Change is coming, but not quite yet

avatar Posted on March 27th, 2015 by David Carmichael

A number of miscellaneous changes to employment legislation are provided for by the Small Business, Enterprise and Employment Bill, due to become law by the end of the month before Parliament is dissolved in anticipation of the General Election. The Bill contains a miscellany of significant changes which will be brought into effect in the next Parliament, there being insufficient time in this Parliament to make the commencement orders that bring most of its individual provisions into effect, with one exception.

The Bill once it has received the Royal Assent will provide the following:

  • Mandatory pay gap reporting.
  • Create a power for the Secretary of State to require reports by prescribed persons (such as regulators) on the whistleblowing disclosures that have been received including mandatory publishing of this information.
  • Prohibition on NHS employers discriminating against job applicants who it is thought have made a protected disclosure.
  • Power to impose penalties on employers who fail to make payment of Employment Tribunal awards and COT3 settlements.
  • Power to limit the number of times an Employment Tribunal hearing can be postponed.
  • Fines for non-payment of the National Minimum Wage to increase to £20,000 per employee under paid.
  • Exclusivity clauses in zero hours contracts to be made void and the possibility of further restrictions in the future.
  • Public sector exit payments to be repaid if the recipient goes back into public service within a prescribed period.

Postponement of ET proceedings

The provision coming into effect immediately is the one that grants powers to Employment Tribunals to limit the number of postponements that can be granted to just 2 per party. If you are involved with a case that has been protracted by multiple postponements, then this new provision may assist you in seeking to ensure no further delay is created by avoidable postponements. However, it is likely to have only limited effect and most commentators consider that the absence of Employment Tribunal Judges or wing members is the more common cause of postponements.

Gender pay gap reporting

All employers of more than 250 employees will be required as from about April 2016 to produce a report detailing the gender pay gap. The provision is dependent on detailed regulations being adopted which will set out the full extent of the obligation. Analogous legislation renders it likely that a failure to produce a report can result in a fine of £5,000. HR and reward specialists should be alive to this new obligation and start planning for the collation of likely data and the framing of a report, using s.78 of the Equality Act 2010 and Regulation 6 of the Equality Act 2010 (Equal Pay Audits) Regulations 2014, as a guide to the types of information that might be required in a report.

Prescribed person whistleblowing reports

Currently an Employment Tribunal can refer a protected disclosure to a prescribed person (for example HMRC or a regulator) where a claimant in tribunal proceedings consents. There is no requirement for the prescribed person to act on the disclosure. This provision at least will require the prescribed person to make an annual report. Again details of the provision will be set out in regulations a draft of which were attached to the Government’s consultation response. The report will not identify the whistle-blower or their employer. The provision is unlikely to have any impact on employers, at least in the short term.

NHS whistleblowing enhanced protection

Its proposed that the Employment Rights Act 1996 be amended so that regulations can be made which prohibit NHS employers from discriminating against job applicants who they believe have been whistle-blowers. The expectation is that the awards of compensation that a wronged whistle-blower might expect to recover are similar to those job applicants who are rejected for reasons connected with a protected characteristic. The award could include an award for injury to feeling and a compensatory award, and perhaps even aggravated damages. NHS employers (and the scope of this phrase could have an interesting ambit) should consider their recruitment policies and documentation to stress test it for processes that might help sustain such claims of discrimination.

Non-payment of Employment Tribunal awards and settlements

Currently, an unpaid award or settlement under a COT3 can only be enforced by means of the usual county court and High Court methods. The only penalty for a defaulting employer is that they will have to pay the court costs the claimant has incurred in having to enforce the judgment. Now this new provision will create penalties of 50% of the award of compensation, up to a maximum of £5,000 for those who fail to make payment.

National Minimum Wage penalties

Provision is to be made for penalties for underpayment of the National Minimum Wage to increase from a maximum of £20,000 per employer, to a maximum of £20,000 per underpaid worker. The recent “name and shame” list of employers who have underpaid wages shows that even large employers can fall foul of this legislation. Stress testing your payroll systems would be prudent, to avoid fines and also the adverse impact on corporate reputation, as an employer of choice.

Zero hours contracts

There is a power for the Secretary of State to legislate to make exclusivity clauses in zero hours contracts void and unenforceable. The same power has the scope to permit the making of wide ranging powers to limit the operation of zero hours contracts. Employers should if they use such contracts check whether exclusivity is a stated requirement and if so plan for the elimination of the requirement. Those employers who seek to evade the intention behind this provision run the risk of the next government making legislation that imposes financial penalties on those employers who seek to work around this prohibition.

