Employment Law Watch : Employment & Labor Lawyer & Attorney : Reed Smith Law Firm

This post was written by Joanna Powis and Ruth Bonino.

Following abolition of the national default retirement age of 65 last year, the Government left open the possibility for employers to introduce their own “employer justified retirement age” provided the age set was capable of being objectively justified in order to meet the employer’s legitimate aims for introducing this policy.   A recent decision of the Supreme Court in Seldon v Clarkson Wright and Jakes (A Partnership) indicates that although it may be technically possible to justify a retirement age, an employer will be taking a big risk in attempting to do so (the Seldon case concerned a partnership but the same principles will apply in an employment case). In another decision heard at the same time, Homer v Chief Constable of West Yorkshire Police, the Supreme Court considered whether an employer’s policy of restricting promotion to employees with a law degree was justified indirect age discrimination against an employee who didn’t have a law degree and didn’t have the time to obtain one before retirement.

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The Court of Appeal in Woodcock v North Cumbria Primary Care Trust has ruled that the savings of costs alone will not, without more, amount to a legitimate aim so as to justify discrimination. In this case, Mr Woodcock was dismissed by reason of redundancy just before his 50th birthday in order to avoid his qualifying for significant enhanced early retirement terms. The Court of Appeal (CA) held that this treatment amounted to discrimination by reason of age but was justified since the legitimate aim of dismissing him was to give effect to his redundancy and to save costs. The aim of the dismissal at that particular age was not purely to save costs and so was justifiable.

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In Cordell v the Foreign and Commonwealth Office (UKEAT/0016/11), the UK Employment Appeal Tribunal (“EAT”) considered whether an employer’s refusal to provide lip-speaking support to a deaf employee was unreasonable based on cost alone. The EAT provided guidance on how Tribunals might put costs considerations into context when considering reasonable adjustments for disabled employees but, ultimately held that Tribunals will have to make a judgement in each case based on “what they consider right and just.” 

What happened in this case?

Mrs Cordell who was employed by the Foreign and Commonwealth Office (“FCO”) in a senior position, was posted to Warsaw. She was profoundly deaf, and was provided with lip-speaking support whilst working. This consisted of a team of individuals who commuted to Warsaw on a fortnightly basis from the UK. Including the costs of airfares and accommodation, the annual cost of this lip-speaking support was around £146,000 per year.

Mrs Cordell was later offered a promotion, based in Kazakhstan, with the same level of lip-speaking support. By this time, the FCO had implemented a policy on reasonable adjustments, setting out the matters which would be taken into consideration and the process to be followed when considering whether proposed adjustments in respect of disabilities were reasonable. Following this process, the FCO considered that the cost of the lip-speaking support in the new role was unreasonable, and so withdrew the offer of promotion.

Mrs Cordell brought claims to the Tribunal that this amounted to disability discrimination under the Disability Discrimination Act 1995 and, in particular, that the FCO had failed in its duty to make reasonable adjustments. She argued in particular that the cost of supporting an employee posted abroad who has a number of children would be similar to the cost of providing lip-speaking support (given the FCO’s policy on paying school fees and airfares for children boarding in the UK).   

The Employment Tribunal’s decision

In relation to the issue of reasonable adjustments, the Tribunal found that the cost of providing the support would have been at least £249,500 per year. It found that such cost made the adjustment unreasonable, relying on various factors to support this:

• this annual cost of support was around five times Mrs Cordell’s salary;
• this figure was greater than the annual salary costs of all local embassy staff in Kazakhstan;
• the cost exceeded the previous cost of the support in Warsaw by nearly £100,000, and was around £180,000 more expensive than support would be in London;
• it was a significant proportion of the FCO’s disability budget, and was around £200,000 more costly than the next largest expenditure in that budget;
• the costs of school fees for an employee with even seven children would be a maximum of £175,000 plus travel expenses.

The Employment Appeal Tribunal’s decision

The EAT agreed that the Tribunal had approached the question of cost and reasonableness correctly. The factors considered by the Tribunal were legitimate as they contextualised the relevant costs. The FCO had therefore not failed in its duty to make reasonable adjustments in this case, given the comparatively high cost of the support.

The EAT went on to list other considerations which might be useful when making this contextual analysis, including what costs the employer has approved in comparable situations, what other employers might spend, and whether there is any collective agreement as to what might be appropriate. The EAT recognised the difficult balancing act between the disadvantage suffered by the employee if the adjustments are not made on one hand, and the cost of making such adjustments on the other, but pointed out that there was no objective measure which could be used when assessing such considerations. The EAT ultimately held that, when considering whether the cost of a proposed adjustment will render it reasonable or unreasonable, Tribunals will have to make a judgement call as to what is ‘right and just’ in each case.

What this decision means to employers

In some ways this decision is helpful to employers: there is now guidance from the EAT that cost alone may well be enough to demonstrate that a proposed adjustment is not reasonable. This is useful given that, in most cases in practice, cost will often be one of the main objections to making proposed adjustments. 

