November 01, 2018

U.K. Employment Law Update: Transfer of an Undertaking Hits a Roadblock, Whistleblower Disclosures and the Latest in Employment Status

Did a Temporary Break in Activities Prevent the Transfer of an Undertaking?

In Colino Sigüenza v Ayuntamiento de Valladolid (C-472/16), the European Court of Justice (ECJ) considered whether a five-month break in activities prevented the transfer of an undertaking under the EU’s Acquired Rights Directive (ARD).

By way of background, the ARD protects employees’ rights on a transfer of an undertaking. Under the ARD, unlike under TUPE (which implements the ARD in the U.K.), there is no specific concept of a “service provision change” in the context of outsourcing arrangements.

A music school owned by the Spanish city of Valladolid was managed by a service provider. In March 2013, the service provider closed the school and dismissed the staff. The premises, facilities and equipment were returned to Valladolid and the service provider was declared insolvent. Five months later, the school re-opened under a new outsourcing agreement with a different service provider, which used the same resources as the previous service provider, but did not take on any of the previous staff.

The ECJ held that on the facts of the case it was possible that there had been a transfer of an undertaking. This was despite the five-month closure which, although relevant, was not conclusive on its own. However, the fact that there had been a transfer of assets was significant and the fact that the staff were not transferred was not sufficient to preclude the existence of a transfer.

This decision accords with U.K. case law, which has established that a temporary break in activities does not prevent the existence of a transfer. However, the facts of a particular case remain crucial and the reasons for and length of any break will be considered on a case by case basis.

Whistleblowers: Is There Information in Your Allegation?

In Karen Kilraine v London Borough of Wandsworth [2018] EWCA Civ 1436, the Court of Appeal considered whether for the purposes of U.K. whistleblowing legislation there is a distinction between an “allegation” and a “disclosure of information.”

Ms Kilraine worked for the education authority of Wandsworth. Over a five-year period, she made four alleged whistleblowing disclosures. She was suspended for making unfounded allegations and subsequently dismissed for redundancy. She brought a whistleblowing claim, alleging that she had suffered a detriment and been dismissed due to making the disclosures. At first instance, the Employment Tribunal dismissed her claims, finding that she had failed to demonstrate that relevant disclosures had been made for the purposes of U.K. whistleblowing legislation. This was because the Employment Tribunal found that the disclosures were merely allegations, not disclosures of information.

The Court of Appeal found that the legislation does not distinguish between an allegation and a disclosure of information; an allegation may contain information and therefore be a relevant disclosure. What is key when determining whether there has been a relevant disclosure is to consider whether it is sufficiently factual and specific to point to one of the six types of wrongful conduct specified in the legislation. Ms Kilraine’s disclosures had not met that test.

Employers should always carefully assess any complaints or concerns by employees to ascertain their nature and scope, and then take appropriate next steps.

Employment Status: What Does the Contract Say?

In Hafal Ltd v Lane-Angell UKEAT/0107/17/JOJ, the Employment Appeal Tribunal (EAT) considered the importance of the written contract in establishing employment status.

Ms Lane-Angell worked for the charity Hafal on a rota basis. In April 2015, Hafal implemented a new system under which Ms Lane-Angell was required to give a minimum availability of 10 shifts per month and could be removed from the rota if she did not respond to three work requests. After failing to respond to three work requests, Ms Lane-Angell was consequently removed from the rota and informed that she would not be offered further work. Ms Lane-Angell brought a claim of unfair dismissal and, as a first step, was required to establish that she was an employee.

The EAT considered both the written contract and the facts relating to the relationship between the parties. The EAT found that Ms Lane-Angell’s contract was clear that there were no guaranteed hours and that her services would only be provided when needed and if she was available. On this basis, there was no mutuality of obligation, which is necessary in order to establish employment status. As for the right introduced in April 2015 for Hafal to remove individuals from the rota due to a failure to respond to three work requests, as this only applied to those who had expressed availability and been placed on the rota, it could not be said that there was any mutuality of obligation when Ms Lane-Angell was not on the rota. Therefore, she was not an employee.

This decision will be of comfort to employers after the recent trend of employment status cases which have found workers to be employees.

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