2008 EMPLOYMENT ARTICLES
 

SUMMER 2008 ARTICLES:

WINTER 2007/2008 ARTICLES:
 

 

ACAS CONSULTS ON DRAFT CODE OF PRACTICE ON DISCIPLINE AND GRIEVANCE

The Employment Act 2002 (Dispute Resolution) Regulations 2004, which require employers and employees to operate statutory minimum disciplinary, dismissal and grievance procedures, were intended to give those involved the chance to settle complaints without recourse to litigation. However, the anticipated reduction in the number of tribunal claims did not happen and the procedures have been widely criticised for being poorly drafted and overly complex. An independent review of the options for simplifying and improving all aspects of employment dispute resolution recommended that the statutory dispute resolution procedures be repealed and replaced with non-prescriptive guidelines on grievances, discipline and dismissal.

To this end, the Advisory, Conciliation and Arbitration Service (ACAS) has published for consultation a revised Code of Practice providing practical guidance for employers, employees and their representatives. This sets out basic principles for handling disciplinary and grievance situations in the workplace. Failing to follow the Code will not, in itself, make a person or organisation liable to proceedings but employment tribunals will have the power to adjust by up to 25 per cent any awards made in relevant cases for unreasonable failure to comply with the Code.

The Government plans to introduce the changes in workplace dispute resolution procedures in April 2009 and it is intended that the revised ACAS Code will come into effect at the same time.

The draft Code of Practice can be found here.  The consultation closes on 25 July 2008.

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AGE DISCRIMINATION - YOUNG WORKERS

The Employment Equality (Age) Regulations 2006 make direct and indirect age discrimination illegal in an employment context, unless the treatment can be objectively justified. The legislation applies to discrimination against young as well as older workers.

Recently, a woman who claimed that she was dismissed for being 'too young' won her claim of age discrimination (Wilkinson v Springwell Engineering Limited).

Leanne Wilkinson was 18 years old when she began working for Springwell Engineering Limited, in Newcastle upon Tyne, as an office administrator. She was dismissed without notice during a three-month probationary period and was asked to leave the premises immediately.

Miss Wilkinson claimed that her employer told her that it needed an older, more experienced person to do the job. Springwell Engineering claimed that she was dismissed on grounds of capability.

The Employment Tribunal upheld Miss Wilkinson's claim. The company had relied on a 'stereotypical' assumption that capability equals experience and experience equals older age. There was also a lack of any 'orthodox procedures' when recruiting Miss Wilkinson and when her employment was terminated.

Miss Wilkinson was awarded £5,000 for injury to feelings, approximately £5,000 for loss of earnings and two weeks' pay because the company had failed to provide her with full written particulars of her employment. The award was increased by 50 per cent because the employer had failed to follow statutory procedures. In addition, the company was ordered to provide any prospective employers with a truthful reference stating that Miss Wilkinson's dismissal was due to a breach of the age discrimination regulations, not that she was dismissed on capability grounds.

Employers are reminded that employees do not have to have worked for a specified period before they are entitled to bring a claim for discrimination. Equal opportunities training should be given so that stereotypical views linking age with competence do not go unchecked, leaving you open to a claim.

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CHANGES OF CONTRACT TERMS AND CONDITIONS

If an employer seeks unilaterally to make changes to the terms and conditions of an employee's contract of employment and the employee is not in agreement with them, it is generally a breach of contract. In serious cases, the employee can have the right to reject the employer's proposals and to resign and claim constructive dismissal. Other options open to the employee are:

  • to go along with the employer's proposals;
  • to refuse to work under the new terms and put the onus on the employer to take appropriate action; or
  • to reject the proposals but to continue to work, under protest, under the new terms, whilst reserving all rights and perhaps bringing court or tribunal procedures in the event that a negotiated agreement cannot be reached.

In the recent case of Robinson v Tescom Corporation, Mr Robinson objected to Tescom's restructuring proposals, which meant that his sales area was increased to cover the whole of the South of England. On 25 September 2006 he wrote to his employer saying that he did not accept the new terms and was treating the change as a breach of contract but would work under the terms of the varied job description, under protest, whilst regarding himself as dismissed and retaining the right to claim damages in future if a satisfactory agreement were not reached. The wording of his letter was taken from the Advisory, Conciliation and Arbitration Service (ACAS) advice leaflet on variations in a contract of employment. This sets out the employee's options in such circumstances. However, Mr Robinson failed to work to the new terms and was subsequently summarily dismissed for gross misconduct for failing to follow a reasonable management instruction. Mr Robinson brought claims for unfair dismissal and breach of contract.

The Employment Tribunal (ET) dismissed Mr Robinson's claims. Whilst he could have resigned and claimed that he had been constructively dismissed, he did not do so and was thereby affirming the continued existence of the contract. He had agreed to work under the new contract terms but then refused to comply with Tescom's instruction to do so. In the circumstances, this failure to cooperate was gross insubordination and his employer's decision to dismiss him was within the band of reasonable responses.

The Employment Appeal Tribunal upheld the ET's decision. The option Mr Robinson chose to take required that he work within the varied contract, albeit under protest. He did not keep to his side of the bargain but insisted on working to the terms of his original contract while the situation was under review and ignored the new job description to which he had agreed to work.

The employee in this case was left without a remedy because he confused the options open to an employee in such circumstances. If you wish to change your employees' contract terms or face proposals from your employer for unilateral changes to your existing terms, we can advise you to ensure you take appropriate action.

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DISABILITY DISCRIMINATION - NORMAL DAY TO DAY ACTIVITIES

Under the Disability Discrimination Act 1995 (DDA), a person has a disability if they have a physical or mental impairment which has a long-term substantial adverse effect on their normal day-to-day activities. The DDA requires employers to make reasonable adjustments to accommodate the needs of disabled employees.

In Paterson v Commissioner of Police of the Metropolis, the Employment Appeal Tribunal ruled that a policeman who was dyslexic was disabled for the purposes of the DDA. Mr Paterson claimed that his employer had failed to make reasonable adjustments to take account of his dyslexia, particularly with regard to the exams he had to take as part of the police promotion process. The Employment Tribunal (ET) had earlier ruled that he was not disabled within the terms of the DDA because his dyslexia did not have a substantial adverse effect on his ability to carry out day-to-day activities.
The case was remitted back to the ET for determination of the claim on its merits and Mr Paterson has now won his claim.

Earlier this year a dyslexic police recruit succeeded in a claim of harassment and disability discrimination against Essex police. The ET found that he was treated as if he were 'thick and stupid' and no proper adjustments were made to mitigate the effects of his condition. In its view he had no option but to resign after other officers set out to humiliate and intimidate him.

Where an employee has a learning difficulty which is covered by the DDA, it is important to make sure that other employees appreciate this. We can advise you on how to go about making reasonable adjustments and how to ensure that an employee does not receive less favourable treatment because of their disability, please contact James Bell for further information.

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EMPLOYEE WINS RELIGIOUS DISCRIMINATION CLAIM

Employees are protected under the Employment Equality (Religion or Belief) Regulations 2003 from discrimination by reason of any religion, religious or philosophical belief. There is an exception where belonging to a particular religion or having a particular religious belief is a genuine and determining occupational requirement for a post and it is proportionate to apply the requirement in the particular case.

