Third time unlucky – Unison’s challenge to ET fees fails at the Court of Appeal

avatar Posted on August 27th, 2015 by Neil Johnston

You may recall that the High Court rejected Union’s two applications to overturn the Employment Tribunal (ET) fee system in Autumn 2013 and Autumn 2014. Unison appealed those decisions supported by the Equality and Human Rights Commission. Yesterday the Court of Appeal (CA) rejected their appeal.

The CA held that the ET fee system was not indirectly discriminatory to women, its introduction did not breach any of the Government’s obligations under the public sector equality duty and that it did not breach the European principles of effectiveness and equivalence.

The CA acknowledged that a proper balance needs to be struck between the right to charge a fee and the right to bring a claim and that the balance would not be struck if the fee was disproportionate. The CA also acknowledged that the “dramatic” fall in ET claims was unlikely to be attributable just to people who “won’t pay” a fee and must also include those who “can’t pay”. However, it was the lack of specific evidence, in particular real examples of individuals who “can’t pay” the fees due, that meant that Unison failed to demonstrate a breach of the principle of effectiveness.

Lord Justice Underhill did however comment on the Lord Chancellor’s forthcoming review of the ET fee system stating that “the decline in the number of claims in the Tribunals following the introduction of the Fees Order is sufficiently startling to merit a very full and careful analysis of its causes; and if there are good grounds for concluding that part of it is accounted for by claimants being realistically unable to afford to bring proceedings the level of fees and / or the remission criteria will need to be revisited.”

We await the Lord Chancellor’s review with interest.


Going underground

avatar Posted on August 14th, 2015 by David Carmichael

The announcement on 11 August by 3 trade unions representing tube workers that they will strike on Tuesday 25 and Thursday 27 August – staging 24 hour walkouts starting at 18.30 on each day, is no surprise. Equally predictably this continuing and disruptive industrial action helps to sustain the political momentum behind and support for the government’s Trade Union Bill.

The Bill, published on 15 July and currently the subject of consultation (open until 9 September 2015), proposes a number of changes to the law affecting trade unions including:

  • Ballot thresholds of 50% of all those entitled to vote, and an overall 40% of those eligible required to be in favour for workers engaged in “important public services”;
  • More detail required on the ballot paper about the matters in dispute and the periods when industrial action is likely to take place;
  • More information about the ballot result has to be given by the trade union;
  • Notice of industrial action to increase from 7 to 14 days;
  • Industrial action must be validated by a vote that is no more than 4 months old, otherwise a further ballot is required;
  • Where trade unions hold a picket they must appoint (in writing) a supervisor.

It’s interesting to note that one of the sticking points in the London Tube dispute is the unwillingness of trade unions to put certain offers made by London Underground to their members. This unwillingness clearly causes frustration for London Underground, given that resolution of the dispute may be delayed or even not achieved because of, in its view, over-reaching or overly political stances taken by the unions. Such frustration may be met in part by the proposal that re-balloting of members must take place if further industrial action is to be called more than 4 months after the last ballot. This is in part an attempt to ensure that the stance of union representatives remains reflective of the employees’ actual position, but it is also about focusing minds within the suggested time frame. Having said that, in the Tube dispute the train drivers union ASLEF voted in mid-June in favour of strike action. Even with the Bill’s 4 month proposed shelf life for industrial action after a ballot, further action could be taken up until the middle of October before any re-ballot would be necessary.

What is more, while the re-balloting requirement may increase union costs in long-running disputes, there is a real risk of a potentially counter-productive outcome. Employers may, in fact, delay tabling their best offer for settlement of a dispute until close to the end of the 4 month period, in the hope that the imminent cost and risk attached to running a further ballot will make the offer that much more persuasive. It may also be a slightly less generous offer than it might otherwise have been, increasing the risk that the industrial action will continue.

With the Bill likely to be enacted before the end of 2015, as in the run up to the Miners’ strike in the 1980s, it might seem that the government is taking the opportunity to improve its position and those of public sector employers, as it hunkers down for industrial action – connected to George Osborne’s continuing austerity measures and planned further spending cuts for government departments. However, leaving aside the issue of whether such preventative action is a legitimate aim, it is certainly an open question as to whether or not the proposals in the Bill will advance the government’s position. Even under the new threshold proposals the London Underground strike action would still be taking place. If enacted the Bill will not be an end to public sector disruption, and as with any one-sided initiative, there is a real prospect that it will harden positions on both.


