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HR Two Minute Monthly: unfair dismissal; TUPE; PRA/FCA rules and consultations


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Summary: Our October 2016 update includes an EAT decision that an ACAS early conciliation certificate can cover subsequent events, a Tribunal decision that failure to respond to a DSAR contributed to an unfair dismissal, the Government’s new consultation on caste discrimination and details of a range of new PRA and FCA rules and consultations.

ACAS early conciliation certificate can cover subsequent events

The EAT has held that a Claimant could bring proceedings relating to an event which occurred after the date of an ACAS Early Conciliation (“EC”) certificate with which she had been issued.

Most types of Employment Tribunal claim can only be lodged if the prospective Claimant has provided ACAS with certain prescribed information relating to the relevant ‘matter’.  The Claimant in Compass Group UK & Ireland Ltd v Morgan had raised a grievance about changes to her role and had subsequently commenced the EC process.  Two months after the date of the EC certificate, she resigned and sought to bring an unfair dismissal claim.  Upholding the ET’s decision to allow the claim to proceed, the EAT emphasised that the statutory wording is broad and flexible, and does not contain anything which prevents an EC certificate covering future events.  The EAT said, however, that an EC certificate does not afford a free pass to bring proceedings about any unrelated matter.  Rather, it will be a question of fact and degree as to whether proceedings instituted by a Claimant relate to a matter about which he or she has provided the requisite information to ACAS. 

This is the latest in a line of cases which demonstrate the flexibility of the EC procedure.  The net effect is that a Claimant could validly lodge proceedings covering events which are substantially different than were the subject of EC, even occurring at different times.

Refusal to respond to a DSAR contributed to an unfair dismissal procedure

The Claimant in McWilliams v Citibank NA was a foreign exchange trader who was dismissed for breaching client confidentiality in online chat messages.  A central plank of the Claimant’s defence was that her behaviour had been condoned by senior management and was in keeping with the prevailing internal culture at the time.  As she had been suspended, she had no access to documents or witnesses in order to support her argument.  She therefore made a data subject access request (“DSAR”) in an attempt to obtain relevant documents. 

The respondent refused to deal with DSAR on the grounds that it was disproportionate.  The disciplinary hearer also failed to conduct any significant investigation into the Claimant’s main defence, despite the fact that her line manager had been dismissed previously for similar offences.  An Employment Tribunal held that the Claimant was unfairly dismissed, as the respondent had failed to conduct a reasonable investigation.  It found that the refusal to respond to the DSAR had materially affected the Claimant’s ability to defend herself, which contribute to the unfairness of her dismissal.  Although only an Employment Tribunal decision, this judgment is notable because the High Court has on numerous occasions refused to order compliance with a DSAR made in an attempt to obtain documents for the purpose of ongoing or potential litigation. 

Employers should be wary that refusing access to relevant documents - even by way of a DSAR - could affect the fairness of dismissal, particularly where the employee is unable to obtain the information themselves.

No service provision change where a new contractor replaced a Council-subsidised bus route

In CT Plus (Yorkshire) CIC v Black and others, the EAT considered whether there was a service provision change (“SPC”) under TUPE when a bus company set up a route as a replacement for a service previously run by a Council-subsidised community interest company (“CIC”).

The CIC ran a bus route from a Council-owned car park in Hull to the town centre, with the assistance of a subsidy from the Council.  Stagecoach, a commercial bus company, set up its own service along the same route.  As a result, the Council terminated its agreement with the CIC, as required by the terms of their arrangement.  The ET rejected an argument from CIC and some of its drivers, that there had been an SPC to Stagecoach.  Case law is clear that there is no SPC where the ‘client’ does not remain the same pre and post-transfer.  In this case, the ET held that the Council was not Stagecoach’s client, rather it was an ‘interested bystander’.  As such, there was no SPC.  On appeal, the EAT held that the ET had taken the correct approach.  It emphasised that a ‘client’ for SPC purposes means "an organisation that is in a position to carry out activities either itself or by commissioning them from others to carry out those activities on its behalf".  This did not apply to the Council once Stagecoach had commenced its own service.

This case is a reminder that, when considering a potential SPC, an ET should take a pragmatic view of the situation on the ground.  Doing so may show that a new company providing a similar service is doing so as its own commercial venture, as in this case, rather than on behalf of an end-user client.

