First Tuesday is when your questions are answered by the employment team at Arthur Cox solicitors. This month's First Tuesday Q&As cover:

1. TUPE application and insolvency
2. Are we obliged to give the bank holiday for the Royal Wedding?
3. Can we withhold pay if an employee day fails to turn up the day after a bank/public holiday?
4. Implementing new policies and procedures

All of the questions came from Legal-Island customers. If you have any questions for the employment team at Arthur Cox please let us have this by Friday of this week by writing to peter@legal-island.com

We cannot guarantee to answer every question submitted but we try to cover the majority of those sent in.

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QUESTION 1. Does TUPE apply in circumstances where a company goes into voluntary liquidation and its business is closed with all employees being made redundant and then a buyer is subsequently found for the business, for example, a month or two later? Do the employees automatically transfer to the new owner?

ANSWER Where a company is the subject of “bankruptcy or analogous insolvency proceedings” instituted with a view to liquidating its assets under the supervision of an insolvency practitioner, the employees will not be accorded the normal protections under TUPE in respect of the automatic transfer of their employment and associated rights, duties, powers and liabilities on a relevant transfer, nor the protections against detrimental changes to their contracts or unfair dismissal by reason of the transfer. Therefore, the dismissed employees will not automatically transfer to the buyer when the business is subsequently purchased and do not have special protection against dismissal. In this case, the employees may be entitled to statutory payments out of the National Insurance Fund.

It is important that employers understand which type of insolvency proceedings the company is going through. For example, a members’ voluntary liquidation (as opposed to a creditor’s voluntary liquidation) is not an insolvency proceeding for the purpose of TUPE and the normal TUPE rules will apply. Furthermore, relevant insolvent proceedings that are not initiated with a view of liquidation (“non-terminal” insolvencies) will be afforded different protection under TUPE than under liquidation. TUPE and insolvency is a complex area, we recommend that specific advice should be sought.

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QUESTION 2. Are we obliged to give the bank holiday for the Royal Wedding? Friday is our busiest production day and granting this day will cause us operational difficulty.

ANSWER The right of employees to take holiday is governed partly by statute and partly by contract. Subject to certain exceptions, workers have a statutory right to a minimum of 5.6 weeks' paid annual leave (equivalent to 28 days for a full-time employee) under the Working Time Regulations in NI. Further, many employees receive holiday rights in addition to their statutory entitlements under their contracts of employment.

Contrary to popular belief, there is no statutory right to time off (paid or otherwise) on any public holiday under the Working Time Regulations. Whether an employee can be required to work on a public holiday depends on their contract and, in some cases, their manager’s discretion. Working on public holidays is a commercial or operational necessity for many businesses like yours. Where employers allow (or even require) employees to take leave on public holidays, this will normally count against their statutory leave.
Therefore, unless it is a term of your employees’ contracts, then they will not be entitled to take the 29th April of this year off. For example, if the contract is worded: “twenty days holidays plus bank and public holidays”, the employee will be entitled to the day off. However, if the contract states; "twenty eight days holiday per year which is inclusive of the usual bank & public holidays", the employee is not entitled to the day off.

If unclear, the best approach to be taken by employers may be to allow all staff the extra day off (or a day in lieu at another time) in order to maintain good employee relations otherwise, you may have a very disgruntled workforce.

Note from Legal-Island: 80% of those responding to our recent survey on the royal wedding said employees are not contractually entitled to receive 29th April 2011 as an additional holiday. However, 63% of those do intend granting this as an additional holiday. Which means over a third of (mainly private sector) employers do NOT intend to grant an additional day's holiday. Full results and a list of any additional rules that might apply are set out on our website:
http://bit.ly/f4SXS5

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QUESTION 3. Our employees have a provision in their contracts of employment stating that they must be present at work the day before and the day after a bank/public holiday in order to receive pay for the holiday. Is this still legal to say this?

ANSWER As above, employees have a statutory right to a minimum of 5.6 weeks paid annual leave under the WTR BUT do not have an automatic entitlement to public/bank holidays. Whether a worker can be required to work on a public holiday is a matter for the contract.

Therefore, the condition outlined above is contractually binding and is not contradictory to the WTR as long as the employee is entitled to receive the minimum statutory paid leave throughout the year. It would be unlawful if all the bank holidays are included in the 28 days' entitlement and are not an additional contractual entitlement.

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QUESTION 4. I would like to introduce some new policies and procedures for our employees. Are there any issues with me just implementing these?

ANSWER If you do not intend the policies to be in the employee contracts (and thereby contractually binding) then, from a strict legal perspective, you can just put the procedures into force.

However, it may be appropriate to make some policies contractual, for example those relating to pay, expenses, hours of work or post-termination restrictions. To implement such policies on a contractual basis, you should have evidence of each employee agreeing to them, as you would with any term of an employee’s contract. Ideally, this agreement will be a signed document or email confirmation. An alternative approach is to explain in writing to each employee that the policies are contractual and will be deemed to have been accepted by the employee unless he or she notifies you to the contrary by a specified date.

Depending on their terms, there may be some difficulty enforcing new policies introduced after an employment contract was first entered in to. This is because, depending on the nature of the terms, employees may seek to argue that the contractual change was not supported by "consideration", which is one of the elements that needs to be present for a contract to be legally binding. To guard against this, you should try to explain the introduction of the policies as being in exchange for something of value to the employees, for example their next pay review.

Although not actually a legal requirement, and irrespective of whether the policies are to be contractual, a period of consultation before the new policies come in to force will almost always be sensible. This could take place with any trade union that you recognise, or an employee representative body if you have one.

Alternatively, consultation could take place with, or at least be offered to, employees on an individual basis depending on the numbers of employees. In practice, you can achieve this by sending all employees the policies in draft form with an explanation of when they are intended to come into force and the reasons for them, and then hold meetings as required with employees to discuss any queries or concerns. You should be prepared to take on board the feedback you receive from employees before you implement the policies, and even be prepared to amend them if appropriate.

There are a number of advantages to consulting employees before implementing the policies. If you recognise a trade union then failing to consult may be a breach of a collective agreement or collective consultation requirements. Your employees are more likely to readily accept the policy if they have been consulted on it, particularly if it has a significant impact on the way they work or their benefits, and the consultation process may even result in changes which improve how the polices operate when they do come in force.

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Legal-Island would like to thank Emma-Jane Flannery from the employment law team at Arthur Cox for the main content of the answers provided in this email. If anyone wishes to contact the team for specific legal advice, the number to call is 028 9023 0007. Joanna White from the employment team at Arthur Cox will be delivering the first session at the redundancy selection workshop on 23 February. Details below.

Remember: if you have a query you'd like to put forward for consideration please let us have this by Friday of this week by writing to peter@legal-island.com

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Legal-Island
1 February 2011

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