UK Legislative Reform - No Summer Break

The sun may have finally decided to make an appearance but this is no indication of a relaxing summer break for employment specialists!

A number of key employment law provisions came into force on 25 June 2013, with 29 July 2013 as the next key date for legislative reform. We take a look at what employment-related legislative changes are in store this summer.

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What's Coming Up in UK Employment Law in April?

This post was written by Fiona McFarlane and Ruth Bonino.

It is that time of year again when the UK Government brings into force legislative changes relating to employment law. In this update we highlight the changes taking place in April 2012 and consider the impact these might have for employers.

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Dealing with dismissal and compensated no fault dismissal for micro businesses

The Government has recently issued a new “Call for Evidence”, Dealing with dismissal and “Compensated no fault dismissal” for micro businesses.  The main aim of the paper is to gather evidence from businesses to establish what can be done to encourage small employers to recruit more employees, whilst at the same time ensuring some protection for employee rights. The paper also aims to gather evidence regarding the dismissal process, and in particular how well the 2009 Acas Code works in the case of dismissals for underperformance. 

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What's coming up in UK employment law in 2012?

UK employment lawyers and HR professionals need to be on the alert this year to keep up with the numerous consultations and proposals which have been or are expected to be initiated by the Government. The key developments this year will be the increase in April in the qualifying period for unfair dismissal rights from one to two years and, in October, the introduction of the new pensions auto-enrolment rules but more is in the pipeline. 

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Government announces radical reform to UK employment laws

The Government has today announced what it describes as “the most radical reform to the employment law system for decades”. In a speech to EEF, the UK manufacturers’ organisation, Vince Cable outlined the results of the Government’s recent consultation on Resolving Workplace Disputes and the recent Red Tape Challenge Review of employment law. 

The proposals announced by Vince Cable include the following:

  • Merge, scrap or simplify 70 of the 159 employment regulations examined in the Red Tape Challenge (this includes consolidation of 17 national minimum wage regulations)
  • Publish calls for evidence on proposals to simplify TUPE and to reduce the minimum consultation period for proposed collective redundancies involving 100 or more employees, from 90 days to 60, 45 or 30 days (see links below to these consultation papers which were issued today and which will close on 31 January 2012)
  • Publish a call for evidence on simplifying dismissal processes, seeking views on two proposals: whether to introduce compensated no fault dismissals for micro firms with fewer than 10 employees; and how to simplify the existing dismissal process, potentially changing the Acas Code, or to provide supplementary guidance for small businesses.
  • Remove protection for any whistleblower making a disclosure about the worker’s own contract (to counter the EAT’s decision in Parkins v Sodexho Ltd [2002] IRLR 109
  • Create a universally portable CRB check that can be viewed by employers instantly online from early 2013
  • Consult on the introduction of fees for bringing a claim in the Employment Tribunal, seeking views on two options: a system involving an initial fee to lodge a claim and a second fee to take that claim to hearing; or a system involving a £30,000 threshold whereby anyone seeking an award above that figure will pay more to bring a claim
  • Consult on streamlining the current regulatory regime for the recruitment sector.

In addition, as part of the Government’s response to its consultation to the Resolving Workplace Disputes, the Government has said that it is committed to:

  • Increasing the qualifying period for unfair dismissal from one to two years from April 2012
  • Requiring all Employment Tribunal claims to be lodged with Acas and to be offered mediation before going to Tribunal
  • Modifying the formulae for up-rating Tribunal awards and redundancy payments to save business an estimated £5.4 million (net) a year
  • Giving Employment Judges discretion to levy a financial penalty, payable to the Exchequer, against employers for breach of employment rights
  • Consulting on whether employers should be allowed to have “protected conversations” with staff without the existence of a formal dispute and without such conversations capable of being used in evidence in a future Tribunal claim
  • Consulting on the simplification of compromise agreements, such as doing away with long lists of causes of action. Other proposals include introducing a standard text, amending s.146 Equality Act to provide reassurance that compromise agreements can safely be used to compromise discrimination claims, and renaming them “settlement agreements”
  • Consulting on developing a “rapid resolution” scheme which will offer a quicker and cheaper alternative to determination of straightforward, low value claims at an Employment Tribunal
  • Carrying out a review of Employment Tribunal rules, to be led by Mr Justice Underhill, who steps down at the end of this year from his Presidency of the Employment Appeal Tribunal.