Public sector exit payments

High earning employees, being those earning £80,000 and above (but with a tapering effect for those earning between £100,000 and £80,000) shall be required to repay in part or in whole a qualifying exit payment which include redundancy payments, payments in lieu of notice, ex gratia payments, payments to reduce the impact of early retirement but do not include any sums said to be payable for injury to feelings for discrimination, where the employee starts into new public sector employment within 12 months of their exit. Regulations can be made to permit the recoupment of all or part of the exit payment from the individual, or either of the public sector employers. Recruitment decisions may have to be flexed to take into account the impact of such claw backs. The provision could have the effect of locking some of the best talent out of the public sector labour market (at least for a period of 12 months).

So a variety of provisions which touch various parts of the work force and which should cause HR professionals to keep a watching eye on the implementing legislation and detail that will be laid out in future regulations.


Contract will only be implied when necessary

avatar Posted on March 18th, 2015 by William Hampshire

The Court of Appeal has confirmed today in Smith v Carillon that an employment contract between an agency worker and an end-user client will only be implied where it is necessary to do so.

Mr Smith provided services through an employment agency to a number of construction companies, including Carillon. He was an active member of a trade union and took on the role of shop steward or health and safety representative at a number of building sites. From around 2001 a number of Mr Smith’s engagements were terminated early and he was unable to find further work in the construction industry.

It was subsequently discovered that Mr Smith had been secretly blacklisted because of his trade union and health and safety activities and Carillon conceded as much to the Employment Tribunal and accepted that its actions had caused Mr Smith a detriment. Under the legislation in force at the relevant time, “employees” have the right not to suffer detrimental treatment on grounds of trade union or health and safety activities.

Notwithstanding the “genuine injustice” Mr Smith had suffered, he was not successful with his claim as he was not able to establish that he was an “employee” of Carillon or had any contract governing his relationship with the company. The Court of Appeal confirmed the Employment Tribunal and the Employment Appeal Tribunal decisions that a contract of employment between an agency worker and an end-user client will only be implied where this is necessary to give effect to the reality of the relationship.

The Court of Appeal, in refusing to imply a contract between Mr Smith and Carillon, confirmed that if the facts would be equally explicable without the implication of a contract of employment, it is not permissible to imply one. Although there were a number of characteristics supportive of implying a contract between Mr Smith and Carillon, such as to outward appearances he would have been perceived as an employee of Carillon and the fact that he was fully integrated into the company’s management team, it was not necessary to do so as Mr Smith’s relationship with Carillon could equally be explained as one where he was supplied to Carillon as an agency worker.

The Court of Appeal considered that even if Mr Smith had been able to establish a contract between himself and Carillon, i.e. whereby although maybe not an employee, he would still be a “worker” of the company, his claim would still fail as the relevant legislation at the time only afforded protection to “employees”. Mr Smith had argued that the Court should interpret “employees” as to include “workers”. This was on the basis that part of the relevant legislation in force at the time was found be in breach of article 11 of the European Convention on Human Rights and was subsequently amended to substitute “worker” for “employee” in relation to acts, or failures to act, on or after 1 October 2004. However, the Court of Appeal rejected this argument, finding that all of the acts which were the subject of complaint occurred before the Human Rights Act 1998 came into force in the UK and could not properly be described as continuing acts.

This decision, although not unexpected, will be a welcome relief for companies that engage agency staff. Although Mr Smith found himself in a very unfortunate situation whereby he suffered a “genuine injustice” but for which, at the time, there was no legal recourse, it is worth noting that new legislation was introduced in 2010 which makes it unlawful for employers, employment agencies and others to compile, supply or use a blacklist of trade union members or activists for discriminatory purposes such as employment vetting.


Scrapping race equality legislation

avatar Posted on March 12th, 2015 by Richard Kenyon

Just when it was looking as though Nigel Farage had peaked too soon, he is back at the top of the news calling for a scrapping of race equality legislation. It’s difficult to accuse Farage of engineering the opportunity. His platform was provided by a Channel 4 documentary, some months in the making. But Farage is an adroit politician. He is quick to make the most of the attention and try to move the conversation on. However, although he claims to have been misinterpreted and that his arguments were about nationality rather than race he has not resiled from his point that the country has moved on since the introduction of race discrimination legislation in the 1960s.

It is interesting to set that comment against yesterday’s announcement that Tidjane Thiam is stepping down as Chief Executive of Prudential in order to join Credit Suisse. His decision leaves the FTSE 100 without a single black Chief Executive. And if one broadens the debate in the week that began with International Women’s day, the gender pay gap remains stubbornly stuck at around 19%. No doubt we have moved on since the 1960s but few would argue that the journey is complete.