However, employers might understandably be frustrated that this decision appears to give significant discretion to the Tribunals to do what is ‘right and just’, without much in the way of definitive guidelines. This is certainly true, but if an employer takes care to consider each case for adjustments individually, analysing cost in context (rather than arbitrarily deciding a specific figure is too high), considering all the factors set out by the Tribunal and the EAT in this case, as well as considering any other relevant facts, then the wide discretion of the Tribunals should hopefully work in the employer’s favour.

Whether cost alone can justify indirect discrimination (as opposed to a reasonable adjustments claim) is a matter which has already been considered by the EAT, particularly by Woodcock v North Cumbria Primary Care Trust [2011] (discussed in a previous edition of this blog). Before Woodcock, the prevailing approach was a ‘costs plus’ approach, meaning employers would struggle to rely on cost alone as a justification. Woodcock did not depart from such an approach entirely, but did cast some doubt on it. Employers should bear in mind that this current case of Cordell does not directly affect such reasoning, and so, whilst possibly open to doubt, the ‘costs plus’ approach in relation to justifying indirect discrimination still appears to be relevant. We wait to see how the ‘costs plus’ approach develops (or not), and whether this current case, relating as it does to reasonable adjustments, has any impact on that.

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In this alert we outline the main changes in UK employment law this October. The most notable piece of legislation coming into force this October is the Agency Workers Regulations 2010, but there are quite a few possible changes afoot. These include a forthcoming increase to the qualifying period for employees to bring unfair dismissal claims from one year to two years, as well as introducing fees for lodging employment tribunal claims.

Agency Workers Regulations

On 1 October 2011, the Agency Workers Regulations 2010 will come into effect. These controversial new regulations (the Regulations) will have a dramatic impact on the relationship between agency workers, agencies and hirers. They will provide increased protection to agency workers, giving them from day one equal access to facilities and amenities at work and the right to receive information about new positions within the hirer. Most importantly, after working for a qualifying period of twelve weeks, agency workers also have the same right to basic working and employment conditions as those enjoyed by workers recruited directly by the hirer. Both the hirer and the recruitment agency may be liable for breach, depending on the type of claim.

What you should be doing:

• make an assessment of the skills required for roles carried out by your agency workers and your employees to assess whether the agency workers have an appropriate comparator for the purposes of the Regulations;
• carry out an audit of your agency workers, paying particular attention to their basic terms of employment, and comparing them to the terms of “comparable” employees;
• provide to agencies appropriate information of comparable workers (including standard terms of employment, pay scales and holiday entitlements);
• put in place HR systems to accurately calculate the qualifying period for each agency worker;
• consider mechanisms to mitigate the impact of the Regulations and take advice as necessary.

For more information concerning the basic rights of hirers and agency workers, please see our client alert.

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This post was written by Thomas Ince and Carl de Cicco.

The Agency Workers Regulations 2010 (“AWR”) are due to come into force on 1 October 2011. The AWR put in place the requirements of the controversial EU Temporary Agency Workers’ Directive, which has to be implemented by 5^th December this year. Last week, rumours circulated in the media that there may be a last minute “watering down” of the AWR by the present government. This seems unlikely, particularly because the AWR has already been scrutinised carefully by the new coalition government after they came into power. The Conservatives were unhappy about the proposed 12 week qualifying period which was not set out in the EU Directive. However, having conducted a review, nothing was changed because the AWR was based on an agreement between the CBI and the TUC made prior to the election and could not be changed. We will, of course, update you on any last minute changes to the AWR, but in the meantime we have prepared below a short summary of the basic elements of the AWR.

The AWR will apply to the relationships between agency workers, agencies and hirers. They offer protection to agency workers, providing them with equal access to facilities and amenities at work, the right to receive information about new positions within the hirer. After working for a qualifying period of twelve weeks, agency workers would also have the right to basic working and employment conditions that are equal to those enjoyed by workers recruited directly by the hirer. In May 2011 the government published guidance (the “Guidance”) to help hirers and agencies understand the implications of the AWR and their responsibilities under them.

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In Farrell v South Yorkshire Police Authority, an Employment Tribunal has considered whether a dismissed employee’s belief in a conspiracy theory surrounding a ‘New World Order’ and the terrorist attacks in 2001 and 2005 constituted a philosophical belief, such as to attract protection under the Employment Equality (Religion or Belief) Regulations 2003 (“the Regulations”). The Tribunal found that, although Mr Farrell’s beliefs did meet most of the requirements set out by the Employment Appeal Tribunal in the case of Grainger plc and others v Nicholson (finding that the beliefs were genuinely held, they related to weighty and substantial aspects of human life and behaviour, they were ‘beliefs’ rather than mere opinions, and they were not incompatible with human dignity), they did not attain a sufficient level of cogency or cohesion. As such, the Tribunal held that Mr Farrell’s beliefs did not satisfy the definition of a ‘belief’ under the Regulations and so therefore were not capable of protection against discrimination.

What happened in this case?