An employee who worked for a Christian charity recently won his claim of constructive dismissal and discrimination on grounds of religion or belief.

The Employment Tribunal (ET) heard that the charity, Prospects, which receives public money for its work with people with learning disabilities, had previously employed a number of non-Christian staff and volunteers. In 2004, it began recruiting only those who were practising Christians and informed existing staff members who were non-Christians that they would no longer be eligible for promotion. Prospects claimed that it was protected by the genuine occupational requirement exception but the ET judged that its actions constituted discrimination under the Regulations.

The legal costs of the claimant in this case were paid by the British Humanist Association (BHA). Executive Director of the BHA, Hanne Stinson, commented that the outcome would "have far-reaching repercussions for religious employers, as faith-based organisations will have to be much more stringent when they wish to discriminate on grounds of religion or belief in employment and attach a 'Genuine Occupational Requirement' to their jobs."

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EMPLOYER RESPONSIBLE FOR WORK-RELATED SUICIDE

Employees, or their dependants, are entitled to claim damages for injury caused by a workplace accident if:

  • there was a duty of care owed to the injured person;
  • that duty was not performed; and
  • it was reasonably foreseeable that harm would result from a failure to discharge the duty of care.

In Corr v IBC Vehicles, the House of Lords ruled that the widow of a man who committed suicide six years after he suffered severe head injuries in a workplace accident should be compensated by his former employer.

Thomas Corr had no history of psychiatric illness prior to the accident in 1996, after which he underwent lengthy and painful reconstructive surgery. He began to suffer post-traumatic stress disorder and subsequently became severely depressed. In May 2002, he killed himself by jumping from a multi-storey car park.

Mr Corr's widow sued IBC Vehicles for pain, suffering and loss caused by the accident and by her husband's suicide. IBC Vehicles admitted liability for the accident but denied liability under the Fatal Accidents Act 1976 for the suicide. The High Court awarded Mrs Corr damages of £82,520 but dismissed the Fatal Accidents claim. In the Court's view, the employer's duty of care to the deceased did not extend to preventing his suicide and his suicide was not reasonably foreseeable.

The Court of Appeal overturned this decision. It held that the key factor was not whether the particular outcome was foreseeable but whether the type of harm for which damages were sought was foreseeable. In this case, the foreseeable harm was depression and this was the cause of Mr Corr's suicide. There was therefore no break in the chain of causation.

IBC Vehicles appealed. It submitted that whilst depression had been a foreseeable consequence of its breach of duty, Mr Corr's suicide was not. In its view, this was an unreasonable, voluntary act that had broken the chain of causation. The House of Lords dismissed the appeal and held that the employer was liable under the Fatal Accidents Act, even though Mr Corr's death was self-inflicted.

The Lords held that to establish liability it was not necessary to be able to foresee the precise form that damage resulting from a breach of the duty of care might take and suicide could not be regarded as so unusual and unpredictable as to be outside what was reasonably foreseeable. Mr Corr's suicide was the action of a man suffering from a severe depressive illness that impaired his ability to make reasoned and informed judgments about his future and the illness, as had been acknowledged, was a consequence of the employer's actions. Lord Bingham said, "It is in no way unfair to hold the employer responsible for this dire consequence of its breach of duty although it could well be thought unfair to the victim not to do so."

This decision could have serious implications for employers. As well as ensuring that health and safety policies and procedures are in place to minimise the risk of injury to employees, employers should also have effective procedures for identifying and dealing with workplace stress. Contact James Bell for advice on this matter.

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HEARING SCHEDULED ON RETIREMENT AGE CHALLENGE

The UK Employment Equality (Age) Regulations 2006, which came into force on 1 October 2006, make all retirement ages under 65 illegal unless objectively justified.

Heyday, an organisation backed by Age Concern to support people approaching or in early retirement, has challenged the Government over the inclusion of the mandatory retirement age on the grounds that this means that the Regulations do not fully implement the EU Equal Treatment Directive. The organisation wants the legislation amended to give workers over 65 the same protection from discrimination as younger workers. In order to settle this issue, the matter was referred to the European Court of Justice (ECJ).

A hearing is due to be held before one of the ECJ's Advocate Generals on 2 July 2008. A written submission on the merits of Heyday's case and the legality of the UK Government's transposition of the EU Directive will then be submitted to the ECJ and it is possible that the Court will come to its decision before the end of the year.

There are many workers who wish to continue working after the age of 65, so the ECJ's ruling on the Heyday organisation's challenge to the age discrimination legislation, as implemented in the UK, is awaited with interest.

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MENTAL HEALTH IN THE WORKPLACE

The issue of mental health can be a very difficult one for employers to deal with, but it is one that should not be ignored. The 2006/07 survey of self-reported, work-related illness, published by the Health and Safety Executive (HSE), indicated that approximately 530,000 people in Britain believed that they were experiencing work-related stress at a level that was making them ill. Research commissioned by the Shaw Trust in 2006 estimated that three in every ten employees will have a mental health problem in any one year. In addition, mental ill health is costing businesses as much as £9 billion a year in salaries, excluding the cost of lost time and productivity.

Aside from issues of productivity, employers have a duty of care to their employees, which includes a duty not to cause an employee psychiatric harm. Whilst there may be an underlying cause of an employee's mental ill health that lies outside the workplace, do not assume that this is the case and do nothing. There may be measures you could take to make things easier. If the problem is work-related then the employer has a responsibility to control and help remedy it.

Many workers in the UK work long hours and suffer stress as a result. Where an employer is guilty of a serious breach of the Working Time Regulations, as regards hours worked and rest breaks allowed, this will be taken into account when deciding if psychiatric injury was reasonably foreseeable for the purposes of a damages claim for stress. Failing to take reasonable steps to prevent an overworked employee's breakdown by refusing to respond to signs that they are struggling to cope is a breach of the duty of care owed to the employee by the employer. Bullying can cause psychiatric damage and an employer can be held vicariously liable if an employee suffers a stress-related illness as a result of being bullied by another employee and the employer is found to be in breach of its duty of care.

In spite of the disruption that mental health problems can cause in the workplace and the legal duties that reside with the employer with regard to the health and safety of employees, the 2006 research revealed that 80 per cent of the companies surveyed did not have a formal policy for dealing with stress and mental ill health at work and 70 per cent were of the view that they did not know enough about their legal position and obligations as regards mental health in the workplace.

There is useful guidance on dealing with this issue on a general level on the Health and Safety Executive's website. In addition, the Advisory, Conciliation and Arbitration service has guidance on how to spot signs of depression in the workplace, this can be found here, and a booklet entitled Health, Work and Wellbeing available here.

For individual advice on dealing with a specific stress-related or mental health issue or for assistance in drawing up a formal policy, contact James Bell.

Statistics
See HSE website and also Mental Health, The Last Workplace Taboo, June 2006.

