Employment Case Law Update October 2022

IN THIS SECTION

Read on for our monthly digest for employers on upcoming employment law changes and key employment cases that have recently been decided.

 

Settlement Agreements

Bathgate v Technip UK Ltd and others

Mr Bathgate entered into a settlement agreement with his employer, Technip, due to his being dismissed by voluntary redundancy. He was 61 years old at the time of the dimissal in January 2017.

Employers and employees are permitted to agree mutual terms to settle statutory claims using settlement agreements. The settlememt agreement must meet certain conditions, for exmaple, the agreement must relate to “the particular complaint” and the employee must have received indepdent legal advice.

The agreement included provision that Mr Bathgate would be paid enhanced redundancy pay, as well as notice pay and an Additional Payment that would be calculated with reference to the terms of a collective agreement between Technip and the trade union.

The collective agreement subsequently stated that the Additional Payment was only applicable to those under the age of 61.

In light of the terms of the collective agreement, Technip took the decision in March 2017 not to make the Additional Payment to those who were aged 61 or over at the time of dismissal, including Mr Bathgate. Technip informed Mr Bathgate of its decision in June 2107.

Mr Bathgate then brought a claim for age discrimination.

The Employment Tribunal decided in favour of the employer, namely that the settlement agreement terms were in full and final settlement of the employee’s particular complaints and claims which he “intimates and asserts” against the employer, including direct and indirect age discrimination claims under the Equality Act 2010. The agreement also included a broad waiver of any claims that Mr Bathgate may have had in the past, present, or future related to his employment or its termination. As such, the claim was precluded by the terms of the settlement agreement signed in January 2017.

Mr Bathgate appealed on the grounds that the settlement agreement can only be valid if it relates to the “particular complaint”. As such, it cannot settle a claim that has yet to arise; in this case, the settlement agreement from January 2017 could not have settled the age discrimination claim as this did not arise until after the agreement had been signed.

The EAT agreed with Mr Bathgate, holding that comprimise agreements cannot settle future statutory claims that have not arisen yet. It found that the stuatory requirement to refer to a “potential claim” does not mean a future claim or potential future complaint; rather, it means a claim known to the parties but has not been brought before the tribunal.

 

Employer takeaways

The case indicates that employers cannot use a settlement agreement to settle statutory employment claims that have not yet arisen. The decision may result in unwanted uncertainty for employers since settlement agreements are intended to remove the risk of future claims. Seeking legal advice is recommended to ensure the terms of any settlement agreement are appropriate and effective.

 

Redundancy selection

Mogane v Bradford Teaching Hospitals NHS Foundation Trust

Ms Mogane had been employed by Bradford Teaching Hospitals NHS Foundation Trust on several fixed term contracts, along with another nurse.

Due to financial challenges, the Trust decided to make Ms Mogane redundant on the basis that her contract was ending sooner than that of the other fixed term contract nurse.

No redundancy pool was created with Ms Mogane and her colleague, and no selection criteria was applied.

The Trust initiated a period of consultation with Ms Mogane alone to consider alternative employment, but Ms Mogane was ultimately made redundant.

Ms Mogane brought a claim for unfair dismissal against the Trust.

The Employment Tribunal found in favour of the Trust, and that Ms Mogane had been fairly dismissed.

Ms Mogane appealed.

The EAT did not agree with the first tribunal. It held it is unfair for an employer to decide on a redundancy pool of one employee without prior consultation on selection criteria.

On the facts, the Trust was found to have decided to make Ms Mogane redundant before any consultation and to have identified the pool on the “arbitrary” basis of fixed term contract dates.

 

Employer takeaways

While a pool of one can be fair in certain situations, if there are several employees, it should not be considered without prior consultation.

Employers are reminded of the importance of meaningful redundancy consultation that allow affected employees the opportunity to influence the outcome, even where the redundancy pool is only one employee.

The decision has generally been received as controversial and could well be overturned.

 

TUPE: share incentive plan

Ponticelli UK Ltd v Gallagher

Mr Gallagher’s employment had been TUPE’d over from Total Exploration and Production UK Ltd to Ponticelli in May 2020.

Whilst at Total, he had voluntarily become a member of a share incentive plan (SIP), pursuant to a Partnership Share Agreement. This involved Mr Gallagher agreeing to deductions being made from his salary for Total to buy shares on his behalf.

When Mr Gallagher’s new, post-TUPE statement of employment failed to provide for an equivalent SIP, he brought a claim under section 12 of the Employment Rights Act 1996 to assert that his right to participate in a SIP was transferred to Ponticelli under Regulation 4(2)(a) of TUPE.

The Employment Tribunal agreed that Mr Gallagher was entitled to be a member of an equivalent SIP. Ponticelli appealed.

The EAT upheld the tribunal’s decision. It held that even if a share incentive plan is not in an employee’s contract, but is ‘in connection’ with it, the benefit can still transfer under TUPE.

The EAT stated that, although the obligations of the SIP ‘did not arise ‘under’ the contract of employment, they plainly arose ‘in connection with’ that contract for the purposes of Regulation 4(2)(a) of TUPE.

 

Employer takeaways

When considering a TUPE transfer, employers should ensure that SIPs, and any other financial benefits employees receive, are taken into consideration and substantive equivalent benefits are put in place.

The EAT also made comment that the long-standing and controversial Court of Appeal decision in Chapman v CP Computer Group on stock option rights not transferring under TUPE was not applicable in this case.

 

Need assistance?

If you have a question about employment case law and the impact of tribunal and court decisions on your business, DavidsonMorris’ experienced employment lawyers can help. Working closely with our specialist human resource colleagues, we offer a holistic advisory and support service for employers encompassing both the legal and people risks of workforce management. Speak to our experts today for advice.

 

Last updated: 28 October 2022

About DavidsonMorris

As employer solutions lawyers, DavidsonMorris offers a complete and cost-effective capability to meet employers’ needs across UK immigration and employment law, HR and global mobility.

Led by Anne Morris, one of the UK’s preeminent immigration lawyers, and with rankings in The Legal 500 and Chambers & Partners, we’re a multi-disciplinary team helping organisations to meet their people objectives, while reducing legal risk and nurturing workforce relations.

Contact DavidsonMorris
Get in touch with DavidsonMorris for general enquiries, feedback and requests for information.
Sign up to our award winning newsletters!
We're trusted