Mr Farrell was employed as a Principal Intelligent Analyst by the South Yorkshire Police Authority. He claimed to hold a belief in a ‘New World Order’, under which a ‘global elite’ (including the UK and US governments and world financial institutions) were seeking to “introduce a secret satanic ideology to enslave the masses and claim control of the world’s resources”. To this end, he believed in particular that the UK and US governments perpetrated the terrorist attacks of 11 September 2001 and 7 July 2005.

During his employment, Mr Farrell was asked to prepare a report for the South Yorkshire Police area, analysing the level of threats posed by various crimes (including terrorism). Mr Farrell made various comments in his report, specifically referring to his views regarding the New World Order and, in particular, his belief that the terrorist attacks in 2001 and 2005 were “sham” operations authorised by the US and UK governments “to divert attention from their own secret scheming and evil ways of the elite”. In light of the content of his report, Mr Farrell was invited to a disciplinary hearing. The South Yorkshire Police Authority took the view that Mr Farrell’s expression of his views was incompatible with his employment and that his position was therefore untenable. Mr Farrell was consequently dismissed.

Mr Farrell brought a claim in the Employment Tribunal for unfair dismissal and unlawful discrimination on the ground of his beliefs.     

The Employment Tribunal’s decision

The case of Grainger plc and others v Nicholson (reported in a previous blog) identified five criteria to be satisfied for a belief to attain protection under the Regulations:

1. The belief must be genuinely held.
2. It must be a belief and not an opinion or viewpoint based on the present state of information available.
3. It must be a belief as to a weighty and substantial aspect of human life and behaviour.
4. It must attain a certain level of cogency, seriousness, cohesion and importance.
5. It must be worthy of respect in a democratic society, not be incompatible with human dignity and not conflict with the fundamental rights of others.

The Tribunal dealt with Mr Farrell’s claim by considering these criteria, finding that criteria 1-3 and 5 above were satisfied. The case therefore concentrated on whether point 4 was satisfied, i.e. whether Mr Farrell’s belief was sufficiently cohesive and cogent.

On this point the Tribunal noted that the Employment Appeal Tribunal in Grainger had unfortunately not been specific about the level of cogency or cohesion required, simply referring to a “certain level”. The Tribunal also recognised that it should not expect too much from a Claimant in demonstrating the coherence of his beliefs, pointing to the fact that religious beliefs, for example, are not always susceptible to rational justification or explanation. Finally, the Tribunal also found that it was appropriate (and indeed important) to objectively scrutinise the nature of the Claimant’s beliefs, in order to consider whether the test of cogency and coherence was indeed met. In this regard, the Tribunal noted that, given that Mr Farrell’s beliefs related to matters where there is a substantial amount of evidence within the public domain (unlike, for example, a belief regarding the existence of a god), the scrutiny put on those beliefs must take into account such available evidence.

Taking all this into account, and considering Mr Farrell’s evidence as to the nature of his beliefs, the Tribunal found that Mr Farrell’s conspiracy theories simply failed to meet any minimum standard of cogency or coherence, and in fact, applying an objective test, were “absurd”. 

The Tribunal did not doubt the sincerity of Mr Farrell’s beliefs, but nevertheless found them not to constitute the definition of belief within the Regulations. Mr Farrell’s claim for discrimination on those grounds could not therefore continue. 

What this decision means to employers

This is the latest in a line of cases considering the question of what constitutes a belief for the purposes of the Regulations (and now the Equality Act 2010). Recent Tribunal decisions have meant that various beliefs (concerning, for example, climate change, the "higher purpose" of public service broadcasting, and anti-foxhunting) have been found to constitute philosophical beliefs under the Regulations. Whilst the trend of such cases indicated that the definition of a philosophical belief was perhaps wider than originally perceived, this current case demonstrates that Tribunals will still need to carefully consider each claim on a case by case basis. It is not a forgone conclusion that even a strong and genuinely held belief will attain protection under the Regulations, and it will be irrelevant how passionately an individual believes in their cause, if that cause is objectively incoherent. 

Employers might take reassurance from this, and from the fact that Tribunals are permitted to analyse the nature of the belief itself, rather than merely the extent to which the Claimant believes in it. It is also worth remembering that establishing that a belief is capable of protection is only the first step: a Tribunal then has to consider whether an employer unlawfully discriminated by reference to that belief. This is only a Tribunal decision and so is not legally binding, but is nevertheless perhaps indicative of how future Tribunals may approach such cases.  

However, employers do need to continue to exercise care when taking action against someone who has a strongly held belief, or treating such person differently from any other employees, as in many cases the individual concerned may well be able to meet all five criteria set out in Grainger. It is worth ensuring that equal-opportunities policies and staff training take into account various religions and widely-held beliefs, as well as ensuring that sufficient measures are in place to prevent harassment or victimisation of employees on all protected grounds, including belief.

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In the recent case of Compass Group plc v Ayodele, the UK Employment Appeal Tribunal (“EAT”) has ruled that an employer must give genuine consideration, in good faith, to an employee’s request to work beyond retirement under the Employment Equality (Age) Regulations 2006 (the “Age Regulations”). A blanket refusal to grant any such request without giving any consideration to the employee’s representations in circumstances where the decision is pre-determined (e.g. by a company policy), will result in the dismissal for retirement being unfair.