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NEW RIGHTS FOR AGENCY WORKERS

In recent years there have been several failed attempts by the European Union Council of Ministers to agree on proposals to improve the employment rights of agency workers. In December 2007, the Agency Workers Directive (AWD), giving temporary workers equal pay and conditions, was blocked by a minority of countries including the UK. However, the issue is not going to go away. France, which takes over the EU presidency in July, is in favour of the Directive.

Meanwhile, the Government has also come under pressure at home, with a Private Member's Bill proposing new rights for agency workers receiving a second reading and trade unions stepping up their campaign to hold the Government to its manifesto promise to provide better protection for temporary workers. Add to that the criticisms from the courts on the law governing the employment status of agency workers and it is clear that the Government needed to act. This has now happened, with the announcement of a compromise 'deal' between unions and employers that will give agency workers in the UK many of the same rights as employees after 12 weeks' employment. It is hoped that this will improve the lot of agency workers whilst still providing employers with flexibility. The Government believes that this will lead to agreement in Europe on an AWD that secures the flexibility the UK seeks.

Agreement has been reached on the following points:

  • after 12 weeks in a given job an agency worker will be entitled to equal treatment; and
  • equal treatment will be defined to mean at least the basic working and employment conditions (e.g. pay and holidays) that would apply if the worker had been recruited directly by the employer to occupy the same job. It will not cover occupational social security schemes (e.g. sickness benefit and pension schemes).

The Government will engage with its European partners to seek consensus on the terms of the AWD that will enable this agreement to be brought into legal effect in the United Kingdom. It is hoped that EU agreement will be obtained in time for the legislative changes to be introduced in the next parliamentary session.

Although the Government states that there are estimated to be 1.4 million agency workers in the UK, according to a report from Leeds University Business School the most reliable statistics come from the Labour Force Survey (conducted by the Office for National Statistics), which shows that in 2007 there were on average 250,000 agency workers making up 1 per cent of the workforce. The analysis shows that agency workers earned £7.80 per hour on average in 2007 compared with £11.47 for permanent workers.

There will now be consultation on mechanisms for resolving disputes concerning the definition of equal treatment and compliance with the new rules. The Government will also consider anti-avoidance measures, in particular how to treat repeat contracts for the same worker, so there is likely to be much debate before the final details of the legislation are known. We can advise you on the legal aspects of your temporary or permanent staff agreements please contact James Bell.

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POOL CARS - ARE THEY SAFE?

Approximately one third of all road traffic accidents involve someone who is at work at the time. Following a series of checks carried out by its examining engineers on over 21,000 pool cars, the RAC has reported that nearly a fifth of pool car fleets may not be roadworthy.

The investigation found that:

  • 16 per cent of the pool cars examined were unroadworthy;
  • almost 8 per cent did not have the correct fluid levels;
  • 14 per cent did not have the correct tyre pressure or tyre tread; and
  • 19 per cent did not have a full service history.

The findings suggest that many pool cars are not undergoing basic checks and maintenance or regular servicing.

Businesses that operate a car pool for employee use should have procedures in place to ensure that the vehicles are well maintained to reduce the risk of an accident. Routine maintenance and safety checks should be recorded and a full service history kept for each vehicle.

With the introduction of the Corporate Manslaughter Act on 6 April 2008, businesses which adopt a cavalier attitude to any aspect of workplace health and safety are walking a tightrope. We can review your health and safety policies and procedures to help you minimise the legal risks to your business.

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PREGNANCY, SEX DISCRIMINATION AND IVF TREATMENT

One in seven couples in the UK has difficulty conceiving a baby and around 6,000 babies are born each year as a result of women undergoing in vitro fertilisation (IVF) treatment.

The European Court of Justice (ECJ) has handed down a judgment (Mayr v Flöckner) which gives guidance as to the treatment of a woman who is absent from work because she is undergoing fertility treatment.

Ms Mayr was employed by Flöckner as a waitress. She was undergoing IVF treatment and was certified as sick by her doctor from 8 to 13 March 2005. The transfer of the fertilised ova into her uterus was planned for 13 March. On 10 March, her employer dismissed her by telephone with effect from 26 March 2005.

The question before the ECJ was whether or not protection under the Pregnant Workers Directive 92/85 extends to a worker who is undergoing IVF treatment when, at the time of her dismissal, in vitro fertilised ova exist but have not yet been implanted? In the ECJ's view the woman was not a 'pregnant worker' for the purposes of the Directive. In some member states fertilised ova may be kept for a long period or stored as a precautionary measure. Had the Court ruled otherwise, it would have granted protection where implantation was delayed for whatever reason.

However, the Equal Treatment Directive 76/207 states that '...the principle of equal treatment shall mean that there shall be no discrimination whatsoever on grounds of sex either directly or indirectly by reference in particular to marital or family status'. The ECJ ruled that dismissal of a female worker at an advanced stage of the IVF process, as in this case, would amount to direct discrimination on the grounds of sex as the treatment involved is only given to women.

Employers are advised to proceed with care if they are considering dismissing a woman for persistent absence from work if they are aware that she is or has been undergoing IVF treatment. Whilst this would not be a pregnancy related dismissal, if the woman is undergoing the advanced stages of the treatment she could be entitled to bring a claim of sex discrimination. Contact James Bell for advice on making sure your maternity policies and procedures are up to date.

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REDUNDANCY - DEFINITION

In the current economic climate, many businesses will be seeking to cut costs and this could involve making organisational changes or making staff redundant.

In Martland v Co-operative Insurance Society Ltd., the Employment Appeal Tribunal (EAT) considered the question of whether employees who had been dismissed and then refused the new terms and conditions offered to them were redundant and therefore entitled to redundancy payments.

The claimants worked as 'Financial Advisors' (FAs) for the Co-operative Insurance Society (CIS). They had previously been called 'agents/collectors' and a traditional feature of CIS was that its agents provided advice to and collected premiums from its customers in their own homes. Faced with severe financial difficulties however, CIS decided to transform its entire operation, which involved improving the productivity of the FAs by having them spend more time procuring sales and less time with existing customers for non-selling purposes. To this end, CIS sought to achieve union agreement to changes in the FAs terms and conditions of employment. When this failed, it terminated their contracts and offered them new ones on different terms.

For the purposes of the Employment Rights Act, an employee is regarded as having been dismissed by reason of redundancy if the main reason for the dismissal is that the business no longer has a need for employees to carry out 'work of a particular kind'.

The Employment Tribunal (ET) examined whether the new terms and conditions offered to the FAs required that they carry out work of a particular kind that was different from the work performed under their original contracts. If it did, then the dismissals were by reason of redundancy.

The ET held that the dismissals were not by reason of redundancy but because of a reorganisation. They were therefore for 'some other substantial reason' and thereby fair. The FAs had essentially been employed as salespersons and whilst the reorganisation meant that the techniques used might be different, the bulk of the selling would still be undertaken by them. The EAT dismissed their appeal. There was no single right or wrong answer to the question whether or not the work under the new terms and conditions could be described as being of a different kind. The judgment involved assessing all the evidence. The ET was entitled to reach the decision it had and had given clear reasons for so doing.