Much of the detail of these proposals is yet to be revealed and we now have to wait for a number of consultations to be completed before we know more. It looks like 2012 will be an important year for employment law reform so watch this space!

Please click on the following links for more information:

Government Press Release:

http://nds.coi.gov.uk/content/detail.aspx?ReleaseID=422195&NewsAreaID=2&HUserID=895,779,885,848,782,879,710,705,765,674,677,767,684,762,718,674,708,683,706,718,674&ClientID=-1

Call for evidence on TUPE regulations (closing 31 January 2012)

http://www.bis.gov.uk/Consultations/call-for-evidence-effectiveness-of-current-tupe-regulations?cat=open

Call for evidence on collective redundancies (closing 31 January 2012)

http://www.bis.gov.uk/Consultations/call-for-evidence-collective-redundancy?cat=open

Government Response to Resolving Workplace Disputes

http://www.bis.gov.uk/Consultations/resolving-workplace-disputes?cat=closedwithresponse

Extensive new duty to provide agency worker information under TUPE and collective redundancy rules

Employers could face significant unanticipated penalties under TUPE and collective redundancy legislation as a result of the Agency Workers Regulations 2010 (AWR) which came into force on 1 October 2011.

The AWR adds to the list of mandatory information to be provided to employee representatives under TUPE (the Transfer of Undertakings (Protection of Employment) Regulations 2006) and collective redundancy legislation (s.188 of TULR(C)A 1992). From 1 October 2011, the AWR requires that employee representatives also be given information about the use of agency workers by the transferor including:

  • the number of agency workers working temporarily for and under the supervision and direction of the employer;
  • the parts of the employer's undertaking in which those agency workers are working;
  • the type of work those agency workers are carrying out.

The requirement is extensive since information is required in respect of all agency workers working "temporarily for and under the supervision and direction" of the employer. Under TUPE, the employer is the employer of any affected employees which is widely defined to include not just transferring employees but also those affected by the transfer, or those who may be affected by measures taken in connection with it. Hence, if only part of a business is transferred, it is not only necessary to provide information about agency workers working in the relevant part but also those working in all other parts of the employer’s business, provided they are under the supervision of the transferor. Agency workers working temporarily in the business or part that is transferred will not, however, transfer along with the employees of the transferor who are wholly or mainly assigned to the business. Nor does TUPE give them the right to participate in the election of the employee representatives.

However, a failure to comply with this new requirement could result in the employer receiving a punitive award of compensation of up to 13 weeks' actual pay per affected employee under TUPE and 90 days' actual pay per affected employee under the collective redundancy legislation.

The AWR makes no allowance for employers who had already complied with their TUPE/S.188 obligations prior to the additional requirements of the AWR coming into force on 1 October 2011. It follows that an employer risks incurring such penalties unless they comply with these extended requirements to provide information prior to the TUPE transfer or the collective redundancies taking effect. Further, to comply with the AWR it would be prudent for an employer to update the information provided to employee representatives if the number of agency workers fluctuates prior to the transfer date (in the case of TUPE transfers), or the date the redundancy dismissal take effect (for collective redundancy dismissals).

For further information, contact Ruth Bonino or any member of the Reed Smith employment team with whom you normally deal.

Impact of the UK Government's plan to increase the unfair dismissal qualifying period

In a speech this afternoon to the Conservative Party Conference, George Osborne Chancellor of the Exchequer has confirmed that the qualifying period for standard unfair dismissal claims is to be increased from one year to two from 6 April 2012. This statement does not come as a great surprise since the issue was the subject of a Government consultation earlier this year. The Chancellor said that this proposed change is one of a raft of measures to help small businesses. It is notable that the proposed extension of the qualifying period is not confined to small employers but would appear to affect all employers, irrespective of size. The Government has expressed the hope that by increasing the limit, employers will be more encouraged to take on new staff. As this change in the law would represent an erosion of employee rights, it is controversial and the unions in particular have expressed their opposition. It will, however, be welcomed by employers since it will make it easier for them to dismiss employees with less than two years’ service. 