This case will be of interest to those employers who have already served notice of retirement on employees on or before 5 April 2011 which, because of the forthcoming abolition of the default retirement age of 65 on 1 October 2011, is the last date on which employers could serve valid retirement notices under the Age Regulations.

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In the recent case of Bailey v R & R Plant (Peterborough) Limited, the UK Employment Appeal Tribunal (EAT) considered the procedural requirements for a valid retirement notice under the Employment Equality (Age) Regulations 2006 (“Age Regulations”). The case is important since the last date on which such notices could be served was 5 April 2011 so any defective notices cannot now be rectified. In this case, the EAT held that a retirement notice given by an employer had to inform the employee of the conditions that the employee would need to meet for a request by the employee to work beyond retirement to be valid. If the employer dismisses for retirement on the basis of a retirement notice lacking that information, a dismissal will be unfair and/or age discriminatory.

This is a surprising decision as it arguably places a greater burden on employers than the Age Regulations themselves. It is therefore likely that many employers will have unwittingly served defective retirement notices. These should now be checked urgently and advice should be sought if there is any possibility they might be defective.

What happened in this case?

Mr Bailey was employed by R & R Plant (Peterborough) Ltd. He had a normal retirement age of 65 and, six months before his 65th birthday, his employer wrote to him informing him of their intention to retire him at 65 and his right to request working beyond retirement, stating that such an application must be made in writing to be valid. Accordingly, Mr Bailey wrote to his employer explaining that he would like to continue working after his 65th birthday. A meeting was then arranged at which he was informed that it was Company policy to retire employees at 65 and that therefore the intended retirement would go ahead.

Mr Bailey’s subsequent Employment Tribunal claims for unfair dismissal and age discrimination failed as the Tribunal held that his request to extend his employment had been defective. This was because his letter had omitted to state specifically that it was made pursuant to paragraph 5 Schedule 6 of the Age Regulations (which provides that a request to work beyond retirement must be in writing and must state it is made pursuant to paragraph 5).

Mr Bailey appealed. The EAT allowed the appeal, holding that the employer’s retirement notice was defective because it did not comply with paragraph 2(1) of Schedule 6 to the Age Regulations (which states that an employer can lawfully retire employees at 65 provided the employer complies with the Regulations). In the present case, the employer had failed to inform Mr Bailey of all the essential conditions which any request to work beyond retirement would have to meet. According to the EAT, the employer should have expressly explained Mr Bailey’s statutory rights including the fact that, if Mr Bailey were to make a request to defer his retirement, his request must state that it was made under paragraph 5 of the Age Regulations. The absence of any mention of this meant the dismissal was automatically unfair.

The EAT awarded a basic award only on the basis that retirement would have taken place on the intended date in any event.

What this decision means for employers

The decision is surprising – on a plain reading of paragraph 2(1), all that is required of an employer is to write to the employee to put them on notice of their right to request to continue working beyond retirement. The EAT appears to have placed a greater burden on employers in respect of the notice they are required to serve in retirement situations. The EAT felt that an employee was unlikely to be aware of the statutory requirements and therefore construed paragraph 2(1) as imposing an obligation on the employer to inform the employee of the essential conditions for a valid request to be made (of which the requirement for the employee to state that the request to continue working is made pursuant to paragraph 5 is just one).

It is necessary for employees to cite paragraph 5 in any request to work beyond retirement. However, the outcome in Bailey makes such a failure by an employee irrelevant if the employer has already fallen at the previous hurdle by failing to advise the employee of the essential conditions they must comply with under the Regulations.

The decision is unfortunate for employers and will leave them at risk if they have issued defective retirement notices on or before 5 April 2011 (which was the last date that a valid notice could be issued under the now-repealed provisions). If such notices did not specifically spell out the requirements under paragraph 5 of the Regulations, employers will be exposed to opportunistic discrimination and unfair dismissal claims by employees who may wish to exploit the decision in this case. Such retirement notices cannot be corrected retrospectively, nor can fresh notices be drawn up.

You should now review any retirement notices that were issued prior to 6 April 2011 and take appropriate advice. Where retirement has not yet taken effect, you may consider allowing the employee to remain in employment to head off risk, but no fresh retirement notice can be issued under the Schedule 6 process. Alternatively, you could try and find some other fair reason for dismissal outside retirement, but this will undoubtedly involve instigating and following a fair procedure, such as a redundancy or capability process.

It remains to be seen whether the case of Bailey will be appealed, but for the time being at least, Employment Tribunals are bound to follow it and employers should be aware of the risk this creates.

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This post was written by Lee Howard.

A recent Employment Appeal Tribunal decision, Cherfi v G4S Security Services Ltd [2011], deals with indirect religious discrimination and offers employers further guidance on how they might deal the issue of time off work for reasons concerning religion. It may also aid those seeking to justify ostensibly discriminatory practices on the grounds of cost.

What happened in this case?