Our own Fieldfisher Diversity Week included a panel discussion for staff today with panel members drawn from some of our major clients. It was interesting to hear how much each was doing to encourage a diverse workforce and how competition for talent and the need for effective team working were cited as drivers rather than legislation. That said, legislation can provide an impetus and a safety net and given the rate of change to date, perhaps we need more rather than less.


New Compensation limits

avatar Posted on February 18th, 2015 by Margaret Davis

Readers may recollect a few years ago the government announcing that any changes to employment legislation would take effect in April and October of each year. The objective was to allow some certainty in terms of planning. Well, for the second year running, increases in the compensation limits and minimum awards that apply to a range of employment claims will take effect in April.

While April may seem a long way off, knowing now what those changes are may be relevant to decisions that need to be made over the next couple of months in respect of redundancies and other dismissals.

The increases are in line with the RPI measure of inflation as at September 2014. This means that the maximum amount of a week’s pay for calculating a redundancy payment and various other awards, including the basic award for unfair dismissal, will increase from £464 to £475. Therefore, if an employee aged between 61 and 64 with 20 or more years of continuous employment earning at least £475 per week has their employment terminated by reason of redundancy on or after 6 April 2015, they will be entitled to a statutory redundancy payment of £14,250.

In the case of unfair dismissal, the maximum award for compensation will increase from £76,574 to £78,335. This increase will only apply to dismissals where the termination date is on or after 6 April 2015. By way of reminder, if an employee’s annual gross salary is less than £78,335, then their compensation will be capped at their annual salary.

Finally, the minimum basic award increases from £5,676 to £5,807 in cases where the principal reason for dismissal was due to the employee refusing to comply with a requirement that would be a contravention of the Working Time Regulations 1998, or because they refused to forgo a right under those Regulations. This minimum basic award extends to dismissals that relate to representative functions under those Regulations, as well as to cases where the principal reason for dismissal is due to the employee being a trade union representatives or trustee under an occupational pension scheme as defined in the Pension Schemes Act 1993.


“You fat b@57@rd” – disability harassment claim upheld

avatar Posted on February 16th, 2015 by Neil Johnston

Following on from the much publicised decision of the European Court of Justice finding in Kaltoft v Municipality of Billund, just before Christmas, that obesity could be a disability where it represents a limitation that hinders a person’s full and effective participation in professional life, a Northern Irish Industrial Tribunal in Bickerstaff v Butcher has upheld a claim of disability harassment where the disability alleged is obesity.

Mr Bickerstaff worked for Randox Laboratories. Mr Bickerstaff is morbidly obese with a BMI of 48.5. One employee in particular, Gerard Butcher, on an almost daily basis verbally abused Mr Bickerstaff calling him various offensive names prefixed by “fat”. Mr Bickerstaff raised a grievance and went off sick with stress, Mr Butcher admitted his actions but alleged it was just “banter”. Randox dismissed Mr Butcher for gross misconduct and settled a claim brought by Mr Bickerstaff. However, Mr Bickerstaff continued to bring a claim against Mr Butcher alleging harassment relating to disability.

Relying on medical evidence the Tribunal found that Mr Bickerstaff’s mobility is “substantially affected by his morbid obesity” and found that he is a disabled person within the meaning set out in the Equality Act. It also went on to uphold Mr Bickerstaff’s claim against Mr Butcher.

This is the first case in the UK relating to obesity as a disability following the ECJ decision in Kaltoft. It is a reminder that the victims of harassment can pursue and obtain compensation from those who perpetrate the harassment. It is also a good reminder that the Equality Act has a wide reach and that when giving equal opportunities and dignity at work training respect for others should not just be limited to a narrow interpretation of the protected characteristics under the Equality Act. If you would like to discuss this case, training or any particular issues relating to obesity or the Equality Act please do not hesitate to contact me or one of the team.


Employee on sick leave affirmed her contract by delaying resignation

avatar Posted on February 9th, 2015 by Joanne White

The Employment Appeal Tribunal (EAT) has handed down its judgement in the case of Mari v Reuters in which it upheld the Employment Tribunal’s (ET) decision to reject the Claimant’s argument that she was too ill to resign while on long-term sick. The EAT held that she had in fact affirmed her contract by both her delay in resigning and her conduct.

This is a useful case to re-cap on the issue of affirmation, particularly in respect of employees who are on long-term sick who may be threatening legal proceedings to avoid a capability dismissal.