Strong views will no doubt be expressed on both sides concerning the change, but will it make much difference in practice? 

  • The Government hopes that the number of standard unfair dismissal claims will drop by about 2000 per year. A reduction may well occur as employees who have not acquired precisely one year and 50 weeks’ continuous employment will not be entitled to make a claim for unfair dismissal, so will be more vulnerable to dismissal without their employer following the appropriate procedure.
  • It is likely, however, that there will be an increase in the number of discrimination or whistleblowing unfair dismissal claims, some of which are likely to be spurious. There is no qualifying period of employment for such claims and, significantly, neither have an upper compensation limit (unlike standard unfair dismissal where the limit currently stands at £ 68,400). Employees may therefore be inclined to bring more claims of this nature but it is possible that the proposal to introduce fees for bringing a claim in the Employment Tribunal might act as a deterrent to some extent.
  • Employers might become less focussed on dismissing poor performers early on. Prudent employers will often make use of probationary periods and will have therefore terminated the employment of those employees with whom they are unhappy, well before the current one year qualifying period is up.   For them, having the extra year to dismiss may perhaps not make a great difference in the ordinary course. Other less diligent employers may be tempted to delay performance management problems for longer than at present.  
  • In the difficult economic situation which businesses now face, employers may be tempted to select employees with less than two years’ service for redundancy rather than choosing longer service employees whose dismissals would be more costly (since they will trigger statutory redundancy pay). Employers should remember, however, that any employer proposing to dismiss 20 or more employees by reason of redundancy is required to observe the collective redundancy obligations of informing and consulting trade unions or employee representatives. Hence, even though employees with less than two years’ service might not have the right to redundancy pay, they will still be counted for the purposes of assessing whether collective redundancy obligations are triggered.

This isn’t the first time that there has been a qualifying period of two years. The limit prior to 1999 was also two years and was reduced by the Labour Government. Prior to this change in the law, there had been a legal challenge that the two year limit was itself indirectly discriminatory on the grounds of sex because women tended to have shorter service than men (R v Secretary of State exparte Seymour-smith and Perez (No.2) [2000] IRLR 263). The challenge was unsuccessful because although the House of Lords found that the limit did result in a disparate impact between men and women, it was objectively justified. However, the Government proceeded to change the law anyway since it had already committed to making the change in what was one of the first pieces of legislation of the incoming Labour Government. It is therefore conceivable that the increase could be subject to another such challenge since the question of whether the increase is objectively justifiable will turn on the statistical evidence presented to the Court at the relevant time. 

Another possible challenge might come on the grounds of indirect age discrimination. It is not inconceivable that statistical evidence could be adduced to show that the change has a disparate adverse impact on younger workers because they are less likely to have two years’ qualifying period of employment. If such evidence could be found, the Government would have to show that it had a legitimate aim in increasing the limit and that as a means of achieving that aim, the increase in the qualifying period was proportionate.   If, for example, the Government argues that its aim is to encourage employers to recruit more staff, one would assume that for that to succeed, there would have to be statistical evidence linking the change in the law with job creation. Even if that were possible, one can foresee arguments about alternative options that might have had a lesser detrimental impact on younger employees such as a reduction in the upper limit of the compensatory award for unfair dismissal.   It may not be an easy case for the Government to prove!

Click here for the Government's press release.

What's coming up in UK employment law this October?

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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UK Agency Workers - understanding the new regulations

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 5th 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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Final Preparations for the UK Bribery Act 2010

This post was written by Eleanor Winslet.