The employer, G4S, was bound under the terms of one of its client contracts to provide a prescribed number of security guards on site at all times during operational hours. The employee, Mr Cherfi, was a Muslim who frequently left the client’s site on Friday lunchtimes to attend prayers at a Mosque. G4S informed Mr Cherfi in 2008 that he would no longer be able to leave the site at lunchtimes, as G4S would be in breach of its contract if the requisite number of guards were not present at the client’s site.

G4S made a number of efforts to accommodate Mr Cherfi, offering him an amended work pattern of Monday to Thursday, with the option of working Saturday or Sunday so that he would not suffer financially. However, Mr Cherfi did not wish to work at weekends, and discussions did not result in agreement.

Thereafter, Mr Cherfi ensured that he was not present at work on Fridays, by either taking sick leave, annual leave or authorised unpaid leave. When G4S expressed discontent with this situation, he brought a claim for indirect discrimination, arguing that Muslims were put at a particular disadvantage by the employer’s requirement for all security guards to remain on site on Friday lunchtimes.

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In April last year we posted a blog on the change in law on paternity leave focussing on the new right to Additional Paternity Leave (APL) which came into force on 6 April 2010. Under this, eligible employees whose children are due to be born on or after 3 April 2011 will have the right to take up to 6 months’ APL. The right will also apply in the case of adoptions where parents are notified of a match on or after 3 April 2011.

Since the implementation of the right to take APL, a question has arisen on whether an employer who offers an enhanced maternity pay package to its female employees should also offer enhanced paternity pay to those employees who take APL.

This issue has become particularly pressing since a recent ruling of the Court of Justice of the European Union (CJEU) in the Spanish case of Roca Álvarez v Sesa Start España ETT SA (ECJ Case C-104/09). Spanish law provides that female employees are entitled to time off during the course of the working day to feed a child under the age of 9 months. This right was originally introduced to facilitate breastfeeding by working mothers. However, this right was subsequently developed so as to allow fathers to take this leave provided both parents were employed. Therefore mothers who are employed were always entitled to this leave while fathers who also have employed status would only be so entitled if the child’s mother is also an employed person. This difference under the provision was held by the CJEU to amount to sex discrimination. In reaching this decision, the CJEU noted that the purpose of this leave was no longer strictly associated with breastfeeding but was actually a measure which reconciled family life and work for both parents. Therefore this purpose could be achieved by fathers taking the time off work as well as mothers. In addition, the fact that this leave could be taken by the father meant that this measure could not be regarded as being to ensure the protection of the special relationship between a mother and her child.

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In our last update, we reported that the UK Government had issued its response to its consultation “Phasing out the Default Retirement Age”, confirming that from 1 October 2011 there will no longer be a default retirement age (DRA) of 65. Draft Regulations were laid before Parliament in February but after much criticism over how they should be interpreted, a revised draft of those Regulations (Employment Equality (Repeal of Retirement Age) Regulations 2011) have been made available and are due to come into effect 6 April 2011. Several of the Government’s original proposals set out in their response to the consultation (and as set out in our last update) have been changed. In particular, changes concern when the last notice of retirement can be served and when the last date it can expire. There was some confusion over retirement of the over 65s but this was a drafting error and has been rectified in the revised draft Regulations.

Confusion about when notice of retirement can expire

Under the current rules, an employee must be given a minimum of six months’ and a maximum of twelve months’ notice to be compulsorily retired. The Government first indicated in its response to its consultation that because the DRA will not apply from 1 October 2011, an employer who wishes to effect a compulsory retirement would need to issue the retirement notice by 30 March 2011 (or before 6 April 2011 under the “short notice” rules). It was understood that this meant that such employees would have to be retired on or before 30 September 2011.

On 17 February 2011, ACAS issued a Guidance update indicating this view was not entirely correct. The ACAS Guidance indicates that employers will in fact have until 5 April 2011 (but no later) to issue notice to an employee of compulsory retirement and that notice (being no less than six and no more than 12 months under the current rules) may run its course and so may expire after the 30 September 2011 deadline. Short notice notifications will not be permitted on or after 6 April 2011. The revised draft Regulations confirm this. 

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Two recent cases give guidance on the tax treatment of settlement payments on termination of employment. A First-tier Tax Tribunal has, for the first time, laid down the correct approach to apportioning a settlement payment which is to compensate an employee for both discrimination and termination of employment. It was decided in Oti-Obihara v. HMRC that the proper starting point is the amount that can be identified as the ‘employment termination payment’, i.e. the amount which represents compensation for financial loss arising from the termination. The balance, being the compensation for injury to feelings, can be paid free of tax, recognising that it may be appropriate for a larger payment to be made.

In addition, the Court of Appeal in Norman v. Yellow Pages Sales Ltd has held that an employer has no implied duty to apportion a termination payment between taxable and non-taxable elements. The employer is entitled to deduct tax on the full amount (above £30,000), and any dispute over the amount of tax payable is a matter for the employee, not the employer, to pursue with HMRC.