As regards the entitlement to redundancy payments, the FAs had claimed that they were entitled to an enhanced contractual redundancy payment, well in excess of the statutory amount, as provided for under a collective agreement. Their contracts of employment provided for terms agreed in the course of collective negotiations to form part of the contract. However, whilst containing precise details of the 'severance terms', the collective agreement stated that 'this process is not intended to form part of individual contracts of employment'.

The ET held that had the dismissals been by reason of redundancy, the FAs would have been entitled to the enhanced payments. CIS cross-appealed this finding. In the EAT's opinion, 'where there is a term which is manifestly apt for incorporation into the individual contract, as the redundancy severance terms were, then it would require very clear and unambiguous language to deny it contractual effect'. The unions and employees would have expected the negotiated terms of the agreement to be met in the event of redundancy and the EAT judged that there would have been an obligation to make the enhanced payments.

For advice on changing the terms and conditions of employee contracts or on any aspect of redundancy, contact James Bell.

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RESTRICTIVE COVENANTS

It is not uncommon for employment contracts to contain restrictive covenants, intended to protect the employer's business in the event that an employee leaves. However, if these are drafted in such a way that their enforcement would prevent the employee from earning a living, the courts have been apt to strike them out as being unenforceable. A restrictive covenant will only be valid if the employer can show that it does no more than protect the legitimate interests of the business and is reasonable with regard to time and the area it covers. It cannot restrict a former employee from using his or her general skills but can legitimately protect trade secrets.

In some recent cases, the courts have begun to take a more flexible approach. Rather than dismissing as unenforceable a restrictive covenant that is too widely drafted they have sought to interpret it in a way that achieves a balance so that the employer's position is protected whilst the employee is not deprived of his or her livelihood.

In a recent case in the Scottish Court of Session (Christie Owen and Davies Plc v Walton), the former employer had obtained an injunction to enforce a restrictive covenant in Mr Walton's contract. Mr Walton had worked for Christie Owen and Davies as a chartered surveyor, specialising in the care sector. Mr Walton challenged the ruling, claiming that the terms of the covenant were too restrictive, in particular that the definition of a 'prohibited business' that it contained effectively prevented him from working as a chartered surveyor.

The background to the case was that Mr Walton had for some months been looking for another job. In December 2007 he accepted employment with another company which was aiming to establish an agency working in the healthcare sector in Scotland. Prior to this, in November 2007, he had sent emails to his girlfriend's computer which contained contact details relating to his work with Christie Owen and Davies in their Edinburgh office. The company's IT security system detected the transfer of the large data files and the senior managers were notified. The company claimed that Mr Walton was gathering confidential information to take to his new employer to assist their expansion into the care sector in Scotland. Mr Walton claimed that he had transferred the files so that he could work at his girlfriend's home, where he was living. On 7 December he was dismissed on the ground of gross misconduct.

The definition of a prohibited business contained in the restrictive covenant referred to any business carried on by Christie Owen and Davies during the relevant period with which the employee 'shall have been directly or materially concerned in the course of his employment'. Mr Walton argued that he had been directly involved in far more activities than just the care sector and that the restriction was unreasonable, being wider than was necessary to protect the employer's trade connections in that sector alone.

Mr Walton lost his appeal. In the Court's view, the restriction only limited him from working in an organisation in the business sector with which he had been 'directly and materially' involved and so recognised that an employee may have carried out various activities in the course of his employment but unless these formed a significant part of his work, those business activities would not be prohibited. The restrictive covenant as regards his work in the care sector was therefore effective.

We can advise you on drafting restrictive covenants that will both protect your legitimate business interests and also be viewed as a reasonable restriction with regard to the individual nature of your business. Contact James Bell for advice.

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RIGHT TO REQUEST FLEXIBLE WORKING TO BE EXTENDED

Whilst anyone can ask their employer for more flexible working arrangements, at the moment only parents and others (such as guardians) who are responsible for looking after children under the age of six years (or 18 years if the child is disabled) and those with caring responsibilities for adult relatives have the legal right to request to work flexible hours, provided they have worked for their employer for 26 weeks continuously before the application is made. The employer is obliged to take the request seriously.

The Government has now announced a proposed extension of this right to those with children up to age 16, as recommended in an independent review carried out by Imelda Walsh, the HR Director of Sainsbury's. This will mean that an extra 4.5 million parents in Britain will gain the right to request flexible working. The Government will now consult on implementing the proposals.

Where the legal right to request flexible working exists, an employer must consider a request seriously and must follow a set procedure and timetable. An employer can only refuse such a request if they can demonstrate a clear business reason for doing so.

The review document can be found here.

If you receive a request for flexible working arrangements and would like individual advice, please contact James Bell.

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RISK ASSESSMENTS & ROUTING ACTIVITIES

Two recent cases involving breaches of the Health and Safety at Work etc. Act 1974 have highlighted the need for those with health and safety responsibilities to be vigilant in ensuring that day-to-day tasks are carried out in a way that does not put workers at risk.

The Health and Safety Executive (HSE) brought the two cases, against JCB Earthmovers Ltd. and JC Bamford Excavators Ltd., before the Crown Court, after two employees died in separate incidents whilst carrying out routine tasks. Both companies had pleaded guilty to charges at earlier court hearings.

Welder Darren Ellis was testing the fuel tank of an earthmoving machine for leaks when the inspection plate blew off, causing him fatal head injuries. The investigation into the accident revealed that he had connected a high-pressure instead of a low-pressure airline. The two airlines were similar and had identical connectors. The Court also heard that Mr Ellis was given insufficient training in how to do the job safely. JCB Earthmovers Ltd. was fined £200,000 and ordered to pay costs of £31,366.

Paul McNamara suffered fatal head injuries when he was crushed by the boom of an excavating machine. HSE's investigation revealed that it was common practice for workers to operate the controls for the boom whilst standing outside the cab and leaning through its back window. A fault in the hydraulic system resulted in the control lever malfunctioning and this caused the boom to carry on moving, trapping Mr McNamara and inflicting fatal injuries. JC Bamford Excavators Ltd. was fined £266,000 and ordered to pay costs of £31,701.

Employers should not only ensure that suitable assessments of the risks involved in their undertakings are carried out but must also make sure that workers are trained properly and do not take short cuts when carrying out routine activities, thereby making them dangerous.

Failure to manage health and safety risks can have disastrous consequences for employees and businesses alike. A proactive approach is essential. We can advise you on the policies and procedures necessary to minimise the likelihood of an accident in your workplace that could result in prosecution or an unlimited fine.

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STRAIGHT MAN FAILS IN GAY BANTER CLAIM

A recent case (English v Thomas Sanderson Blinds Ltd.) has raised the question as to whether or not the Employment Equality (Sexual Orientation) Regulations 2003 properly implement the EU Council Employment Framework Directive 2000/78/EC, which establishes a general framework for equal treatment in employment and occupation.