ICO fines nursing home £15,000 for failure to keep personal information secure

The Information Commissioner’s Office (“ICO”) has responsibility for oversight of the Data Protection Act 1998, as well as other regulations relating to information rights and privacy.  As part of its powers, the ICO can take action to change the behaviour of organisations that collect and process personal data.  This can include criminal prosecution, non-criminal enforcement and audit.  It may impose a fine on a data controller of up to £500,000.

In a recent example of its enforcement powers, the ICO fined a nursing home in Northern Ireland £15,000 for failing to look after the sensitive personal details in its care.  The breach occurred when a member of staff took an unencrypted work laptop home, which was stolen during a burglary.  The laptop contained sensitive personal details relating to staff, including reasons for sickness absence and information about disciplinary matters.  It also held details about residents, including their date of birth, mental and physical health and ‘do not resuscitate’ status.

Details of this matter can be read about in this news report from the ICO. The case serves as a reminder that organisations must have measures in place to keep the personal information they hold secure.  The level of ICO fines reflect the size of the relevant business, and a bigger organisation would expect to receive a much larger fine for a similar breach.

Government announces plans for consultation on caste discrimination

At present, caste discrimination is not expressly prohibited because caste is not a ‘protected characteristic’ under the Equality Act 2010 (“EqA”).  In 2013, a new provision was added to the EqA, committing the government to amend the EqA to explicitly include caste as an aspect of race.  This process was put on hold following Chandhok and another v Tirkey, in which the EAT found that the concept of ‘ethnic origin’ under the EqA was wide enough to encompass caste.  

The government has now announced that it will be conducting a full public consultation on caste discrimination. The announcement can be read here. The key aim is to seek views on whether additional measures are needed to ensure victims of caste discrimination have appropriate legal protection and effective remedies under the EqA.  Further details and timings for the consultation will be issued in due course.

BIS Committee launches inquiry on corporate governance

The House of Commons' Business, Innovation and Skills Committee has launched an inquiry on corporate governance, focusing on executive pay, directors duties, and the composition of boardrooms, including worker representation and gender balance in executive positions. This follows the corporate governance failings highlighted by the Committee’s recent inquiries into BHS and Sports Direct.

Amongst other things, the Committee raises the following questions which will be of particular interest to employment lawyers and HR professionals:

  • Executive pay – Should executive pay should take account of companies' long-term performance?  Should executive pay reflect the value added by executives relative to junior employees?
  • Directors’ duties – Is company law sufficiently clear on the role of directors and non-executive directors?  How should the interests of shareholders and employees be balanced?
  • Composition of boardrooms – What more should be done to increase the number of women in executive positions?  How might proposals to include worker representation on boards and remuneration committees work?  How could greater diversity of board membership be achieved?

Written submissions are sought by Wednesday 26 October 2016. 

New PRA and FCA rules and consultations

On 28 September, the Prudential Regulation Authority (“PRA”) and Financial Conduct Authority (“FCA”) published a package of final rules, guidance and consultations on a wide range of accountability, remuneration and whistleblowing issues.  The FCA has specifically emphasised that these are underpinned by its ongoing focus on culture and governance.

The publications include:

  • final rules for banks and insurers on providing and updating regulatory references (FCA PS 16/22 and PRA PS27/16) which come into force on 7 March 2017, aimed at ‘rolling bad apple’ employees. The regulators will consider extending these new requirements to other financial services firms when the Senior Managers and Certification Regime (“SMCR”) is extended;
  • consultations on remuneration (PRA CP33/16 and FCA CP16/28) which among other things incorporate updates to take account of the European Banking Association Guidelines on remuneration;
  • the PRA’s final rules on buy-outs of variable remuneration (PS26/16 and PRA 2016/37) which come into effect from 1 January 2017;
  • a whistleblowing consultation (FCA CP 16/25 and PRA CP35/16) which proposes extending the PRA and FCA whistleblowing regimes to UK branches; and
  • various other papers, including on amending and optimising the SMCR and Senior Insurance Managers Regime.

National Minimum Wage increases from 1 October 2016

From 1 October 2016, the following hourly rates of national minimum wage will apply:

  • The rate for workers aged 21 to 24: £6.95
  • The development rate (workers aged 18 to 20): £5.55
  • The young workers rate (non-apprentices aged under 18 but above compulsory school age): £4.00
  • The apprenticeship rate: £3.40

The national living wage for workers aged 25, which has been in force since 1 April 2016 and is currently set at a rate of £7.20 an hour, did not change.

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