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The UK Government has now issued its response to its consultation “Phasing out the Default Retirement Age”, confirming that the default retirement age (DRA) of 65 will be abolished from 1 October 2011. The last retirement notice under the current procedure should be issued by no later than 30 March 2011, so employers have very little time to prepare. We understand draft Regulations will be laid before Parliament by the end of this month and will come into effect on 6 April 2011. 

The Government has stuck to its original proposal that, from 6 April 2011, employers will no longer be able to issue notices of retirement under the DRA procedure. In practice, notices must be issued by 30 March 2011 as the current procedure requires employers to give no less than 6 and no more than 12 months notice of retirement. Notices can be issued after 30 March 2011 and before 6 April under the short notice provisions but the employee could claim compensation of up to 8 weeks’ wages as a result. Where notifications have already been made prior to 6 April 2011, employers will be able to continue with retirement procedure, as long as the retirement is due to take place before 1 October 2011. Retirement notices already issued which provide for a retirement date on or after 1 October 2011 will be void.

No retirements using the DRA procedure will be possible from 1 October 2011. After that date it will only be possible to retire a particular employee at a particular age if the employer can objectively justify that age for retirement. This will be very difficult to do other than in particular professions (such as those requiring significant physical fitness) and will require substantial supporting evidence. 

Most importantly for employers, the Government has responded to employer concerns (as communicated by us in our response to the consultation) as regards group risk insured benefits (such as medical insurance, death in service and income protection). The Government’s proposal is to provide an exemption so that employers will be able to exclude employees aged over 65 (such age rising in line with increases in the State Pension Age) from benefits under these schemes, without risk of age discrimination claims being brought. This has been a particular concern for our clients, and so it will come as a relief to many employers who will be able to continue to operate existing schemes without incurring inflated costs. We await the draft Regulations to determine which schemes will be captured by the exemption.

ACAS has now issued guidance for employers “Working without the default retirement age.” While this has been designed to assist employers rather than set statutory guidelines, we recommend that all employers read this carefully. In addition to the new ACAS guidance, the Government recommends that employers look at the guidance already available through the Age Positive Initiative. This gives information on how to review retirement practices, manage performance and flexible approaches to retirement without the use of a fixed retirement age.

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The established view that cost considerations by themselves cannot justify age discrimination in the UK has been questioned in the recent decision of the Employment Appeal Tribunal (“EAT”) in Woodcock -v- North Cumbria Primary Care Trusts. The EAT in this case upheld the Tribunal’s decision that a redundancy dismissal timed so as to avoid ‘enhanced’ early retirement rights being triggered due to the appellant’s age, although unfair, did not amount to age discrimination. This was on the basis that it was objectively justified, on grounds other than cost alone. The EAT did not therefore go as far as to depart completely from the established view that cost alone cannot form the basis of an employer’s justification for age discrimination. However, its reasoning did suggest that, in some circumstances, there is no reason why this should not be sufficient to be the basis of justification.

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On the day the Equality Act 2010 came into force last Friday, it became apparent that there is a significant drafting error in the Act which could affect the enforceability of compromise agreements intended to settle discrimination and equal pay claims under the Act.

In order to have a qualifying compromise agreement the complainant must receive advice from an “independent adviser” about its terms and effect. The problem has arisen in relation to section 147 which sets out the requirements for an independent adviser. 

The Act, in force as of 1 October, provides in Section 147(5)(d) that:

‘. . . none of the following is an independent adviser in relation to a qualifying compromise contract:

(a) a person who is a party to the contract or the complaint; and

(d) a person who is acting for a person within paragraph (a) in

relation to the contract or the complaint . . ."

The literal effect of this would be that an adviser who has acted for the employee in relation to the contract or complaint to date cannot also advise the employee on a compromise agreement to settle a claim or complaint.   It would appear that this is a flaw in the drafting of this section of the Act.   

How will this be interpreted?

The Courts have built up, over the years, a line of case law which deals with the interpretation of drafting errors in legislation and other ambiguities. Where the wording of the statute is plain and unambiguous, the Courts are bound to construe them in their ordinary sense, even if it leads to an absurd result or manifest injustice. However, as soon as the provision is acknowledged to be ambiguous (i.e. more than one meaning can be derived from the plain reading of the words used) the Courts may take account of any absurdity that would occur from a particular interpretation. 

It appears that the wording of section 147 is plain and unambiguous in the way it is drafted. However, a reading of the explanatory notes shows that its effect is clearly not what the legislature intended. There is case law which indicates that the Courts may, in such cases, be prepared to look at all the evidence (such as Parliamentary debates recorded by Hansard) to determine what the legislation was intended to do.

We would hope that any Employment Tribunal faced with interpreting this section would agree that its meaning does not accord with the corresponding sections of other legislation such as section 203 of the Employment Rights Act 1996 (which relates to the settlement of claims under that Act, such as unfair dismissal), and therefore conclude that this could not have been the Government’s intention.

How could this affect employers?

Taking a literal interpretation of section 147 of the Act could mean that a compromise agreement is not valid because the adviser was not an independent adviser within the Act. Indeed, it could mean that no claim under the Equality Act could ever be settled by way of compromise agreement since an independent advisor is not allowed to be a person (e.g. solicitor) who is “acting” for an employee in relation to the claim or complaint.  