Overseas criminal record certificates for Tier 1 (Investors) and Tier 1 (Entrepreneurs)

avatar Posted on July 31st, 2015 by Lynn McCloghry

Last week the Minister for Immigration, James Brokenshire, announced that from 1st September 2015, migrants who are applying for entry clearance as Tier 1 (Investors) or Tier 1 (Entrepreneurs) must provide a criminal record certificate from any country in which they have resided in continuously for 12 months or more in the ten years prior to the date of application. Adult dependants (over 18 years old) of the main applicant in these Tier 1 categories must also provide a criminal record certificate.

You must provide the following specified documents:

  • The original certificate, for each country (excluding the UK) where you have resided continuously for 12 months or more in the last ten years, since aged 18 years old, issued by the overseas authority; and
  • If the original is not in English, then you must provide a translated copy of the certificate, in line with UK Visas and Immigration requirements.

Certificates will only be considered valid if they have been issued within six months of the entry clearance application. If a migrant fails to provide any certificates or an acceptable explanation as to why a certificate was not obtained, then the application will be refused.

We suspect the Government will roll this requirement out for other visa categories in due course. This additional requirement is another example of a visa application becoming more complex, time consuming and costly. Any future Tier 1 (Investor) or Tier 1 (Entrepreneur) application should consider factoring in extra time to obtain the relevant certificate.

Should you require further information, please contact Lynn McCloghry.


Summer holiday reading: how about a HMRC consultation – or two?

avatar Posted on July 30th, 2015 by Nicholas Thorpe

Summer holidays are when we traditionally reach for something undemanding to read: easy reads that require little brainwork as we lounge in the sun. But for those of you who fancy reading something more challenging this Summer, the HMRC has kindly obliged with the publication of two consultation papers; the first on the tax and National Insurance (NI) treatment of termination payments; and the second on possible changes to IR35 – the rules governing the tax and NI treatment for individuals engaged through a personal services company instead of as a direct hire employee.

The first consultation paper on termination payments follows the work untaken by the Office of Tax Simplification on benefits and expenses in 2014 (reported in earlier blogs). The HMRC has put forward various proposals to simplify the current arrangements. It has also sought suggestions on alternative ways in which the current arrangements could be structured.

Key proposals include:

  • Removing the current distinction between contractual and non-contractual termination payments, in particular in relation to the different tax and NI treatment of different types of PILON. The suggestion is that contractual PILONs might also benefit from some form of tax relief although the current £30,000 tax exemption which currently applies to non-contractual payments only is likely to be reduced.
  • Aligning the tax and NI treatment of termination payments, the likely result being that employee and employer NICs would be payable in respect of termination payments that are subject to income tax.
  • Replacing the current £30,000 tax exemption. This is the proposal that is likely to attract most interest. The current proposal is to link the availability of the exemption to length of service and only employees with two years’ service or more would qualify. The exemption is also likely to start at a lower rate than the current £30,000, but would then increase at a set rate with each year of service completed up to a maximum amount. Of particular note is that the Government is also considering limiting the exemption to termination payments that have been made in connection with a redundancy, on the basis that the relief would then be targeted at those who are most at need.

Views are being sought on these proposals as well as the appropriate level at which the threshold for the tax and NI exemption should be set over the Summer, with consultation closing on 16 October 2015. Further announcements are then expected in the Autumn Budget.

And, if all that is not enough for you, HMRC is also consulting on possible changes to IR35. Options include placing greater onus on the ‘engager’ (the end client) to ensure the correct amount of tax is paid and a limitation in the scope of what falls within IR35, with the possible adoption of the deemed employment criteria set out in the intermediaries legislation, reported in earlier blogs.

We will be submitting a response to the consultations – so do let us know your thoughts on the current proprosals. We will then compile the responses and send everyone that replied a summary, so we can all benefit. We look forward to hearing your thoughts.


Modern Slavery Act 2015

avatar Posted on July 29th, 2015 by Richard Kenyon

The Government has today published its response to its consultation on the transparency in supply chain provisions of the Modern Slavery Act 2015. The Act, which was passed earlier this year, includes a provision requiring large companies to publish an annual statement regarding their efforts to combat modern slavery within their own organisations and within their supply chains.

