Monthly Highlights – UK Employment Law – June 2024 | Orrick, Herrington & Sutcliffe LLP

In this month’s instalment, our team discuss recent findings by the Employment Appeal Tribunal that employers should consult on the fairness of redundancy pools and that future claims can be waived under a settlement agreement. We also highlight an important change to TUPE rules that will come into effect from 1 July 2024.

1. Failure to consult employees on pools for redundancy can render a dismissal unfair.

In Valimulla v Al-Khair Foundation, the Employment Appeal Tribunal held that employers should consult with employees on proposed pools for redundancy, even when there is a pool of one.

The Facts

• The claimant worked as a liaison officer for the respondent, covering northwest England. Other employees performing similar roles were based in other locations in the UK.
• During the COVID-19 pandemic, the claimant was informed he was at risk of redundancy and was placed in a pool of one. The other liaison officers were not placed at risk of redundancy.
• The respondent held three consultation meetings with the claimant but there was no consultation about the fairness of the pool. The claimant was subsequently dismissed by reason of redundancy and brought an unfair dismissal claim.
• The Employment Tribunal dismissed the claim, finding that the claimant had been fairly dismissed and that he was in a self-selecting pool of one. The claimant appealed.
• The Employment Appeal Tribunal sided with the claimant, finding that the respondent had not consulted the claimant about the selection pool. It ruled that the Employment Tribunal had failed to consider whether a pool of one was appropriate.

Key Takeaway

Employers should consult with employees on proposed redundancy pools and carefully consider the choice of pool, including employees at different locations.

2. Future claims can be waived in a settlement agreement.

In Clifford v IBM, the Employment Appeal Tribunal held that an Employment Tribunal was correct to strike out a claim for disability discrimination due to a waiver in a settlement agreement.

The Facts

• The claimant had been absent from work since 2008 due to ill health. In 2012, he brought a grievance against the respondent for failure to transfer him to the respondent’s disability plan.
• The parties entered into a settlement agreement in 2013, whereby it was agreed that the claimant would move to the respondent’s disability plan and receive disability salary payments, and that his employment was to continue.
• The settlement agreement also waived the claimant’s right to bring various claims, including for disability discrimination, regardless of whether the claims were or could have been contemplated by the claimant at the date of the agreement.
• The claimant later brought a disability discrimination claim against the respondent. The claimant alleged that since his transfer to the disability plan, his salary had not increased in line with employees who had had annual salary reviews.
• The Employment Tribunal struck out the claim on the basis that the settlement agreement precluded the disability discrimination claim. The claimant appealed.
• The Employment Appeal Tribunal dismissed the appeal. It held that the Employment Tribunal was correct in finding that the disability discrimination claim fell within the terms of the settlement agreement waiver.
• The Employment Appeal Tribunal reaffirmed the ruling in Bathgate. In that case, the Scottish Court of Session held that unknown future claims can be waived under an appropriately worded settlement agreement.

Key Takeaway

This case has reaffirmed the decision in Bathgate that future claims can be waived in an appropriately drafted settlement agreement. Whilst this is good news for employers, we likely will see an increase in employees and their advisors focussing on specific claims that are being settled in the settlement agreement. That may result in push back on clauses that try to settle future claims.

3. Important changes to TUPE rules take effect soon.

The Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023 will come into effect from 1 July 2024. The regulations will allow employers to consult directly with employees about a planned transfer if the business has fewer than 50 employees or if the transfer involves fewer than 10 employees regardless of size. This change applies unless employee representatives are already in place.

Key Takeaway

Many employers will welcome this change. It will simplify the consultation process, saving employers time and money.