Ms Mari began working for Reuters in 2004. She went off sick with numerous symptoms including stress and depression throughout her employment and she eventually resigned in 2012. Following her resignation, Ms Mari issued a claim for, amongst other things, constructive dismissal. In order to issue such a claim, Ms Mari had to establish that her employer had fundamentally breached her contract of employment and she argued that they had done this by continuously giving her work that was below her level of expertise (i.e. she had effectively been demoted).

In the ET, Ms Mari argued that despite the fundamental breach by her employer, she was in such a bad way when she was off sick, that she was simply too ill to resign. The ET rejected this argument on the basis that during her time off sick, she was still able to engage in coherent email correspondence with her employer regarding other aspects of her contract.

The ET therefore naturally concluded that had she wanted to, she was well enough to resign, despite being off sick. Consequently, in failing to do so, she had effectively affirmed the alleged breaches of her employer.

The ET also rejected Ms Mari’s alternative argument that apart from the delay in resigning, she had done nothing to affirm her contract. The ET held that although the delay in itself did not affirm the contract, affirmation was implied by her conduct. It held that she had affirmed her contract by:

  • repeatedly requesting access to and using work email while she was off sick
  • accepting 39 weeks’ sick pay
  • requesting to be considered for permanent health insurance
  • discussing her continued employment at disciplinary and welfare meetings

In short, the ET found no evidence that Ms Mari genuinely believed that she had rejected her contract of employment due to the alleged breach by her employer. The EAT agreed.

The EAT held that the material question was whether Ms Mari resigned in response to her employer’s alleged breach of contract and given the delay, as well as her conduct, it decided that she had not.

Ms Mari argued that accepting sick pay was a “neutral factor” with regard to affirming her contract. In respect of receipt of sick pay, each case will turn on its own facts and so the significance of an employee accepting sick pay is one that needs to be treated with caution. On one hand, an employee may be so seriously ill that it would be unjust to suggest that it constituted affirmation of a contract. However, as in the case of Ms Mari, when the receipt of sick pay is coupled with taking positive steps to exercise other contractual rights, it is likely that this will be considered to amount to affirmation.


Advocate General backs UK Government in Woolies case

avatar Posted on February 5th, 2015 by Nicholas Thorpe

Advocate General Wahl has today delivered his opinion in the Woolies case on the meaning of “establishment”. If you are an avid follower of our blog, you will know that the Woolies case had been referred by the Court of Appeal to the European Court of Justice (ECJ) after the Employment Appeal Tribunal (EAT) removed the requirement under section 188 of the Trade Union & Labour Relations (Consolidation) Act 1992 for the proposed collective redundancies to be “at one establishment”.

The result of the EAT’s decision meant that multi-site employers, potentially, had to take into account redundancies across all of their sites, rather than at each site, when determining whether or not their collective obligations to inform and consult in a redundancy situation had been triggered because of plans to make 20 or more staff redundant.

In contrast to the EAT’s decision, the Advocate General’s opinion supports the UK Government’s position that the meaning of “establishment” under the relevant European Directive should be the same whichever limb of the Directive a Member State has sought to implement under national law, and that an establishment is the “local employment unit”. The issue of what is a “local employment unit” is a question of fact which would need to be determined by the national courts on a case-by-case basis (which was the position prior to the EAT’s decision in Woolies).

If the ECJ follows the Advocate General’s opinion, this will see a welcome return to the previous position adopted by multi-site employers and the UK courts to the question of establishment – and will remove some of the uncertainty employers have faced over recent months. However, we will need to wait a few months before judgment is given by the ECJ.


Right to be accompanied – new ACAS guidance

avatar Posted on February 5th, 2015 by James Warren

ACAS has belatedly released its response to a consultation run at the start of 2014 – concerning proposed changes to the ACAS Code of Practice on Disciplinary and Grievance Procedures. The need for changes to the statutory code was recognised as a result of the Employment Appeal Tribunal case of Toal and Anor v GB Oils. This decision held that employees could choose whoever they wished as their companion for a disciplinary or grievance meeting, so long as they fell within one of the statutory categories – a fellow worker or a qualified trade union official. The case ran counter to the terms of the original code, which suggested it would not normally be reasonable for employees to choose (and employers might reject) people who have to travel from a distant location, or whose attendance might prejudice the conduct of the meeting.

There are many examples of why limits on the choice of companions are needed to avoid unfairness or, indeed, simply unworkable disciplinary processes. But as the Toal decision held, the current legislation underpinning the right to be accompanied does not allow scope for such restrictions.