Mr English worked for Thomas Sanderson Blinds Ltd. under an agency agreement. He claimed that he had for many years been subjected to banter of a homophobic nature, which began when a manager learned that he had been to boarding school and that he lived in Brighton. Mr English is heterosexual and accepted that his tormentors did not mistakenly or genuinely believe that he was gay. However, he argued that their treatment constituted harassment under Regulation 5 of the Sexual Orientation Regulations, which defines harassment as unwanted conduct towards another on the grounds of sexual orientation, which violates that person's dignity or creates an intimidating, hostile, degrading, humiliating or offensive environment for them. The Framework Directive, however, defines harassment at work as unwanted conduct 'related to' sexual orientation.

The Employment Tribunal held that Mr English was not protected by Regulation 5. He appealed to the Employment Appeal Tribunal (EAT).

The EAT held that although those who engaged in the homophobic banter referred to stereotypical characteristics which they associated with a gay person, the alleged tormentors did not perceive Mr English to be gay and he himself accepted that this was the case. In the EAT's view, although the homophobic banter was unacceptable, it was a 'vehicle for teasing' Mr English and was not based on a perception or even incorrect assumption that he was gay. It therefore fell outside the reach of Regulation 5.

However, the EAT granted permission to appeal to the Court of Appeal as it believed that the result of the case might have been different had it been decided under the narrower definition of harassment contained in the Framework Directive and this was 'an unsatisfactory state of affairs'.

Employers are advised to protect the dignity of all employees by promoting a workplace culture of tolerance and respect. Whilst the teasing in this case has thus far been found not to be unlawful, banter of a personal nature can easily cause offence and should be discouraged.

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THE BURDEN OF PROOF IN UNFAIR DISMISSAL CASES

In Kuzel v Roche Products Ltd. the Court of Appeal considered where the burden of proof lies when an employee brings a claim for unfair dismissal but where different reasons for the dismissal are put forward by each side.

In this case, Dr Kuzel claimed that the real reason she was dismissed was because she had made protected disclosures about certain of her employer's activities. The dismissal was therefore 'automatically' unfair and there should be no cap placed on the amount of compensation payable. Roche Products Ltd. argued that the reason Dr Kuzel was dismissed was either a conduct reason or 'some other substantial' reason.

The Employment Tribunal (ET) found that Roche had failed to demonstrate a potentially fair reason for Dr Kuzel's dismissal but neither could it find evidence to support her claim that she was really dismissed for 'whistleblowing', ruling that the claim was 'not made out'. The use of this phrase caused disagreement as to whether or not the ET was saying that the burden of proof lay with Dr Kuzel. The ET held that the reason for the dismissal was Dr Kuzel's line manager's 'catastrophic loss of temper' and his failure to follow the advice of the company's Human Resources Director with regard to the situation.

The Employment Appeal Tribunal (EAT) held that the ET's approach to the burden of proof of the whistleblowing claim was not legally correct and remitted the case to the same ET for a fresh hearing.

Dr Kuzel appealed, arguing that as Roche had failed to prove that it had a fair reason for dismissing her, the ET should, as a matter of law, have accepted the reason she put forward. The Court of Appeal rejected this argument. The principal reason for a dismissal is a question of fact for the ET. It is for the employer to prove the reason for the dismissal as it knows better than anyone else why the employee was dismissed. In this case, it was for Roche to show that the reason for Dr Kuzel's dismissal was a fair one. In contesting the reasons put forward by Roche, there was no burden of proof on Dr Kuzel to disprove these reasons, let alone prove a different reason. When an employee asserts that the dismissal was for a different reason altogether, some evidence to support their claim must be produced but they do not have to discharge the burden of proving that the dismissal was for the different reason for their claim to succeed.

If the employer does not demonstrate that the reason for dismissal was the one it put forward, it is open to the ET to find that the reason was that claimed by the employee. However, 'it is not correct to say, either as a matter of law or logic, that the ET must find that, if the reason was not that asserted by the employer, then it must have been for the reason asserted by the employee. That may often be the outcome in practice, but is not necessarily so'. The ET may also find that the true reason for dismissal was one that was not put forward by either side.

The Court of Appeal therefore dismissed Dr Kuzel's appeal and reinstated the decision of the ET. Roche was liable for 'ordinary' unfair dismissal because it had not demonstrated its case, but the dismissal was not automatically unfair because Roche had shown that the making of protected disclosures by Dr Kuzel was not the reason for her dismissal. The compensation awarded was therefore limited to £56,800, the maximum amount payable in unfair dismissal cases at that time.

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THE CUSTOMER NOT ALWAYS RIGHT

Employers with staff in customer facing roles are advised to ensure that they have robust procedures for dealing with sexual harassment in the workplace in order to meet the challenges posed by changes to the Sex Discrimination Act 1975 that were introduced on 6 April 2008.

In practice, many employers, such as bar managers and hotel and restaurant owners, will already have established ways of dealing with any unwanted behaviour towards staff which also attempt to defuse the situation. However, it is now unlawful for an employer to fail to take reasonably practicable steps to protect an employee from unwanted conduct relating to their sex, by a third party, where such harassment is known to have occurred on at least two other occasions. The person responsible for the harassment does not have to be the same on each occasion.

As a first step, make sure that you have a policy in place for dealing with incidents of sexual harassment and intimidation involving customers, suppliers or members of the public and that this is communicated to all staff. Where possible, display signs making it clear that the harassment of workers will not be tolerated, so that all visitors to your premises are in no doubt that you operate a zero tolerance policy in this regard. Managers should be trained in how to deal with complaints from staff, how to monitor the ongoing situation to ensure that the member of staff is satisfied with the steps that have been taken and how to prevent further incidents arising.

The type of action necessary if a member of staff is subjected to sexual harassment will depend on the nature of your business. Barring someone from a pub or restaurant is an obvious way of trying to protect staff from a further incident involving that customer at least. However, a complaint of harassment involving a long-standing supplier or customer, the loss of whose business would be unwelcome, will require sensitive handling if the employer is to comply with its legal duty to the member of staff to act to prevent a recurrence of the unwanted behaviour at the same time as retaining the business. Protecting your business is not a defence. One can also envisage difficulties arising when a worker's job is to socialise with clients or prospective clients, for example at corporate events, especially where alcohol is provided. But it is important to remember that there is no limit to the amount of compensation payable in claims of this kind and the settlement can include damages for injury to feelings as well as for any loss the employee has suffered.

The first cases brought under the new law will provide guidance on this issue. Meanwhile, it is important for employers to anticipate problems that could arise and have measures in place to deal with them swiftly. Contact us for individual advice on strategies to adopt to ensure that you take all practicable steps to protect your staff.

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THE RIGHTS OF PART-TIME WORKERS - DO THEY COMPARE?

The Part-Time Workers (Prevention of Less Favourable Treatment) Regulations 2000 established a minimum standard of fairness for part-time workers to prevent them from being treated less favourably than comparable full-time co-workers, unless the treatment is justified on objective grounds.

A recent decision of the Employment Appeal Tribunal (EAT) has clarified that in order to bring a claim under the Regulations, the part-time nature of the worker's status does not have to be the 'sole reason' for the discriminatory treatment and the fact that not all part-timers are treated adversely does not mean that those who are cannot take proceedings if being part-time is a reason for the adverse treatment (Shama and Others v Manchester City Council).

