it's Ridder. It's a redundancy. However, let's say an organization had two sites. Maybe they're even next door to each other all there on the same road. But the really closest found an employee is currently assigned to work one Onda. All the work is being concentrated at the other. Then it could be argued that actually that the place where their work they're working hasn't really buried. Of course, there are a number of relocations where we don't need toe worry about this. It all because it's very clear that there is a difference in locations. So, for example, if we got him, please who were currently working at the site in Birmingham on the Birmingham side was going to close and there will going to be moved to Liverpool, then clearly that's within the definition of redundancy. But we also have to be mindful of mobility and flexibility clauses because if they're there, we can apply them, but they must be applied reasonably more. A mobility or flexibility clause says, is Yep, you work here, but you could be required to work anywhere else in a particular area. Well, I could say if it's a flexibility clause at the moment, you do this sort of work, but you've got to be willing to do this. That and the other. If we ask you to do it, that must be applied reasonably. And here the case of United Bank versus Act on 1989 is particularly helpful in this case. The employees had a mobility calls in his contract for employment that required him to relocate anywhere in the UK. He was given six days notice that he was required to me from Leeds to Birmingham. Andi He his wife was unwell, so it was really possible for him to relocate at that stage. Plus, he was being given no company assistance with the relocation, and he said, I can't do it. He didn't actually say I will never real okay. He just said, Look at the moment. I cannot me from burning into Leeds. Hey was told you got to do it on. Eventually he resigned on he claim constructive dismissal on what he said was the way that the mobility clause had been applied was a breach of the implied term of mutual trust and confidence on he was successful in that argument. There was two points to make from this case. First of all, a bit of a question mark over a mobility clause that says you will move anywhere in the UK now that could be reasonable for a senior employee, you'd expect more flexibility from senior employees but requiring it from any employee. I think it will be difficult toe ever apply that reasonably on the second is that it's not just the distance of the relocation, Buttle said. The the other issues around it that the employer needs to think about. So if act I have been told you need to move from Birmingham to Leeds, would like you to do it as soon as possible. When can you go? Always sorry to hit your wife cell. Is there a point in the future when you think that she would be well enough to consider moving those sorts of conversations could actually have made the whole situation reasonable. So it's about the employer behaving reasonably. Thedc Ace of Bass Leisure LTD. Versus Thomas, 1994 is also worth noting. The de Poet, which Thomas was based, closed down and she was relocated, which meant that she would have extra traveling because the business had relocated about 20 miles away and this was going to cause her difficulties with child care. And it is important to be aware of potential discrimination issues if an employee is going to have to travel longer and that is going t give them difficulties with their caring responsibilities. Is potentially indirect sex discrimination Now, of course, men also take their responsibility in sorting out childcare. But on the whole, women are more likely than men. Toe have childcare responsibilities, so it's more difficult for them than men to relocate, so care needs to be taken here on the case of London Underground vs Edwards, 1998 years also worth noting here there was a change in shift patterns, which meant that there was going to be a requirement. Teoh start work earlier in the morning, finished work later at night. No, every day it was just Some shifts would start early. Some ships with end late on. Edwards, like Thomas, had childcare responsibilities and couldn't do this on she was successful in claiming indirect sex discrimination. So it's important Teoh be mindful of any particular difficulties that employees might have. So let's move on on talk about some issues relating to redundancy and, first of all, some issues relating to consultation. So if there are 20 or more jobs at an exactly Szymon and being made redundant at an establishment in a 90 day period, there is a requirement to have a collective consultation on. That means consultation with employee representatives that might be trade union representatives. It might not pay. If there are no representatives, then the employer has to facilitate the election of representatives for the purposes of collective consultation. Now, a number of questions. First of all, when should this consultation begin? On the ACA Van case, you've got the full reference off it there in the slides and in your notes are not riken for pronounce it all. But the ACA van case is is a useful want er to look at here because the ruling in this was an employer, Ms Star consulting, before final decisions about the redundancies have been made. So when the plans are still at formative stage, so it's important, therefore, that the employer doesn't get so far down the planning that actually they're going into consultation and saying this is what's going to happen Theo Employer starts consultation, saying There is going to be redundancy. We anticipate it's going to be this number of jobs on then It's a detail there is discussed in the consultation, but it should begin before final plans have been made. What happens if consultation will make absolutely no difference? This was the question in the Shanahan Engineering versus Unite 2010 case. The company had lost the contract. There were a number of employees you worked on that contract on. There was no other work to transfer them to. And while the employees was saying is we can consult Hape, it is going to make no difference. There is no