Are you ready for the Bribery Act 2010 (“the Act”) which will finally come into force on 1 July 2011? To help you, we summarise below the main points that HR professionals and in-house counsel should be thinking about to ensure their organisations are in the best position to defend themselves against any offences under the Act, and that employees are well-informed about its implications.

Offences

As said in our previous alert The Bribery Act – what it means for you, the Act sets four offences:

  • Offering, promising or giving a bribe;
  • Requesting, agreeing to receive, or accepting a bribe;
  • Bribing a foreign public official; and
  • Failure of a commercial organisation to prevent bribery.

An organisation will be guilty of the last of these four offences (the “Corporate Offence”) where an associated person” bribes another person with the intention of obtaining business, or an advantage in the conduct of business, for that commercial organisation. The organisation will have a defence to the Corporate Offence if it can show that it had in place “adequate procedures” designed to prevent bribery.

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Defective retirement notices could lead to unfair dismissal and age discrimination claims in the UK tribunals

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.

UK Regulations Amending PAYE Treatment of Post P45 Payments

This post was written by Fionnuala Lynch.

From 6 April 2011 the PAYE treatment of termination payments to an employee after a P45 has been issued will change. Any employers considering the timing of any imminent dismissals should consider whether it may be better to enter into any compromise agreement or other termination agreement before the end of this tax year. This will not change the actual amount of tax due but will have cash flow advantages for employees on higher rates of tax. As regards payments to be made after 6 April, employers should consider whether it may be better to make the entire payment before the issue of the P45 or structure the payment monthly, post P45. 

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What's Coming Up in UK Employment Law in April?

UK employment law seems to be in a constant state of flux and this year is no exception. Summarised below are the main legislative changes that employers need to know about this April. There are some urgent action points to consider before 6 April regarding serving any last minute retirement notices and the timing of termination payments.

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The Bribery Act - What it means for you

Guidance on the delayed UK Bribery Act 2010 has now been published. The guidance sets out what procedures a commercial organisation should adopt to prevent persons associated with it from committing offences under the Act. The breadth and importance of this legislation means that companies and their senior officers would be well advised to familiarise themselves with the effects of this new law.

In particular, the Act provides that "senior officers" (including non-board level managers) can "individually be held criminally liable" for a company’s bribery offences. The Act also includes extensive extra-territorial powers of prosecution similar to those found in the U.S. Foreign Corrupt Practices Act ("FCPA") and the offences apply to acts of bribery in both the public and private sectors (unlike the FCPA).

Reed Smith has produced a briefing note on the new Guidance. This new briefing note complements our previous briefing note on the substantive elements of the Act.

Phasing out the UK default retirement age: legal update

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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UK Government's final decision on plans to phase out the default retirement age

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 UK Equality Act 2010 - new risks for employers using Compromise Agreements

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.

The UK Equality Act - Your Questions Answered

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 UK Bribery Act 2010 - What it means for you

This post was written by Suzie A. Savage.

The UK Bribery Act 2010 has far-reaching implications for any business (including US businesses) which is either registered in the UK or which has any part of its operation in the UK. The breadth and importance of this legislation means that companies and their senior officers would be well advised to familiarise themselves with the effects of this new law.

In particular, the Act provides that “Senior officers” (including non-board level managers) can "individually be held criminally liable" for a company’s bribery offences. The Act also includes extensive extra-territorial powers of prosecution similar to those found in the U.S. Foreign Corrupt Practices Act (“FCPA”) and the offences apply to acts of bribery in both the public and private sectors (unlike the FCPA).

Reed Smith has produced a Client Briefing Note which provides you with a summary of the key provisions and offers suggestions for best practices to comply with the Act. Please click here for the full Reed Smith Client Briefing - The Bribery Act 2010.

In addition to this Client Briefing, Reed Smith is running a client teleseminar "The New UK Bribery Act 2010: What Does it mean for US Companies that operate in the UK?" on Thursday, June 10, 2010 from 12:00 pm - 1:00 pm ET; 11:00 am - 12:00 pm CT; 9:00 am - 10:00 am PT; 17:00 pm - 18:00 pm British Summer Time and 18:00 pm - 19:00 pm Central European Summer time.