Miss Shama was one of a number of part-time lecturers employed by Manchester City Council with the Manchester Adult Education Service. The contracts of employment of the part-time workers varied in nature. For example, some were on a pro-rata basis - normally 50 per cent of a full-time worker's contract. Miss Shama and her co-workers were termed 'established part-time workers'. The hours they worked could be varied year on year, subject to their being given a minimum of one third of the hours they had worked in the previous year.

When the Council needed to make savings, it implemented a 'best fit' policy, whereby when work was allocated, priority was given to those lecturers with fixed contractual hours, which resulted in the hours of the established part-time staff being reduced.

Miss Shama brought a claim of less favourable treatment, arguing that the terms of her contract were unlawful because they discriminated against part-time staff and reducing her hours in accordance with her contractual terms was therefore a breach of the Regulations.

The Employment Tribunal (ET) rejected her claim. In so doing, it considered itself bound by the 2004 judgment in Gibson v The Scottish Ambulance Service. This construed the Part-Time Workers Directive, which the Regulations implement in the UK, as meaning that if the reason for the less reasonable treatment was not solely the worker's part-time status but included some other factor, the claim was bound to fail. In applying this test, the ET found that the treatment was not on the ground that the lecturers were part-time per se but because they were a particular type of part-timer. Miss Shama appealed.

The EAT allowed the appeal and dismissed the 'sole reason' test. In its view, it was inconceivable that the Directive was not intended to outlaw such treatment and in any event, when properly analysed, the discriminatory treatment in this case only occurred because the claimants were part-timers. As the difference in treatment could not be justified, it was therefore unlawful.

Employers are advised to carry out periodic reviews of the contract terms of all categories of worker to ensure that these comply with the law. Contact James Bell for advice.

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TIME OFF FOR DEPENDANTS - HOW LONG IS REASONABLE?

Under Section 57A of the Employment Rights Act 1996, all employees are entitled to take a reasonable amount of unpaid time off work to deal with emergencies involving a dependant and not to be dismissed or victimised for doing so. The emergency must involve a dependant who is a child, parent, husband, wife, civil partner or other household member or somebody for whom the employee has primary caring responsibility.

Unless the particular circumstances make it impossible, the right to time off in such cases is subject to the employee telling the employer the reason for the absence, as soon as is reasonably practicable, and for how long he or she expects to be absent. The law makes no provision as to how much time is 'reasonable' although guidance on the website of the Department for Business, Enterprise and Regulatory Reform (DBERR) notes that this will vary according to the circumstances of the emergency but 'for most cases, one or two days should be sufficient to deal with the problem'.

In a recent unfair dismissal case (Cortest Ltd. v O'Toole) the Employment Appeal Tribunal (EAT) gave guidance on this issue. Mr O'Toole worked for Cortest Ltd. as a street lighting engineer. His partner was struggling to cope with their domestic situation and when things reached crisis point, he requested a month or so off work to look after the couple's three children in order to give his partner the rest she needed. Her mother worked full-time and so was unable to step in to help.

The Employment Tribunal (ET) found that the amount of time off work requested was reasonable under Section 57A, albeit at the top end of what might be permitted. On appeal, the EAT ruled that the ET was in error. The purpose of the legislation is to cover emergencies and to enable alternative care arrangements to be put in place. In this case, there was no evidence that alternative child care arrangements were sought - for example enlisting the help of a friend or relative. Section 57A does not permit a parent to take time off to become a child minder for a period of time but was created for emergency situations and to provide a 'short breathing space'.

We can advise you on making sure your employee guidance covers requests for time off to care for dependants and makes clear the circumstances in which this right applies. Please contact James Bell for advice.

The DBERR guidance can be found here.

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TIPS - GOVERNMENT TO REVIEW LAW

Currently, restaurants operate a wide variety of practices when it comes to dealing with tips and the Government does not regulate as to how they should be managed.

Minister Baroness Vadera recently announced in the House of Lords that the Department for Business, Enterprise and Regulatory Reform (DBERR) has agreed to examine the laws relating to the payment of tips in restaurants. It will look at several issues of concern and take all representations into account, including those of the British Hospitality Association and the trade unions.

The trade union Unite is campaigning to prevent service charges being used to top up wages. Currently, tips paid to a member of staff by a customer do not count as wages for the purposes of the National Minimum Wage (NMW). For example, this would be the situation in a restaurant when the customer gives a tip directly to the waiter. However, tips paid through the employer's payroll can count for the purposes of calculating the NMW. This would be the case where a restaurant adds a service or cover charge to the bill and remunerates employees through the payroll.

In a recent case, the Central London Tribunal confirmed that customers' tips added to a bill paid by cash or credit card then distributed to employees via a 'tronc' system (a special arrangement used to pool and distribute tips) do count as being paid by the employer and thus count towards the NMW. HM Revenue and Customs' guidance note E24 had not been clear on this point. However, the Employment Appeal Tribunal (EAT) has ruled that tips paid to employees at the Mayfair nightclub, Annabel's, between 1999 and 2003, did not count as wages for the purposes of the NMW. The tips were paid each week to one of the employees (the 'troncmaster') who distributed them amongst the waiting staff through a separate payroll. The EAT held that the tips did not belong to the employer but were held in trust by the troncmaster for the members of the tronc.

Lady Vadera said that the DBERR would also investigate whether restaurants should be required to disclose their tips policy to customers.

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TRIBUNAL PROCEEDINGS - INTIMIDATING CONDUCT

The Employment Tribunals (Constitution and Rules of Procedure) Regulations 2004 set out the normal rules for Tribunal proceedings.

Employment Judges have the power, under Rule 18(7)(c), to strike out any claim or response on the grounds that 'the manner in which the proceedings have been conducted by or on behalf of the claimant or the respondent…has been scandalous, unreasonable or vexatious'.

In the recent case of Force One Utilities v Hatfield, the Employment Appeal Tribunal (EAT) held that it was appropriate to debar the employer from taking any further part in the Tribunal proceedings and to strike out its response, after one of the employer's witnesses intimidated the claimant outside the Tribunal building, following a hearing on 26 April 2007.

The witness, Mr Shuter, was an executive director of an associated company of Force One Utilities and had played a key role in handling the unfair dismissal case on behalf of the employer. When the matter came back before the Employment Tribunal (ET) on 27 September 2007, Mr Hatfield described how Mr Shuter had sworn at him and made a serious threat of physical harm to him. He told Mr Hatfield he should be careful "how he slept at night", then drove alongside his car, blocking him in, wound down his window and said, "Me and you - ten minutes up the road now." The intimidation had caused Mr Hatfield great anxiety and he was still nervous and afraid.

The ET judged that it was unlikely that a fair trial could be held if the employer took part in the proceedings. The employer appealed to the EAT, which upheld the ET's decision. There was a proper evidential basis for the ET's conclusion and the decision did not reflect any error of law. Although it was a 'draconian step' to take and would affect the ability of the respondent to defend the case, this was something they had brought upon themselves.

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TUPE DISMISSAL: TRANSFER-RELATED OR FOR ECONOMIC REASONS - WHO DECIDES?