The size of companies affected will now be set at the lowest threshold upon which the Government consulted – £36 million. According to the consultation, the intention for the Regulations, which are due in October, is that the turnover threshold will be measured on global group turnover regardless of the size of the organisation’s operation in the UK.

The annual statement must be signed off at board level and published on an organisation’s website with a link from the home page. The statement should cover the entirety of the organisation’s operations – which seems to mean the holding company and all subsidiaries globally along with all of their supply chains.

What are you doing to combat modern slavery? We will be hosting a seminar from 16.00 to 21.00 on 15 September 2015 to address the Act and the issues it raises – hold the date.  We have also formed our own team combining lawyers and social compliance consultants to assist clients to comply.


Beyond the headlines: proposed employment law changes

avatar Posted on July 15th, 2015 by Nicholas Thorpe

In the last 10 days we have seen a number of proposed employment law changes hit the headlines.

First, we had news of the Government’s proposal to relax the Sunday trading laws, with a consultation to be launched over the summer on plans to devolve the powers regarding when stores larger than 3,000 square feet can open to local authorities. This was then followed by the Summer Budget and the announcement of a new National Living Wage (which is, in all but name, an enhanced statutory minimum wage). The new living wage will start at £7.20 per hour next year and rise to £9 per hour by 2020.

News of these proposals has prompted a mixed reaction, particularly in Retail, one of the sectors most likely to be impacted by these changes. The proposed changes are likely to prompt many retailers to review their resourcing and pay models, including Sunday premiums and overtime arrangements. Many large retailers have, however, sought to allay Market concerns in recent days by suggesting that the new National Living Wage is unlikely to have a significant impact on their ‘bottom line’, as it will only apply to employees aged 25 or over. But an initial 11% hike in the current minimum wage for the over 25’s next year (with further staged increases over the following 4 years) is likely to force all retailers (as well as employers in other sectors) to consider potential changes to their current pay and staffing levels.

These proposals were then followed yesterday by the Prime Minister’s vow to tackle gender inequality in the workplace, and in particular the gender pay gap, so that his daughters (currently aged 4 and 11) can experience complete gender equality when they start their careers.

The gender pay gap has been a hard nut to crack and the latest proposal (introduced by the Coalition Government in its dying days, but first proposed as part of the Labour Government reforms in the Equality Act 2010) is for companies employing 250 employees or more to publish the average earnings for men and women in their company. Beyond the headlines, the Government has launched a gender pay gap consultation, entitled “Closing the Gender Pay Gap”, seeking views on the level of gender pay information to be required and the frequency of publication. The consultation also seeks views on wider action that can be taken to inspire girls and women, modernise workplaces and support older working women. The consultation closes on 6 September 2015.

And finally, as if all that was not enough, the Government announced today tougher union laws to limit strikes and pickets with the proposal to introduce a Trade Union Bill. Amongst other things, the Bill will introduce a 50% turnout threshold for a valid ballot on industrial action (with additional hurdles imposed for key public services), and it will limit the period during which a ballot is valid to authorise industrial action for 4 months. The Bill has yet to be published but the Government’s proposals have, predictably, attracted an immediate and furious reaction from trade unions. Detailed consultation papers are due to be published shortly and consultation will be open until September 2015.

So, what does this all mean for you and your business?

While the recent flurry of headlines on the proposed employment law changes may soon be forgotten, the proposals present significant change and all employers (large and small) are likely to be impacted to some degree by them. For a greater understanding of what is being proposed and likely impact it may have on your business, please do not hesitate to contact any member of the team.


Summer is here and holidays yet again

avatar Posted on July 10th, 2015 by Margaret Davis

Perhaps not the sitting on the beach or just relaxing holidays we all think about at this time of the year but yet another holiday pay case.

As many of our readers will be aware the Working Time Regulations 1998 (Regulations) set out the minimum entitlements for workers to paid annual leave. The current statutory entitlement is 28 days in each holiday year (pro-rated where only part of a year is worked). Because the Regulations specify that holiday must be taken in the leave year in which it accrues, many employers adopt a use it or lose it policy. However, such a policy can give rise to problems when the employee is on long term sick, or takes maternity leave and which more often than not will straddle leave years.