Please click here to register for the teleseminar.

Changes in Employment Law for April 2010

In force from today are a number of legislative changes which will be of interest to employers. These include the new right to request time off to train and the replacement of sick notes with “fit notes”. Also expected to come into force today are various regulations relating to additional paternity leave which will affect parents of babies born or expected to be born on or after 3rd April 2011 and parents who are notified of having been matched for adoption on or after that date. For the moment, however, they still appear in their draft form but will no doubt come into force shortly.

New right to request time off to train

From 6 April 2010 employees working for employers with 250 or more employees have a new right to request time off to train. As from 6 April 2011, the right will extend to all employees, regardless of the size of their employer. The right will be available to employees only (not to other “workers”) and is subject to a qualifying period of service of 26 weeks. Employers are required to consider all requests seriously and follow a prescribed procedure. They may only refuse a request if they think that one of a number of specified business reasons set down in section 63F(7) of the Employment Rights Act 1996 apply. An employee whose application is refused can bring a claim before an Employment Tribunal but their remedies are limited to compensation of up to eight weeks’ pay and/or an order for the employer to reconsider the application.

For more information see the Government’s business link website

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What's on the cards for UK employment legislation this year?

Equality Bill

This long awaited piece of legislation is due to hit the statute books this Spring, with many of its provisions coming into force in October. It is this year’s most significant piece of legislation so far and will affect employers in both the private and public sectors. As well as harmonising and consolidating discrimination legislation, it will also strengthen it. For example, new types of disability discrimination will redress the balance in favour of the employee following the case of London Borough of Lewisham v Malcolm. Also, the definitions of direct discrimination and harassment will be widened to cover claims based on “association” and “perception” and there will be a new type of claim for gender pay discrimination based on hypothetical comparators. Widely publicised in the press is the extension of the concept of positive action to enable employers to choose from two equally qualified candidates, the person who is from a group which is under-represented in their workforce. It will also be possible for claimants to bring “multiple” direct discrimination claims. Finally, amongst other things, proposals to make the gender pay gap more transparent include a power to issue regulations which can require large employers (250+ employees) in the private sector to report their gender pay gap. Public bodies with more than 150 employees will be required to do this from 2011.

For more information, view the Bill.

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October Changes in Employment Law

Continue reading for an overview of what legislative changes have taken effect from the beginning of this October.

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House of Lords paves way for back-dated holiday pay claims

The House of Lords, in the case of HM Revenue and Customs v Stringer and others has overturned the decision of the Court of Appeal in that case, ruling that claims for unpaid statutory holiday pay and accrued statutory holiday pay on termination under the Working Time Regulations 1998 (“WTRegs”) can be made as unlawful deduction from wages under the Employment Rights Act 1996 (“ERA”), as well as under the WTRegs. This will mean that workers can take advantage of the more favourable time limits which apply under the ERA, which could potentially allow them to claim unpaid holiday pay on termination of their employment going back several years, provided they bring their holiday pay claim within three months of their employer’s most recent failure to pay them holiday pay. This decision will not be welcomed by employers as it will increase the cost of both continuing to employ workers on long term sick leave, and also on termination of their employment. It also leaves unresolved a number of practical problems arising from the decision of the European Court of Justice (ECJ) earlier this year on this issue (see our blog for details of the ECJ decision). 

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The Equality Bill

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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European Court rules on holiday pay during sick leave

The European Court of Justice has ruled that workers on long term sick leave will not lose their right to holiday pay where they have been unable to take the holiday by virtue of being on sick leave. This decision is very unwelcome to employers as it will increase the cost of both continuing to employ workers on long term sick leave, and also on termination of their employment. Read on to see what we think this means for employers in practice.