Options for employers and associated risks

As the wording of section 147 of the Act produces what can only be described as a clear error, it is hoped that Parliament will be able to resolve this shortly. Until that time, or until the Courts are required to make a declaration as to the meaning of this provision, employers are left in the uncomfortable position that there is a risk that their compromise agreements can be challenged as unenforceable. 

The only watertight solution is for employers to consider using a COT3, where appropriate. This is an ACAS form for conciliating an agreement between employer and employee. 

In cases where a COT3 is not appropriate, employers will have to assess the risk of continuing to use a compromise agreement. Essentially, the risk is that employers will be open to a challenge being made. However, given that the drafting error appears to be a simple one, which will not require much creativity on the part of the courts, it is hoped the risk will not be great or prolonged.

Click on the following link for the Government Equalities Office website, which contains all the latest news from the government on the Equality Act 2010 and its implementation, as well as links to the text of the Act and the Explanatory Notes.

Click on the following link for the Equality and Human Rights Commission website, which gives more information the Equality Act 2010 and the draft Codes of Practice.

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This post was written by Joanna Whiteman and Ruth Bonino.

In this Q&A, we have attempted to cover some of your most frequently asked questions on the UK Equality Act 2010.  This is not intended to be a comprehensive guide of the new provisions, so if you would like further information, please do not hesitate to contact us.

The Equality Act 2010 has been in the press a lot recently. Should we already have taken steps to ensure that our systems are in compliance with it?

The Equality Act 2010 ("the Act") received Royal Assent in April, just before the general election and after a period of intense discussion and debate.  The new coalition government has recently announced that most of the Act's provisions are due to take effect, as planned, from October 2010. However, despite this, questions remain over the more controversial provisions, such as the socio economic duty, gender pay reporting and positive action.

Employers need to act now in order to prepare for the Act, and the action we recommend is set out at the end of this note.  As regards those provisions of the Act where a question mark remains, there is no need to jump the gun - keep a close eye on developments, but be prepared to act as soon as any announcements are made.

I've heard that the Act makes it easier for employees to show they have suffered disability discrimination. Is this true?

The Act introduces some significant changes in the law concerning disability discrimination, and the government has said that these will come into force in October.  The changes have come about because of a recent decision of the House of Lords (London Borough of Lewisham v Malcolm (2008)), which rendered the existing protections against disability-related discrimination inadequate.  The changes make it easier for people to show they are disabled and are protected by disability discrimination law.  Two new types of disability discrimination are recognised as unlawful by the Act:

• Indirect discrimination - under Section 19 of the Act, a person will be indirectly discriminated against if the employer applies a "provision, criterion or practice" that puts people sharing that person's specific disability, at a particular disadvantage. This means, for example, that a job applicant or an employee with dyslexia could claim that a rule that employees must be able to type at a certain speed disadvantages people with dyslexia. Unless the employer can justify this, it would be unlawful.
• Discrimination arising from disability - under Section 15 of the Act, an employer discriminates against a person when it treats that person less favourably, not because of the disability itself, but because of something arising "in consequence of that person's disability," such as the need to take a period of disability-related absence. For this type of discrimination to occur, the employer must know, or reasonably be expected to know, that the disabled person has a disability. This type of discrimination will be easier for an employee to show since there will be no need to make a comparison with a person who does not have a disability (as is currently the position). It will, however, be possible for an employer to defend a claim by showing that the treatment is justified as being a proportionate means of achieving a legitimate aim.

Some aspects of disability discrimination law are not changed by the Act. For example, the Act still requires employers to make reasonable adjustments for disabled employees and does not change the extent to which these are required. However, it may be necessary to review your organisation's policies to ensure that they are up to date and compliant with the current interpretation of "reasonable adjustments."  It will also be advisable to review your policies and practices to ensure that they cover the new definitions of disability discrimination referred to above.

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The European Court of Justice (ECJ) has ruled that the protection of patients from declining performance of dentists due to their age may be a legitimate aim justifying difference in treatment on the grounds of age. However, whilst setting a maximum practising age of 68 for German national health service dentists is potentially lawful under the EC Equal Treatment Directive, it was not justifiable because German law permitted private dentists to practice beyond 68. The age limit was justifiable, however, on a different basis, namely because it gave opportunities to younger workers to join the health service(see Petersen v Berufungsausschuss für Zähn für den Bezirk Westfalen-Lippe). In another decision, the ECJ held that a German law which restricted applications to join the fire service to those under the age of 30 could be defended as a genuine occupational requirement. (see Wolf v Stadt Frankfurt am Main)

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In Ladele v The London Borough of Islington and Liberty, the Court of Appeal has confirmed the decision of the Employment Appeal Tribunal (EAT) that Ms Ladele, a Registrar of Births, Marriages and Deaths at Islington Council who held strong Christian beliefs, had not suffered discrimination on the grounds of her religion or belief when she was required by the Council to perform same sex civil partnership ceremonies. The Court made it clear that the Council had a legitimate aim to provide the full range of civil partnership services without discrimination and so was entitled to require Ms Ladele to perform the ceremonies despite her objections to doing so based on her Christian belief. Moreover, having been designated a Registrar, it was unlawful under the Equality Act (Sexual Orientation) Regulations 2007 for the Ms Ladele to refuse to perform such ceremonies.