The purpose of the Transfer of Undertakings (Protection of Employment) Regulations (TUPE) is to safeguard the employment rights of employees when a business is sold. If a person employed immediately before the relevant transfer of a business is dismissed for a reason connected with the transfer, the dismissal is automatically unfair unless the employer can show that it was for 'economic, technical or organisational reasons entailing changes in the work-force'.

In Dynamex Friction Ltd. v Amicus, the Court of Appeal had to decide whether the Employment Tribunal (ET) had been justified in concluding that employees who were dismissed by the administrator of a company had been dismissed for economic reasons rather than for a reason related to the transfer of the business.

Following a strike, Friction Dynamics Ltd. had dismissed 86 of the employees involved. An earlier Tribunal held that the workers had been unfairly dismissed and the compensation due to them was estimated to be approximately £3 million. The company did not have the money to pay this and the managing director, Craig Smith, decided to try to sell the business as a going concern. Shortly afterwards, whilst the factory was closed for maintenance during August 2003, he decided to petition for an administration order. An administrator was appointed, who decided that the company could not carry on in business. It had no available cash with which to pay the wages and he therefore dismissed the employees.

However, the ET heard evidence that the administrator may have been the 'unwitting tool' of Mr Smith's plan to carry on in business without any liabilities to the company's former employees. A purchaser was found only a week or so after the employees were dismissed. A few months after the new company, Dynamex, had been incorporated, Mr Smith acquired a 60 per cent interest in it. The ET accepted that there had been no collusion between the administrator and those involved in Dynamex.

The ET was satisfied that there was no certainty that the sale of the business would go ahead when the employees were dismissed and held that the principal reason for the dismissals was an economic one and not due to the transfer of the business. However, on appeal the Employment Appeal Tribunal criticised the ET for failing to resolve material disputes as to the facts of the case, regarding whether or not the events had been 'stage-managed' by Mr Smith, and for failing to explain adequately the reasons for the conclusions it reached.

The Court of Appeal, by a two to one majority, allowed the appeal. The ET was wholly justified in its judgment based on the findings of fact. Furthermore, 'in deciding whether the reason for dismissal was an economic or a transfer-related one, one has to identify whose thought process is the subject of the analysis. It has to be he who took the decision'. In this case it was the administrator's decision that came under the microscope. He had decided that he had no option but to dismiss the employees because there was no money to pay them. This was an economic decision, taken independently. There was nothing to suggest that the administrator had taken the view that he had to dismiss the staff in order to have a better prospect of selling the business. Nor was there any collusion between the administrator and Mr Smith.

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WHEN IS A CONTROLLING SHAREHOLDER AN EMPLOYEE?

Many employment law rights are only available to those who are employees. For someone to have employee status, they must work under a contract of employment. Protection from unfair dismissal, under the Employment Rights Act 1996, is only afforded to someone who has been an employee for 12 months continuously.

Just because someone is the controlling shareholder of a company does not mean that they cannot also be an employee of the company. When determining someone's employment status, a Tribunal will consider all the relevant information and assess whether or not the contract of employment truly reflects the nature of the relationship. In Clark v Clark Construction Initiatives Ltd. (CCI) the Employment Appeal Tribunal (EAT) has handed down guidance on how Tribunals should approach this task.

Mr Clark brought several claims before the Employment Tribunal (ET), including a claim of unfair dismissal, after he was dismissed from the construction business that he had established. When he was the controlling shareholder, his status was said to be that of an employee, although he did not have a formal written contract of employment. He received a very small salary but his living expenses were met by loans from the company. He intended to repay these from the dividends he would receive if and when the company became profitable. He later transferred the shares to someone else but remained as managing director of the company on a higher salary. Less than 12 months later he was dismissed.

The ET ruled that Mr Clark was not an employee of CCI during the period when he owned the majority of the shares and it therefore did not have jurisdiction to hear the unfair dismissal claim because he did not have the 12 months' continuous employment needed to qualify for protection.

The EAT dismissed an appeal against this decision. The ET was entitled to reach the decision it had, based on the facts presented to it. When giving its judgment, the EAT described three sets of circumstances in which it would be legitimate not to give effect to what was claimed to be a binding contract of employment. These are when the company itself is a sham; where there is an ulterior motive for the contract (for example in order to receive statutory redundancy pay); or where the parties to it do not conduct their relationship in accordance with the contract - this might be because they never intended to or because the nature of the relationship no longer reflects the terms of the contract.

The EAT then went on to list eight factors for consideration by Tribunals in such cases. For example, the fact that an individual has a controlling shareholding may raise doubts as to the nature of the relationship but does not of itself prevent a contract of employment arising, nor does the fact that an individual is able to exercise sole control over what the company does, nor the fact that the individual built the company up and will profit from its success. The onus is on the party seeking to deny the contract's effect to satisfy the court that the contract is not what it appears to be, particularly where someone has paid Income Tax and National Insurance Contributions as an employee. The conduct of the parties in practice with regard to the terms of the contract is key.

For the full guidance, see paragraph 98 at http://www.bailii.org/uk/cases/UKEAT/2008/0225_07_2902.html.

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HSC AND HSE MERGER

The Health and Safety Commission (HSC) and the Health and Safety Executive (HSE) have merged to form a single national regulatory body.

Originally, the two were established as separate, non-departmental bodies with working practices and delegated powers established in such a way as to distance the HSC from the day-to-day workings of the HSE. However, following extensive consultation and through the process determined by the Legislative and Regulatory Reform Act 2006, the decision was taken to merge the two bodies in order to provide greater clarity and consistency in promoting better health and safety at work, whilst maintaining public accountability. The merged body will be called the HSE.

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OUTDOOR WORKERS AND THE SUN

The incidence of skin cancer in the UK has doubled over the last 15 years with over 40,000 new cases diagnosed each year. Skin cancer is almost always caused by exposure to the sun and is therefore preventable.

The Health and Safety at Work Act 1974 requires employers to ensure, so far as is reasonably practicable, the health, safety and welfare of their employees at work. Therefore, employers with employees who work outside are advised to include in their health and safety policy measures to protect them from harmful exposure to ultraviolet radiation from the sun.

The Health and Safety Executive has useful guidance on this topic which is available at the HSE website.

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SEX CHANGE PARATROOPER WINS COMPENSATION

A former paratrooper who underwent a sex change operation has been awarded £250,000 compensation in an out of court settlement of her claim for sexual discrimination and unfair dismissal. Jan Hamilton, formerly Captain Ian Hamilton, was ordered to attend a compulsory army medical examination in her male uniform. She refused, saying it would have been 'humiliating and demeaning' for her to have to attend dressed as a man.

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SUCCESSOR NOT COMPARATOR

One of the commonly disputed issues in equal pay claims is who is an appropriate comparator for the purposes of deciding if an employer's pay policy has been applied in a discriminatory fashion.

Recently, a claimant sought to use as a comparator a successor to the post, as opposed to a contemporary. The Employment Appeal Tribunal rejected the use of a successor as a comparator as being too hypothetical. Elias P said that the Equal Pay Act "plainly envisages comparison with someone employed at the same time as the claimant."