Gerhard Schultz-Hoff (C-350/06) v Deutsche Rentenversicherung Bund, and Mrs C. Stringer and Others (C-520/06) v Her Majesty’s Revenue and Customs

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Phasing out of the statutory procedures

The Regulations bringing parts of the Employment Act 2008 into force on 6th April 2009 also introduce transitional arrangements for the removal of the statutory dispute resolution procedures. These regulations provide for one set of arrangements for dismissal and disciplinary actions, and another for grievances. These changes will be important for all HR managers and line managers. In particular, the transitional arrangements relating to grievances may catch many employers out in the year ahead.

The Employment Act 2008 (Commencement No. 1, Transitional Provisions and Savings) Order 2008

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April changes to the Tribunal Rules of Procedure

Regulations to amend the 2004 Employment Tribunal Rules of Procedure have been laid before Parliament and will come into effect on 6th April 2009. These changes will be relevant to all practitioners and HR managers involved in Tribunal proceedings – take note in particular of the changes regarding making a request to extend time for filing a Response.   

The Employment Tribunals (Constitution and Rules of Procedure) (Amendment) Regulations 2008

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What is coming up in Employment Law in 2009?

 

Some important legislative changes are planned for 2009, including the abolition of the statutory dispute resolution procedures and the extension of the right to request flexible working for parents with children under 16. Read on for a summary of these and other expected developments which may affect your business in the year ahead.

 

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UK's 48 hour working time opt-out under threat

The UK’s ability to opt out of the 48 hour working week is now in peril following the European Parliament vote this week to have it scrapped. The UK’s opt out of this element of the Working Time Directive (in other words employees in the UK being able to agree to opt out of the limit) was agreed in the 1990s but has been under threat now for a number of years. The vote will come as a great disappointment to UK businesses bearing in mind that earlier this year the UK agreed to the Temporary Agency Directive provided it could keep the Working Time Directive opt out. Keeping the opt out was, however, dependent on being accompanied by a number of conditions which guarantee the protection of health and safety of workers. The European Parliament was not convinced that keeping the opt out does not undermine health and safety. 

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Revised ACAS Code of Practice approved

The Secretary of State has approved the new draft ACAS Code of Practice on discipline and grievances following public consultation. The new draft Code has been revised to take into account the changes proposed to be made to workplace dispute resolution procedures by the Employment Act 2008, which received Royal Assent on 13th November.

In the consultation, which ended in July this year, the draft Code was criticised for being too vague, which it was suggested, could have led to increased litigation. The revised Code has addressed some of these concerns by adding more detail, but this may have the effect of restricting flexibility and leave employers open to challenge when mistakes or omissions are made.   Employers should now think about what changes are needed to disciplinary and dismissal, capability, performance and grievance policies in time for 6 April 2009 when the Code is likely to come into force.

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EU Temporary Workers Directive approved by European Parliament

After many years of political wrangling, the European Parliament has finally approved a Directive giving new rights to temporary agency workers. The Directive must now be implemented into each Member State’s national laws within three years.

Press release of the European Parliament. 

The Directive should be accessible via this link as soon as it is available in its approved form.

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What's coming up in Employment Law this Autumn?

Continue reading for an overview of what legislative changes to expect and prepare for this coming October.

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Legislation Update

In addition to the Equality Bill which we reported on last week, recent developments include secondary legislation under the Employment Bill, draft regulations relating to terms and conditions of employment during maternity leave, draft guidance for the revised new ACAS code, EU proposals on working time, and new consultations on carers and the right to request training during employment. Read on for a brief overview of these proposals, as well as links to the relevant documentation for further reading. 

 

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Government publishes White Paper on Equality Bill

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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Legislation Update

 

In this edition of Human Capital we give you a brief update of some recently announced or proposed developments in employment law.

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ACAS publishes draft Code of Practice for consultation

On 2 May 2008, ACAS published a new draft Code of practice on discipline and grievances for public consultation. The Code has been revised to take into account the changes proposed to be made to workplace dispute resolution by the Employment Bill, currently before Parliament, and in particular the forthcoming abolition of the statutory dispute resolution procedures.

Consultation Paper and draft Code of Practice

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What's coming up in employment law this April?

 

What’s coming up in employment law this April?

Continue reading for an overview of what legislative changes to expect and prepare for this coming April.

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