The consultation proposed draft new guidance, on which there were a number of comments submitted, mainly all aimed at seeking to ensure that the law in this area is now explained as clearly as possible. These have largely been accepted by ACAS, although it has confirmed that it still wishes to provide practical guidance that goes beyond a simple statement of the legal requirement.

The updated language which will be included in the Code when formally approved by Parliament is shown below:

13.    Workers have a statutory right to be accompanied by a companion where the disciplinary meeting could result in:

         – a formal warning being issued; or

         – the taking of some other disciplinary action; or

         – the confirmation of a warning or some other disciplinary action (appeal hearings).

14.    The statutory right is to be accompanied by a fellow worker, a trade union representative, or an official employed by a trade union. A trade union representative who is not an employed official must have been certified by their union as being competent to accompany a worker. Employers must agree to a worker’s request to be accompanied by any companion from one of these categories. Workers may also alter their choice of companion if they wish. As a matter of good practice, in making their choice workers should bear in mind the practicalities of the arrangements. For instance, a worker may choose to be accompanied by a companion who is suitable, willing and available on site rather than someone from a geographically remote location.

15.    To exercise the statutory right to be accompanied workers must make a reasonable request. What is reasonable will depend on the circumstances of each individual case. A request to be accompanied does not have to be in writing or within a certain time frame. However, a worker should provide enough time for the employer to deal with the companion’s attendance at the meeting. Workers should also consider how they make their request so that it is clearly understood, for instance by letting the employer know in advance the name of the companion where possible and whether they are a fellow worker or trade union official or representative.

16.    If a worker’s chosen companion will not be available at the time proposed for the hearing by the employer, the employer must postpone the hearing to a time proposed by the worker provided that the alternative time is both reasonable and not more than five working days after the date originally proposed.

17.    The companion should be allowed to address the hearing to put and sum up the worker’s case, respond on behalf of the worker to any views expressed at the meeting and confer with the worker during the hearing. The companion does not, however, have the right to answer questions on the worker’s behalf, address the hearing if the worker does not wish it or prevent the employer from explaining their case.

Vince Cable has indicated that the ACAS Code of Practice on Disciplinary and Grievance Procedures may be reviewed as a whole, given the time which has passed since it was first drafted. However, it seems that the separate strong argument for a review of the underlying legislation on which the Toal decision is based will need to await consideration by a new government.


Annual HR Planner 2015 – Thursday, 5 February 2015

avatar Posted on January 21st, 2015 by Richard Kenyon

Our Annual HR Planner is the perfect opportunity for HR professionals, senior managers and in-house lawyers to review the main developments from 2014 and plan effectively for the changes coming in 2015.

This seminar will take place in our London offices on Thursday 5 February 2015 from 10.00am until 1.00pm including lunch and will cover the following topics:

A recap of developments in 2014

  • The problems with holiday and holiday pay
  • Employment Tribunal and ACAS conciliation developments
  • Major cases and practical implications
  • The rising risks of social media

What’s coming up in 2015

  • Shared parental leave
  • Pensions in the news
  • HR issues in the General Election mix
  • Cases to watch out for in 2015

It can be difficult to keep up with the fast pace of change and always remain one step ahead, particularly when juggling all your demands at a senior level.  We will be looking at some of the issues that senior HR professionals and in-house Counsel have had to face over the last 12 months.  We will share with you our insights, having helped many clients find appropriate solutions for their businesses, and will flag future changes, so that you can plan ahead.

We look forward to you joining us.

If you would like to register for our Annual HR Planner, please click here.



Two year limit on back dating of holiday pay claims

avatar Posted on December 18th, 2014 by Nicholas Thorpe

So, the rumours were right. Following the recent holiday pay ruling in the Employment Appeal Tribunal (EAT) that holiday should reflect non-guaranteed overtime, the Government has announced today that it will impose a two year cap on the back dating of holiday pay claims.

Changes will be made to the Employment Rights Act 1996 which will prevent claims for holiday pay stretching back further than 2 years. While the EAT’s ruling gave employers some arguments to limit the back dating of holiday pay claims, these changes will give employers much needed certainty in relation to their potential financial exposure and should help to reduce the potential costs to employers.

However, employers are not out of the woods yet. These changes will not be introduced until 1 July 2015. Therefore, workers could still make claims under the existing arrangements over the next 6 months, which will act as a transition period before the new rules come into force, for holiday pay stretching back beyond 2 years. We are therefore likely to see increased activity from unions and employee representative bodies in the New Year seeking pay settlements before the new 2 year cap comes into force.

So, enjoy your holidays; as next year looks like it is going to be another interesting year for us all!