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10 employment law changes from 2013 which will resonate in the New Year

2 January 2014

Woolworths' case on collective redundancy

The definition of establishment was expanded by the decision in the Woolworths case. Previously, consultation obligations were only triggered when an employer was proposing to make 20 or more employees redundant at one establishment within a 90 day period. This case removed the "establishment" test and has required employers to consult where 20 or more redundancies are proposed within 90 days. 

The Government is appealing this decision. The appeal is scheduled to be heard on 21 or 22 January 2014. However, in the meantime, employers with multiple sites who are proposing 20 or more redundancies should assess the risks they face and take a conscious decision to either address or accept that risk. 

Separately, the minimum collective consultation period where 100 or more redundancies are proposed within 90 days was reduced from 90 days to 45 days, although the maximum protective award remains at 90 days.


At the end of the year the Court of Appeal found that the use of the word 'golliwog' is racist and offensive. During the year the courts have been busy with many cases that have dealt with other discrimination issues. The claim made by Ms Eweida stands out.

Ms Eweida successfully argued that her right to manifest her religion and belief had been infringed by BA's failure to allow her to wear a religious cross over her uniform.

The decision has changed how employers should approach situations where business aims conflict with employees' religious beliefs. Employers should look to weigh up the competing interests and seek a fair balance. Where the appropriate balance lies will depend on the objective that the employer is pursuing. For example, Ms Eweida's rights trumped BA's corporate brand. However three other employees who brought claims against other employers were unsuccessful. One of these was a nurse who was required to comply with a uniform policy for health and safety reasons. Health and safety trumped the employee's rights in that case (although it will not necessarily always do so).

Employers should keep their dress codes under review and consider whether they include what may seem to be a neutral practice but which may have an unintentional effect of indirectly discriminating against an employee due to their religion or belief. If so, employers should assess whether their dress code can be justified.

Seldon - justifying a compulsory retirement age

This year saw the outcome of the long-running Seldon case about a compulsory retirement age. Mr Seldon argued that requiring him to retire at 65 was age discrimination which could not be justified. The Supreme Court accepted that aims of retention of more junior employees, planning for when vacancies in the partnership would arise and collegiality (a positive relationship between the partners) could be legitimate. However it was for the Employment Tribunal to assess whether the choice of age 65 (rather than some other age) was proportionate to achieve one or more of those aims. 

The Tribunal decided in relation to both "retention" and "planning", age 65 was justified on the particular facts of the case.  Importantly, because the claim was originally brought many years ago, this was assessed as if the default retirement age of 65 still existed. The result might not be the same today.

Mr Seldon has lodged a further appeal but the outcome to date is unlikely to be changed.

Employers who still have a compulsory retirement age should carefully consider their reasons for doing so and document their reasons. These reasons will need to be kept under review to ensure they remain valid.

Payment in lieu of notice

The Supreme Court decided in Société Générale, London Branch v Geys that it was not enough for the employer to inform Mr Geys that his employment was terminating and that he would be paid in lieu. The wording of the payment in lieu of notice clause (PILON) required the employer to actually make the payment and to inform Mr Geys that it had done so.

Many PILON clauses have tended to be drafted in a similar way to Mr Geys'. Employers should therefore be careful to ensure that they comply precisely with the wording of any PILON clause. If the clause requires payment to be made to effect the termination, then the payment should be arranged to take place on the intended termination date.

Employers should also consider revising the wording of the PILON in their template contracts so that payment does not need to be made to effect the termination. In addition, employers should ensure they specifically notify the employee once payment has been made.

Pre-termination negotiations introduced

Pre-termination negotiations (PTNs) were introduced on 29 July 2013. A PTN is an offer or discussion that takes place with a view to the termination of employment on terms agreed between the employer and employee. PTNs are inadmissible in "ordinary" unfair dismissal proceedings, provided there is no "improper behaviour".
Employers should consider whether they wish to rely on a conversation being a PTN. If so, it is important to take account of the ACAS Code of Practice on Settlement Agreements to reduce the likelihood of a Tribunal finding improper behaviour to have occurred.

Secondary unfair dismissal cap introduced

A secondary unfair dismissal cap was introduced on 29 July 2013. Employees dismissed on or after that date face an unfair dismissal cap of the lower of either £74,200 or 52 weeks' pay. The calculation of a "week's pay" is not straightforward and does not include benefits, discretionary bonus or pension contributions despite the fact that they are included for the purposes of the overall £74,200 cap.

Whistleblowing changes - public interest element

Changes have been made to the law on whistleblowing in relation to disclosures made from 25 June 2013: 

  • a disclosure only qualifies for protection if the worker reasonably believes it to be made in the public interest. This change is intended to reduce the likelihood of employees being able to rely on breaches of their own employment contract to bring a whistleblowing claim, although it is still possible to do so if it is in the public interest
  • the requirement for disclosures to be made in good faith has been removed, although the Employment Tribunal can reduce compensation by up to 25% if the disclosure is was not made in good faith
  • an employer may be liable for actions of its workers who subject a whistleblower to detriment, unless it took all reasonable steps to prevent the detriment.

Employers should ensure that their whistleblowing policies are updated to reflect these changes. Given the risk of vicarious liability, employers should take steps to draw their employees' attention to the policy and provide specific training.

Employment tribunal fees and rule changes

Employment Tribunal fees were introduced on 29 July 2013. Claimants wishing to bring a claim in the Tribunal now have to pay an issue fee to do so, and then pay a hearing fee at a later date if they wish to proceed to a full hearing. The amount payable depends on the type of claim rather than how much is being claimed. 

Anecdotal evidence and initial figures on the number of claims brought suggests a substantial drop in the number of claims since the introduction of fees.

The two judicial review applications in relation to the decision to introduce fees are still outstanding. These argue that the fee introduction is not legal as it inhibits the ability to enforce European Community law and that it discriminates against women who typically earn less than men.

The Employment Tribunal Rules were also simplified.

Compromise agreements renamed settlement agreements

Since 29 July 2013, compromise agreement have been renamed settlement agreements. They are still the same document, but with a new name. However some small changes should be made to any templates that employers have.

Employment status

The Government introduced the new status of 'employee shareholder' which came into effect on 1 September 2013. Despite the excitement of potential tax savings that may be made on shares granted linked to the status change, the complexity of introducing appropriate schemes has resulted in few changes being made to employee status but this may change.

For more information please contact Christopher Bushnell, Associate

T: +44 (0)20 7427 6427