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In Grainger plc and others v Nicholson the EAT has given guidance on what might qualify as a ‘philosophical belief’ for the purposes of the Employment Equality (Religion or Belief) Regulations 2003 (the “Regulations”). In the case, the Employment Appeal Tribunal (“EAT”) held that a belief in the existence of man-made climate change and the need to cut carbon emissions was capable of amounting to a philosophical belief which would qualify an employee holding that belief for protection from discrimination under the Regulations. However, importantly, the EAT made clear that it would be necessary for any claimant to establish that their adherence to the philosophical belief in question is genuine.

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In Rolls Royce Plc v Unite the Union, the Court of Appeal has ruled that using length of service as a criterion in a redundancy selection policy can be lawful in some circumstances. Although the use of length of service amounts to indirect age discrimination, it can be objectively justified where it pursues the legitimate aim of maintaining a stable workforce during a redundancy exercise and rewarding loyalty, and is a proportionate means of achieving that aim. In this case, the means of achieving that legitimate aim were proportionate because the criterion was one of many criteria used in the selection process and the means used were consistent with principles of fairness.

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The UK Government has published the long awaited Equality Bill, the aim of which is to harmonise and consolidate discrimination legislation and also tackle inequality and discrimination which continues to persist in employment and in the provision of services. Aspects of the Bill which have attracted media attention include the new public sector duty to consider reducing socio-economic inequalities and the banning of “gagging clauses” in employment contracts so that employees can be free to talk about their pay packages. The Bill also extends the concept of positive action to enable employers to recruit or promote people who are from groups which are under-represented in their workforce. Despite concerns of commentators and employers about the difficulties employers may face, the real practical impact of some of these provisions might be low. Other proposals may however have a greater impact. Large employers should note the proposed requirement to report on their gender pay gap, and the recasting of the definition of disability related discrimination should help to redress the balance between the protection of disabled persons and providing employers with the opportunity to defend the treatment that they have given. Many aspects of the Bill fall outside the employment law field but the main issues which will affect employment law are as set out below.

http://services.parliament.uk/bills/2008-09/equality.html

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The European Court of Justice has decided that the UK's retirement age of 65 is not necessarily in breach of EU law. However, that is not the end of the matter because the case must now return to the UK Court to decide if the UK's compulsory retirement age of 65 can be justified. This will require the High Court to assess if the retirement age pursues a legitimate aim (such as social policy objectives), and whether the means to achieve such an aim, i.e. a blanket mandatory retirement age of 65, is proportionate in achieving that aim.

Click here to view the Judgement of the European Court:

curia.europa.eu/jurisp/cgi-bin/form.pl

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The Advocate General of the European Court of Justice has rejected the claim by Heyday (an offshoot of Age Concern) that UK law, which entitles employers to retire employees compulsorily at or after reaching 65, is contrary to EU law.  In 2007, Heyday brought a claim in the High Court against the UK Government that the national default retirement age of 65 under the Employment and Equality (Age) Regulations 2006 was incompatible with the EU Law. The High Court referred certain questions regarding the lawfulness or otherwise of the Age Regulations to the European Court of Justice (ECJ). Before the ECJ can give its judgement, the Advocate General must give a preliminary legal opinion which is usually (but not invariably) followed by the ECJ. The AG’s opinion is therefore significant because it is more than likely to be followed.  Click here for a link to the opinion:

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:62007C0388:EN:HTML

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In the case of Tradition Securities & Futures SA v X & Y, the Employment Appeal Tribunal clarified the Employment Tribunals’ jurisdiction in sex discrimination cases.

Whilst this case relates to sex discrimination, its implications are relevant to other types of discrimination as well and will be of interest to large multi-national organisations whose employees work in various jurisdictions throughout their employment.

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In the eagerly awaited case of Coleman v Attridge Law & Steve Law, the European Court of Justice (ECJ) has ruled that the EC Equal Treatment Directive (‘the Directive’) prohibits direct discrimination and harassment by association. This ruling will have wide-reaching consequences for employers.

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The Government has published its White Paper, Framework for a Fairer Future – The Equality Bill, setting out its proposals for a Bill to be published in the next Parliamentary session.

Many of the White Paper’s proposals fall outside the employment law field. The main issues which will affect employment law are set out below.

Click to view the White Paper

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In the case of Mayor and Burgesses of the London Borough of Lewisham v Malcolm, the House of Lords has made potentially major changes to the law on disability-related discrimination. Although the case concerns issues to do with housing, the Lords’ decision will make it more difficult for employees to bring certain DDA claims. Particularly noteworthy is that the House of Lords concluded that the well-established ‘comparator’ test for DDA purposes, laid down by the Court of Appeal in the 1999 Clark v Novacold case, is incorrect.

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