INSTITUTE OF EMPLOYMENT RIGHTS

1. INSTITUTE OF EMPLOYMENT RIGHTS PENSIONS AND TUPE Richard Arthur Thompsons Solicitors 24 February 2009

2. PARTICULAR PROBLEMS • Changes to terms and conditions; • The Werhof case; • Retention of Employment Model; • Information and Consultation; and • Pensions.

3. CHANGES TO TERMS AND CONDITIONS • If the sole or principal reason for the variation is (1) the transfer itself or (2) a reason connected with the transfer that is not an ETO reason, the variation is void; • ETO reason “…..entailing changes in the workforce”; • Change in headcount or job description; • Variations permitted where the reason is connected with the transfer, and is an ETO reason; • Does that comply with the ARD?

4. CHANGES TO TERMS AND CONDITIONS London Metropolitan University v Sackur and others: • two universities merged in August 2002; • In 2004, the merged universities terminated contracts and sought to harmonise terms and conditions; • Were the dismissals transfer-connected? • Was there an ETO reason?

5. CHANGES TO TERMS AND CONDITIONS ET: • dismissals were transfer-connected despite the two year gap between the transfer and the dismissals; and • No ETO reason because the reason was to harmonise (no change in the workforce). EAT agreed.

6. CHANGES TO TERMS AND CONDITIONS Power v Regent Security Services Ltd: • Pre-transfer contractual retirement age of 60; • Post-transfer, employer and employee agree to retirement age of 65; • Transferee sought to retire employee at 60; and • Transferee argued change to 65 was transfer-connected, no ETO, and therefore void. EAT: “…No reason why the employee should not hold the transferee to the new term…”.

7. The Werhof Case • W’s rate of pay determined by collective agreement between trade union and employer’s federation; • Employment transfers; • Transferee not party to bargaining machinery; • Transferee concludes new agreement with Works Council; • Trade union concludes new agreement with employer’s federation; • W argues that his pay should be determined in accordance with the new agreement between the trade union and the employer’s federation.

8. The Werhof case ECJ: • “Static” interpretation: • Only the agreement in force at the date of transfer transfers; • (Also employer’s rights under Article 10 ECHR); • W could not rely on the new agreement.

9. The Werhof Case • Appears to undermine transfer of collectively agreed pay; • But, in Werhof, there were two separate agreements; • Entitlement to subsequent NJC awards should still transfer: • Hughes v Aramark; • Alemmo-Herron v Parkwood Leisure Ltd.

10. The Retention of Employment Model • To allow staff who would otherwise transfer in PFI/PPP schemes to remain employed in the NHS; • Originally intended for non-supervisory staff in catering, cleaning, laundering, security and portering; • Advantages: job security and pensions; • Employee objects to transfer and enters secondment arrangement.

11. The Retention of Employment Model The Celtec case: • Transfer of vocational training to TEC’s in 1990; • Civil servants continue to be employed by Department of Employment until 1993, working under secondment for TEC’s; • Became employees of TEC’s in 1993; • Q: What was the date of transfer of employment?

12. The Retention of Employment Model Answer (House of Lords): • If employee not given option of transfer, but is instead offered opportunity of secondment, she hasn’t objected to the transfer of her own free will; • It follows that her employment transfers at the start of the secondment. Q: Does this cast doubt on the ROE Model?

13. The Retention of Employment Model Answer: Probably not, provided that four conditions are satisfied: • Employee given free choice as to whether to transfer; • Employee freely decides not to transfer; • Employee objects to transferring (preferably in writing); and • Employee enters into new contract permitting secondment.

14. The Retention of Employment Model • The Department of Health agrees that ROE survives Celtec; • Subsequent EAT decision in Capita Health Solutions v (1) BBC and (2) McLean can be distinguished.

15. Information and Consultation • “Long enough before the transfer to enable consultation to take place…”; • Fact of transfer, date and reasons; • Legal, economic and social implications for affected employees; • “Measures” old employer envisages it will take; and • “Measures” old employer envisages new employer will take

16. Information and Consultation • “Affected employees”-any employee who may be affected by the transfer, regardless of whether they actually transfer; • Election of employee representatives; • “Measures”: any changes to existing working practices or arrangements.

17. Information and Consultation • Obligation to consult only where employer envisages taking “measures”; • Employer must consider union’s representations and reply to them; • With a view to reaching agreement; • Up to 13 weeks’ pay per affected employee;and • Award is punitive.

18. Pensions: The Basics Past Service and Future Service: • No contractual right to future service benefits as pre-transfer; • Past Service: Pension Schemes Act 1993 and Preservation Regulations; • Future Service: Sections 257 and 258 Pensions Act 2008 and Transfer of Employment (Pension Protection) Regulations 2005; • Public Sector: Best Value Authorities Staff Transfers (Pensions) Direction 2007 and Cabinet Office Statement of Practice 2005.

19. Pensions: Past Service PSA 1993 and Preservation Regulations apply to “early-leavers”: • Money purchase scheme: accrued value; • Final salary scheme: (i) <3 months: refund of contributions; (ii) >3 months, <2 years: refund of contributions or “cash transfer value”; and (iii) >2 years: deferred pension or “cash equivalent transfer value”.

20. Pensions: Compulsory Transfers Can be forced upon active, deferred and pensioner members on reorganisation or business transfer where: • Transferor scheme trustees consent; and • Transferor scheme actuary certifies credits in transferee scheme as no less favourable (GN16 Certificate). (Actuarial Standards Board: only “exceptionally” will a transfer from a db to a dc scheme satisfy the Preservation Regulations).

21. Pensions: Future Service Pensions Act 2004 and Transfer of Employment (Pension Protection) Regulations 2005: • DB scheme meeting defined standards; or • DC scheme (matching employer contributions up to 6% of pay); or • Stakeholder scheme (effectively a personal pension). Employer gets to choose which, regardless of transferor scheme.

22. Pensions: Public Sector Transfers Pensions Direction 2007 and Cabinet Office Guidance 2005: • Future Service: contracting public authority must ensure that contract provides for “broadly comparable” pension; • GAD: in the opinion of a qualified actuary, no identifiable member will suffer material detriment; • DC scheme can not be broadly comparable with a DB scheme; • GAD Passport Scheme in local government discontinued; • Enforcement: Section 101 Local Government Act 2003; non-local government-more difficult.