Gordons Legal Employment Update – 10 March

TUPE – Service Provision Change

In the case of Tees Esk & Wear Valley NHS Foundation Trust v (1) Harland, (2) Danshell Healthcare Limited, the Employment Appeal Tribunal considered what an Employment Tribunal would need to consider when assessing the “principal purpose” of an organised grouping for the purpose of a TUPE transfer.

In this case, a group of employees provided care for a service user, CE, who was employed by the second Respondent from 2005.  In 2015, the team who provided care for CE had been retained and maintained its identity, although they also provided care for other service users in the second Respondent’s care, as CE’s caring needs had greatly reduced over time.

The Employment Tribunal considered that there was no TUPE transfer on the basis that the “principal purpose” of the organised grouping was no longer for the provision of care to CE.  The NHS Trust appealed.

The EAT considered the issue and held:

• The “principal purpose” should be determined by looking at the dominant purpose of the grouping at the relevant time;
• The Employment Tribunal was entitled to look at the activities carried out immediately before the service provision change as well as the original intention behind the organisation of the grouping, although neither was necessarily determinative;
• In this case, as the purpose of the grouping had changed over time, so the Employment Tribunal had properly focussed upon the period immediately before the service provision change.  By this time the Tribunal found the dominant purpose was providing care to other service users and care for CE was a subsidiary purpose of the group;
• The Employment Tribunal had therefore reached a permissible conclusion and there was no TUPE transfer in this case.

Comment: This is a sensible decision which highlights that factual circumstances are critical when applying the TUPE rules.

Failure to comply with recommendation

An Employment Tribunal has awarded compensation of £500 for an employer’s failure to comply, for a 10-week period, with a recommendation that the Tribunal had made, that the employer should send a letter of apology to the Claimant.

In this case, the Claimant was successful with a prohibited conduct claim and the Employment Tribunal ordered the Respondent to pay the Claimant compensation of £2,183.23.  As part of its judgment, the tribunal also made a recommendation that the Respondent should send a letter of apology to the Claimant within seven days of the expiry of the time limit for appealing against the Tribunal’s judgment.  The Respondent failed to comply with the Tribunal’s recommendation and held that the Respondent’s failure to write to the Claimant by the due date made it appropriate to order the Respondent to pay the Claimant an additional £500.

Comment:  This is a helpful reminder of the Employment Tribunal’s power to order additional compensation where there has been a failure to comply with a recommendation made by the Employment Tribunal.

Gender discrimination for women who take maternity leave

According to a survey commissioned by the Royal Institute of Chartered Surveyors (RICS), 50% of British people believe women receive fewer opportunities after returning from maternity leave.

A summary of the findings also include:

• 50% of British people believe women receive fewer opportunities after returning from maternity leave;
• 48% said that they would be ‘much happier’ at work if their employer offered a more flexible working arrangement;
• 20% disagree that their CEO actively strives for gender equality and supports initiatives in the workplace;
• 42% of 13-22 year old females believe they will be paid less than men doing the same job;
• 25% of 13-22 year old females believed they would have more career success under a female CEO; and
• 20% of 13-22 year old men believed they will earn more than women.

Comment: These statistics emphasise the difficulties that some women can face in relation to career progression following a period of maternity leave. It will be interesting to see how much of a difference Shared Parental Leave will make over the longer term. At the moment the limited up-take of Shared Parental Leave by fathers does suggest the disparity will remain.

Online HMRC Tax Status Checker

The HMRC has introduced an online status checker to help individuals determine whether they are an employee or self-employed, or covered by IR35 for tax purposes.  You can access the online status checker here.

National Insurance contributions (NICs)

Subject to any government U-turns following the Budget backlash, the main rate of NICs for self-employed people will increase, with Class 2 NICs being abolished and Class 4 NICs rising to 10% in April 2018 and 11% in April 2019.

At present, the self-employed may have to pay both Class 4 and Class 2 NICs:

• Class 4 NICs at 9% are paid on profits between £8,060 and £43,000
• Class 2 NICS are paid at profits of £5,965 or more (this will be abolished in 2018)

Class 4 NICs will rise to 10% in April 2018 and to 11% in April 2019.

Taken together, only a self-employed person with profits over £16,250 will have to pay more as a result of these changes.

Tax-free dividend allowance to be reduced

From April 2018, the tax-free dividend allowance will be reduced from £5,000 to £2,000.  This will reduce the tax difference between the self-employed and those working through a company.

The National Employment Savings Trust (‘NEST’)

On 1 April 2017, the limit on contributions into the NEST will be removed as well as the restrictions on transfers into and out of the NEST will be lifted.  There will be no change to the current flat 0.3 per cent AMC applied to funds transferred by members who want to move money into their NEST account from other schemes.  Additionally, there will be no exit change for members who want to transfer their NEST pot to another scheme.