work. We're desperately trying to find more work for the good of the company, but we haven't got any more. There's nothing we can give you to do, so there's no point is consulting on this approach was no accepted. The employer should consult even if it's a limited consultation. But you can't just say that it will make no difference. Therefore I'm not going to do it. And then the other question is when we were say that the consultations got happen. If there's a least 20 redundancies at an establishment in a 90 day period, what is an establishment on in this case, this related toe wars? You may remember it was the chain of department stores on they closed. Andi War always had lots of stores across the country. Now, if there is no consultation or inadequate consultation, employees Conceit a protective award, which is up to 90 days, pay in compensation for the lack of consultation. The war with stores fair it in size. Some of them were very small, some of the medium size, some of them very big, and so they had differing numbers of employees. I'm not sure that any of them had fewer than 20 employees, but there are definitely some stores with less and 100 employees, so they would fall in the 30 day consultation period in some with 100 or more employees. So what's the establishment? Is it worse as a whole? In which case that straightforward cause definitely many more than 100 employees were made redundant in wars always a each individual store because it is each individual store. That means that there are going to be different minimum consultation periods in different stores on the ruling Waas that the establishment is the entity toe, which the individual is assigned. So in Moore's case, employees were resigned to individual stores and therefore the establishment was the store at which they worked. Let's move on and just have a lick at some case law relating to the selection. So when we've completed the consultation, the collective consultation in a redundancy situation, the next stage is to select which individuals are going to be dismissed due to redundancy. And to do that, we have to identify selection criteria that are going to be used on the selection. Criteria. Need to be a Z objective as possible, but we also have to be realistic about this. Individuals are going to be assessing other individuals that managers are going to be assessing the employees. Andi. So there's always going to be some subjectivity, apart from criteria that we might use, like absence records. But we do need to be careful with absence that we're not penalizing anybody because of disabled or because they've taken maternity leave or another factual criteria is length of service. But we need to be careful there because that's potentially indirect age discrimination. Because, of course, older people have got more opportunity tohave a longer length of service. So we got a fine selection criteria, and we've got to apply them fairly. And this is a show it thrown in the case of Dublin versus Ever shits 2011. And it's interesting case because it's sex discrimination claim brought by a man, and we we don't get a lot of these on. In this case, there were two solicitors who were working in the property area on a criteria, had one of the criteria related to their performance over the last six months, and they were being scored from naught to in this criteria. Well, the retired people in the pool a man and a woman and the woman had been on maternity leave for the last six months, so she couldn't score anything in this particular criteria. She hadn't been there to perform, So what the employer decided to do was give her full marks because otherwise, they said, she was being penalized for being on maternity leave. She got more marks and double in overall. So Mr Dublin was selected for redundancy on, He said that sex discrimination, because she wasn't being treated equally to him. She was actually being treated favorably because she was being given four marks for this criteria. And he was successful in the argument that where other things that the employer could have done, they could have looked at her last six months in employment before G. But we're before she went off on maternity leave, for example, I already said to be careful with length of service. In the Rolls Royce versus Unite the Union 2000 and eight case. Rolls Royce were arguing that they couldn't include length of service is one of a number of criteria, but it was ruled that they could as long Asi criteria was no weighted too heavily on. It was one of a number of selection criteria that were used. When's the selection has been completed? Then the individuals were written to on. They're told that they're a risk of redundancy on. That's when individual consultation starts, So that's redundancy. Now let's move on. T transfers run to taking what first of all is a transfer. Well, it's when part or all of the business is sold to another organization and in continues to operate in much the same way. So I only think it's useful to think of picking up the part of the businesses tractor that that's being sold and carrying it over when you put it down and it carries on operating. Does it look pretty much the same, alternatively, is when the service is being provided by one provider on. Then it switches and it's being provided by another. Yeah, that's water transferees one or two Specific Situations Festival. The case of Want vs London Kolding, a Parish Council 2010 in this case of bar closed for a short period of time, and then it we opened with new management on and the employee who had run the ball. I was told that he was no longer needed, and he was told it's not a transfer of undertaking because we didn't pick it up and carry over. It sort of closed, and then we moved it on. That argument was not successful. It was only a temporary closure, so that did no exclude the completion that it wasa transfer. In the case of a CME Vehicle Delivery Services LTD. Versus Cox, 1999. The question was, Is there a transfer? Because when you look it, what was happening before on what was happening after? But there are some differences in the administrative processes on some work was being carried out