There has been a series of cases on the entitlements of workers who are unable to take their holiday because of long term sickness absence or maternity leave, including European Court of Justice cases which established general propositions that a worker did not lose their entitlement to leave if because of sickness or maternity leave they were unable to take it, and they were entitled to carry over that leave for up to 18 months. In 2012 the Court of Appeal in the case of Leeds NHS Primary Care Trust v Larner found that there was no requirement for an employee on long term sick to make a prior request to take holiday and that the employee who had been unable on account of sickness to take her leave that had accrued prior to her dismissal was entitled on termination to a payment in lieu of the untaken leave.

Many of us thought that was the end of the matter, and since then the exception has been reflected in contractual terms and holiday policies. But not so. In the case of Plumb v Duncan Print Group Limited reported earlier this week a question arose as to whether Mr Plumb, who had been on sick leave since April 2010 because of an accident, was entitled to be paid for leave he had not taken in 2010, 2011 and 2012. The Employment Tribunal accepted the argument of Mr Plumb’s employer that there was insufficient medical evidence of him being unable to take his holiday and he could have requested that he take holiday leave at any time but chose not to do so. It may be the Tribunal was persuaded by the fact that despite Mr Plumb’s 3 operations and being diagnosed as severely depressed, he continued to work at weekends and took a week’s holiday in 2012.

Mr Plumb’s appeal to the EAT was successful. Following a review of European and domestic case law the EAT concluded that the Tribunal had erred in law. The EAT held that an employee who is absent from work on sick leave is not required to demonstrate that he or she is physically unable to take annual leave by reason of the medical condition. The EAT indicated that this would be the case even if the employee’s contract or legislation prohibited the taking of annual leave which coincided with sick leave, or the employee could under their contract of employment elect to take sick leave and be paid for that leave while on sickness absence. It is not unusual for employees on long term sick to request paid leave when their sick pay runs out and when this has been exhausted to continue their sickness absence.

The EAT also confirmed that as European case law indicates that at most 18 months carry over in circumstances of long term sick or maternity leave, Regulation 13(9) of the Regulations should be read as permitting a worker to take annual leave within 18 months of the end of the leave year in which it accrued where he or she was unable or unwilling to take annual leave because of sickness. In the circumstances Mr Plumb was entitled on termination to be paid in lieu of annual leave for the 2012/13 year, but no earlier.

The story does not end here because the parties were given leave to appeal to the Court of Appeal having regard to the wider importance of the issues and the nature of evolving case law.


Indirect Discrimination – establishing individual as well as group disadvantage

avatar Posted on July 1st, 2015 by Joanne White

In the case of Home Office (UK Border Agency) v Essop, the Court of Appeal has held that a Claimant who complains of indirect discrimination under the Equality Act 2010 must establish not only that they were part of a disadvantaged group, but also why the relevant provision, criterion or practice (“PCP”) put them at an individual disadvantage.

When claiming indirect discrimination, a Claimant must establish that their employer had a PCP that applied to everyone but which put them at a disadvantage due to a protected characteristic (sex, race, disability etc).

In this case, the Home Office had a PCP in place which required all staff within a specific salary band to sit and pass a core skills assessment (“CSA”) in order to become eligible for promotion.

In 2009, the Home Office commissioned a report on the equality impact of the CSA, the result of which was that black and ethnic minority employees and older employees had a proportionately lower pass rate than white and younger employees.

This led to over 50 Tribunal claims being issued against the Home Office on the basis (the Claimants argued) that the requirement to take the CSA amounted to indirect race and/or indirect age discrimination. The Employment Tribunal held that it would not be enough for the Claimants to establish that they were part of the disadvantaged group of employees who were less likely to pass the test, they would also have to establish the reasons why they were individually less likely to pass.

When the judgments went against the Claimants, they appealed the decision. The original decision was subsequently overturned by the Employment Appeals Tribunal (“EAT”). On appeal the Judge considered that the legislation did not require the Claimants to establish why they were individually disadvantaged by taking the CSA, just that they were disadvantaged. Unsurprisingly, the Home Office appealed this decision.

