UK: Redundancy – EAT rules on approach to suitable alternatives

Employers considering withholding a statutory redundancy payment, on the ground that they have offered a suitable alternative job which has been refused, should encourage employees to disclose any reasons they have for rejecting the alternative offered prior to a final decision. The onus is on the employer to show that (i) the alternative was suitable (in terms of the individual's skills and experience and the terms and conditions of the job), and (ii) the refusal was unreasonable, taking into account the employee's personal circumstances.

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Spain: Increase in the basis used to calculate the severance payment for dismissal

On 3 May 2017, the Spanish Supreme Court (the “Supreme Court”) issued a judgment in which it declared that employer’s contributions to (i) medical insurance policies; (ii) life insurance policies; and (iii) pension plans, should be treated in the same way as salary (as benefits in kind). Contributions must therefore be included in the annual salary considered when calculating the severance payment for dismissal.

Hong Kong: The labour policy promises of the new Chief Executive

On 26 March 2017, Carrie Lam Cheng Yuet-ngor was elected as the city's next (and first female) chief executive, after winning 777 votes from a 1,194-member election committee. In a 520-page manifesto, Carrie Lam set out her policy campaign including, briefly, her views on how the government under her leadership would address certain topical labour issues. This article summarises what we can expect from a new government under Carrie Lam's leadership.

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UK: Voluntary redundancy – excluding employee eligible for early retirement is prima facie age discrimination

The EAT has confirmed that excluding an employee who is eligible for early retirement from voluntary redundancy, due to the higher severance costs, is prima facie discrimination on grounds of age. The employer could not argue that the reason, severance cost, was something other than age, as the additional cost was directly referable to age. Therefore the employee's exclusion was age discrimination unless it could be objectively justified. (Donkor v Royal Bank of Scotland)

Spain: Individual dismissals and calculation of severance pay and processing salaries

In its decision 75/2011, dated 1 May 2012, Labour Court 3 of Pamplona clarifies the method for calculating severance payments for unfair dismissal. The case refers to an employment contract that was entered into before 12 February 2012 (the date when the Labour Reform entered into force via Royal Decree-Law 3/2012) and that was terminated after that date.

As severance pay must in these cases be calculated in two phases (firstly, 45 days' salary per year of service for the period from the employment contract start date and 11 February 2012; secondly, 33 days' salary per year of service for the period between 12 February 2012 and the contract termination date), the decision clarifies that the legal round-up formula only applies to the second, post-12 February 2012 period.

UK: Voluntary redundancy/early retirement: employers may be able to set budget and use severance cost as a criterion for selection of volunteers

An employer may be justified in selecting those with the cheapest entitlements under a voluntary redundancy/early retirement scheme when seeking to reduce headcount within a fixed budget, despite the indirectly discriminatory effect on a particular age band.

In this case the employer had a set budget for a voluntary redundancy/early retirement scheme.   Subject to ensuring a balance of experience, the employer accepted applications from employees whose entitlements would cost the least (the Cheapness Criterion). This disadvantaged those aged 50 to 54, but its use had been supported by the recognised union.

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