November 30, 2018

U.K. Employment Law Update: Collective Redundancies, Post-Termination Restrictions and Disability Discrimination

Collective Redundancies: What Is an “Undertaking Controlling the Employer?”

In Bichat v Aviation Passage Service Berlin GmbH & Co KG [2018] C-6117, the European Court of Justice (ECJ) considered the meaning of an “undertaking controlling the employer” for the purposes of collective redundancy consultation.

Aviation Passage Service Berlin (AP), a company based in Germany, was controlled by GlobeGround Berlin (GB). GB decided to cease AP’s operations and consequently that the employment of AP’s employees should be terminated for redundancy. However, AP did not inform its works council of this until five months after the decision had been taken by GB, in breach of EU collective redundancy law.

A group of AP’s former employees brought claims of unlawful dismissal in the German national courts. The courts referred to the ECJ the question of what was meant under EU law by an “undertaking controlling the employer” in the context of collective redundancy consultation obligations, which are triggered when an employer or an “undertaking controlling the employer” proposes to dismiss 20 or more employees within a 90-day period.

The ECJ took a broad approach to this question, finding that it covers all undertakings that can compel an employer to make collective redundancies, either because they belong to the same group or because they have a majority of votes in the employer’s decision-making body. If an undertaking does not have a majority of votes but has decisive influence, then this would also amount to sufficient control over the employer. However, factual criteria, such as a common interest, or a contractual relationship that does not grant decisive influence are not enough to show the required degree of control.

This decision will be particularly important for employers which are part of a wider group of companies.

Effect of a Fundamental Breach of Contract on Post-Termination Restrictions

In Brown & others v Neon Management Services Ltd & another [2018] EWHC 2137 (QB), the High Court considered whether an employer that fundamentally breaches the employment contract during the employee’s notice period can rely on the post-termination restrictions in that contract.

The claimants were employed by Neon Management Services Ltd (Neon), a company in the insurance sector. Neon informed them that their employment contracts were being changed to their detriment and that unless they accepted the changes, they would not receive their previously agreed salary increases and bonuses. As a result of this conduct, the claimants chose to resign on notice (of between six and 12 months). In the following weeks, Neon made unjustified accusations of misconduct against the claimants and reported them to the insurance regulator. At this point, the claimants resigned with immediate effect and claimed that Neon was in fundamental breach of contract which, importantly, meant that the post-termination restrictions in their employment contracts would fall away.

The High Court found that, while Neon’s initial actions had amounted to a fundamental breach of contract, the claimants had affirmed the contract by choosing to work their lengthy notice periods. However, Neon’s subsequent actions amounted to a further fundamental breach, which had entitled them to resign with immediate effect and meant Neon could no longer rely on the post-termination restrictions.

While this decision is not new law it is a helpful reminder for employers that they will not be able to rely on any post-termination restrictions if they have committed a fundamental breach of the employment contract.

Disability Discrimination: How Much Does an Employer Need to Know?

In Mutombo-Mpania v Angard Staffing Solutions Ltd UKEATS/002/18/JW, the Employment Appeal Tribunal (EAT) considered whether an employer knew or could reasonably have been expected to know about an employee’s disability.

Mr Mutombo-Mpania worked for Angard Staffing Solutions (Angard) on a flexible basis, which included some night shift work. Although he suffered from Essential Hypertension (which could lead to symptoms including dizzy spells, headaches and fatigue), he did not indicate that he had a disability either on his application form or on a subsequent health questionnaire. After a year, Mr Mutombo-Mpania told Angard that he could not continue to work night shifts due a “health condition.” He was dismissed after failing to attend four shifts and brought a claim for disability discrimination.

The EAT held that, although Mr Mutombo-Mpania had numerous symptoms arising from his health condition, he did not demonstrate how they had an adverse effect on his ability to work night shifts or show the specific tasks that he could not carry out. The EAT considered whether Angard knew, or could reasonably have been expected to know, that Mr Mutombo-Mpania suffered from a disability. It concluded that, because he had not mentioned it on his application form or questionnaire and had initially worked night shifts, Angard did not, and could not reasonably have been expected to, know that he had a disability.

This decision will be welcomed by employers as it emphasises that employees need to demonstrate how their condition adversely affects their ability to carry out day-to-day activities. However, employers would be well advised to seek further information from any employee who states that they have a health condition that may impact their employment and obtain medical advice where appropriate.

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