The Court of Appeal unanimously overturned the EAT’s decision. It was held that although the legislation does not specifically require Claimants to establish the reason why they were disadvantaged, it was (in the Court of Appeal’s view) impossible to establish a group disadvantage without also establishing why the disadvantage had arisen in the first place. The Claimants argued that they had already established why the disadvantage had arisen, using the report commissioned by the Home Office as evidence. However, the difficulty for the Court of Appeal was whether the Claimants could also establish that they had individually been put to the same disadvantage (as the whole group), as required by the legislation. The Court of Appeal held that they could not. It held that the group disadvantage was not the actual failure of the CSA, because many black and ethnic minority employees as well as many older employees did pass the CSA and there was no logical basis to assert that those who did not only failed because they were from a black or ethnic minority or they were older.

The Court of Appeal held that whilst the statistical report was capable of being relied upon to establish a group disadvantage, it was up to each individual Employment Tribunal to determine whether or not Claimants could rely on the same report to establish individual disadvantage. For any Claimant who failed to establish individual disadvantage, their claim should therefore be dismissed outright. However, for any Claimant who succeeded in establishing individual disadvantage, it would then be up to the Home Office to establish that the PCP was a proportionate means of achieving a legitimate aim. If it did, the Claimant’s claim would also fail.


Voluntary overtime and holiday pay – the latest

avatar Posted on June 18th, 2015 by Nicholas Thorpe

Those hoping that the Northern Ireland Court of Appeal might reverse the recent tide of decisions regarding the inclusion of variable pay (specifically overtime) in the calculation of holiday pay will be sorely disappointed today. It is understood that the employer’s legal representatives in Patterson v. Castlereagh Borough Council (“Patterson”) conceded at the appeal hearing yesterday that there was “nothing in principle” to prevent voluntary overtime from counting towards holiday pay in appropriate circumstances.

On the basis of this concession, it is understood that the appeal has been allowed and the case has been remitted to an Industrial Tribunal to be reheard.

Patterson had been decided after the Employment Appeal Tribunal (EAT) decision in Bear Scotland v Fulton (“Bear Scotland”), and it had given some employers (false) hope that a distinction could still be made between “voluntary overtime” (overtime which an employee is not obliged to perform) and other types of overtime.

Readers may recall that the Bear Scotland decision focused on “non-guaranteed” overtime (overtime which is not guaranteed, but which an employee is obliged to perform if requested) and the EAT in that case did not make any specific findings on “voluntary overtime”.

The Northern Ireland Industrial Tribunal had found in Patterson that Bear Scotland was authority for the principle that voluntary overtime was excluded, on the basis that if overtime was genuinely “voluntary”, an employee could not be required to perform it. But this distinction was (unsurprisingly) strongly criticised by the Northern Ireland Court of Appeal, not least because it ignored the overwhelming tide of recent European decisions that make it clear that “normal pay” is the pay that an employee would normally expect when at work, and so if voluntary overtime is worked sufficiently to be normal pay then it should be taken into account.

This concession does not, however, prevent the employer’s legal representatives from arguing in the Industrial Tribunal that voluntary overtime should not be included on the facts in Patterson – for example, because the payment was one-off or ad hoc, and therefore should not be treated as “normal pay”. But it now seems clear that an employer will be given short shrift from the Courts if it seeks to take a general stand that voluntary overtime, per se, should not be included. If an employer wishes to contest a claim that voluntary overtime should be included, it will need to provide detailed evidence of its precise overtime arrangements to say why not.


When is travel working time?

avatar Posted on June 16th, 2015 by James Warren

The Advocate General to the European Court of Justice has just issued an opinion on whether or not travelling to and from work may count as working time for certain staff. The Spanish company Tyco Integrated Security SL has a number of employees who do not work from an office or other fixed location, but travel each day to carry out work for different customers in their company vans. Like many employers who operate on this basis, Tyco has not been treating the first trip each day from home to the customer, nor the last trip back home, as working time. In other words, employees have only been paid each day from the time that they arrive at the first customer until the time that they depart from the last. Given that there is sometimes a significant journey involved in getting to or from customers, this has substantial implications for workers’ wages.

Advocate General Bot suggests that, for ‘peripatetic workers’ of this type, travelling is an integral part of the work and necessary for the customers to receive the relevant services, meaning that it should be treated as working time. He notes that time is either resting time, or working time, with no intermediate category. On this basis, the relevant travelling time must fall into the “work” category. This opinion is not binding, but the AG’s view is usually followed by the Court. Judgment is expected later this year, but there will be many UK employers who may have to be prepared for a very different and potentially costlier approach when defining working time for staff who travel each day to customer sites.