from different locations. What we're looking at is fundamentally, the work is the same before and after the transfer on. If it's fundamentally the same, then there is going to be a transfer of undertaking. And it's important to Nate that a transfer of undertaking could be just one person. In the case of Hunt versus Storm Communications, wildcard Public Relations and Brown Brothers Wine 2000 and seven around 70%. If the employees time was spent working for one client in PR, that leaves a PR agency. That client decided that they wanted their PR to be carried out by another agency, so they made their work and home to the person that was spending about 70% of the time working for agency once said Well, I must transfer with the work because I'm assigned to the work, and that was a successful argument so they can potentially be just one person transferring now for anybody to be transferred. They've got to be an organized group of employees who will are resigned to the work but is transferring on. This was set out in the case of Eddie Stobart versus Mormon 2012 here, and it was a logistic step overrun by Eddie Stobart Andi. They carried out logistics for a number of different clients, but the way they structured it wasn't that that go for employees worked for that plant and that group of employees for that client, etcetera. But all employees just worked on whatever work came in, say in effect, er an inbox and just go to the inbox in whichever email came last address it. Here's a little bit more structured now, but it was decided to close this particular logistic center. Andi. Different pieces of work were being sent out, were being sold to different logistics companies on day one chunk of work for a particular client with going, and some employees argued well, where assigned to that work, so we must transfer with it. But they were not successful in the argument because they weren't actually assigned. They may have done quite a lot of their work, so that particular client, but actually the assignment of work was fairly random. Now, case Law doesn't helpers in saying you have to spend X percent of your time on particular work to be counted as assigned to it. Ron Look have to look holistically at the way the work is structured. Who transfers a couple of interesting points here? In the case of Index Home Improvements Limited versus Hodgkins 2015 there was a temporary layoff prior to the work, transferring much as the walls in the bar that we've just talked about the employees still transferred despite there being a layoff. Another interesting question is whether somebody who is long term sick transfers in BT Managed Services LTD. Vs Edwards 2015. The ploy. The employees have been absent due to sickness for five years on the work that he had been employed to do prior to his sickness transferred Andi the question waas Was he still assigned to that work, given how long? Hey had been absent from work due to sickness, and it was ruled that no, he didn't. He wasn't designed. He didn't transfer. He'd been absent too long for it to be counted as being assigned. And finally, let's look at the question of what transfers so back here, I always find it useful to think about picking up and putting down again. So we were thinking when we were looking at the definition of a transfer of picking up part of the business and carrying it and putting it down. Now let's think about the individual employees in the business, and we pick up an employee on. We carry the maneuver into the new business, and we put them down on as we carrying that employees. We don't drop anything, so allow their terms and conditions of employment that continuity of service, a little transfers over. The only thing that might not transfer is a pension, and that will depend upon the pension scheme that they're part off because you can't always be am paying into a pension. If you're not an employee that is signed up to a particular pension scheme, pensions always need to take specialist advice. All but one interesting question is, what about a collective agreement? A collective agreement is an agreement that is reached between an employer on a trade union that's recognize to console with that employer. In the case of Alamo Heroin and others versus Part would leisure 2011 employees had initially been in the public sector and then the leisure centre, which was originally operated by the public sector, was sold to a private sector. Come room transferred to a private sector provider. Now when they're in the public sector, they were covered by the collective agreement carried out by local government employees. The pay negotiations. So every year there would be pay negotiations negotiated centrally and they would get whatever pay increase was negotiated. When they moved across, they said, Well, you've picked us up. You carried is over. You've put us down. We're still covered by this collective agreement So we still get the pay increase that is being negotiated by an organization that the new employer has no involvement with whatsoever, and the new employees said that just cannot be right. We can't have a pay increase imposed on us by an organization that we have no involvement with and no influence over on this is a case eventually went to the Court of Justice of the Employment European Union on they ruled the dynamic collective agreement. Basically one where changes can still be made doesn't transfer if the new employer has no involvement in those negotiations. So in this situation, the pay increases that were being negotiated that part would leisure have no involvement with did not transfer theme. The transfer bond attacking legislation is the to P 2006. It was amended by the 2014 regulations on. They did address this issue off collective agreements by saying that if a collective agreement is something that the employer isn't engaged in negotiating with, it doesn't transfer on. After a year. The year after the transfer, the employer can remove a collective agreement as long as the overall impact on the employee is no negative. Some. There's a look at some of the key issues that need to be considered in a restructuring situation. I hope you found it useful