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TIME TO TRAIN - CONSULTATION ON PROPOSED NEW RIGHT

The Department for Innovation, Universities and Skills has launched a consultation on a proposed new law whereby employees will have the right to request time off work to complete relevant training. It is planned that the new entitlement will apply to all employees who have worked for their employer for a minimum of 26 weeks. It is proposed that requests should be treated in a similar way to those for flexible working, with employers required to give them serious consideration. The consultation closes on 10 September 2008.

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UNFAIR DISMISSAL & ALCOHOL POLICY

A recent case serves as a reminder of the importance of circulating and abiding by your internal policies and procedures. The Employment Appeal Tribunal ruled that the dismissal of a council employee who had consumed alcohol whilst on duty was unfair because the council had failed to make known its published alcohol policy and had not followed it when dismissing him (Sinclair v Wandsworth Council).

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AGE DISCRIMINATION - CHANGES TO BENEFITS

Unlike other forms of discrimination, such as race or sex discrimination, the Employment Equality (Age) Regulations 2006 do allow a defence of justification in cases of direct discrimination, where this is 'a proportionate means of achieving a legitimate aim'.

In the first major case involving the Regulations, which were introduced in October 2006, the Employment Tribunal (ET) has dismissed a £4.5 million age discrimination claim brought against a City of London law firm (Bloxham v Freshfields Bruckhaus Deringer).

Peter Bloxham, 54, was head of restructuring at Freshfields Bruckhaus Deringer. He brought a claim of age discrimination against his former partners because he had lost out financially as a result of transitional arrangements made when the firm's pension scheme was being reformed. Had he been a year older, his retirement pension would not have been affected.

The ET found that Mr Bloxham had suffered less favourable treatment compared with partners aged 55 or over and that the treatment would be discriminatory unless justified. However, when considering the test of justification, in the ET's view, Freshfields did have a legitimate aim in reforming its pension arrangements. Without reform, the scheme in place meant that younger partners would be disadvantaged as they would contribute more but receive smaller pensions. The firm had carried out a lengthy consultation before introducing the changes and no less discriminatory method of achieving the desired reform had been put forward then or since. The ET therefore found that the firm not only met but comfortably passed the test. Its unanimous judgment was that Mr Bloxham's complaint was 'not well founded' and it dismissed his claims of direct and indirect age discrimination.

The outcome in this case will be welcomed by employers who find themselves in a similar situation. It has been reported that Mr Bloxham has decided not to appeal against the decision.

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AGE DISCRIMINATION LEGISLATION - CHALLENGES

We have previously reported that Heyday, an organisation for people in or nearing retirement, has challenged the Government over the inclusion in the Employment Equality (Age) Regulations 2006 of a mandatory retirement age, on the grounds that this means that the Regulations do not fully implement the EC Equal Treatment Framework Directive 2000/78. Heyday wants the legislation amended to give workers over 65 the same protection from discrimination as younger workers. In order to settle the issue, the matter was referred for judgment to the European Court of Justice (ECJ).

The issue as to whether mandatory retirement ages are inconsistent with the Equal Treatment Directive has now been considered by the ECJ in reference to another case. The ruling was sought by the Spanish Court in the case of Palacios de la Villa v Cortefiel Servicios SA.

Felix Palacios de la Villa brought an action against his employer seeking the annulment of his dismissal after his contract of employment was automatically terminated when he reached the compulsory retirement age of 65. There was a collective agreement in place, governing the employment relations between Sr Palacios de la Villa and his employer, which stated that, 'in the interests of promoting employment, it is agreed that the retirement age will be 65 years unless the worker concerned has not completed the qualifying period required for drawing the retirement pension, in which case the worker may continue in his employment until the completion of that period'. Sr Palacios de la Villa had completed the pension qualifying period.

The ECJ ruled that a compulsory retirement age set by national law, although discriminatory, was not incompatible with the requirements of the Directive. The prohibition on any discrimination on grounds of age must be interpreted as not precluding national legislation allowing compulsory retirement clauses contained in collective agreements where such clauses provide as sole requirements that workers must have reached the set retirement age and must have fulfilled the conditions set out in the social security legislation for entitlement to a pension, provided:

  • the measure, although based on age, is objectively and reasonably justified in the context of national law by a legitimate aim relating to employment policy and the labour market; and
  • it is not apparent that the means put in place to achieve that aim of public interest are inappropriate and unnecessary for the purpose.

The ECJ accepted that the Spanish practice of allowing the inclusion of compulsory retirement clauses in collective agreements was adopted as part of a national policy which sought to promote better access to employment by a better distribution of work between different age groups, even though this was not stated precisely in the national legislation. It therefore rejected Sr Palacios de la Villa's challenge against his compulsory retirement.

In the light of this judgment, it seems likely that the UK Government will be able to defeat Heyday's challenge by justifying the need for a default retirement age as part of its legitimate employment policy.

In June 2007, an application for a stay of proceedings until the ECJ's decision on the Heyday challenge was struck out by the Southampton Employment Tribunal (Johns v Solent SD Ltd.). However, the Employment Appeal Tribunal has allowed the employee's appeal against that decision and the Employment Tribunals Service has put all British retirement age discrimination cases on hold pending the ECJ's ruling. This is not expected until at least 2009.

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COMPANY CLEARED OF DISCRIMINATION AGAINST A PREGNANT EMPLOYEE

The dismissal of an employee is automatically unfair if the reason for it is that she is pregnant.

The Employment Tribunal (ET) has ruled that a woman who was employed as a press officer at a Northamptonshire hotel was not unfairly dismissed because the decision to outsource her job had been taken before her employer was made aware of her pregnancy.

Samantha Remedios claimed that she had been sacked by Macepark (Whittlebury) Limited, which owned the hotel, after the company found out that she was expecting a baby. She had worked at the hotel for 11 months before being dismissed and her work had been praised by her manager. In Mrs Remedios's opinion, she was sacked because she was honest about her pregnancy during a routine appraisal interview, but the ET found that the reason for her dismissal was that her services were no longer needed.

However, the ET did criticise the terminology used in a letter sent to Mrs Remedios by the company's Human Resources manager, calling it 'nothing short of shambolic', and made it clear that had Mrs Remedios acquired the employment rights that are gained after being in continuous employment with an employer for one year, the company would have been forced to pay her compensation.

The ET also criticised the company's decision to let the hotel manager conduct Mrs Remedios's appeal against the general manager's decision to sack her, on the ground that a subordinate is unlikely to overturn the decision of a senior manager.

It is unlawful to dismiss or demote an employee or to refuse her vocational training because she is pregnant or on maternity leave. Treating a woman less favourably because of pregnancy or maternity leave is unlawful sex discrimination. It is also unlawful sex discrimination for an employer to turn down a job applicant because she is pregnant. For advice on any discrimination matter, please contact James Bell.

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COMPANY ROAD SAFETY - POLICE GET TOUGH

Employers who forget that their health and safety responsibilities extend to employees driving on company business should take note of a shift in the way police will investigate road accidents in future.

Research by the Health and Safety Executive shows that 20 people are killed and 250 are seriously injured each week in traffic accidents involving someone driving for business reasons. This has prompted the Metropolitan Police and several other forces to adopt a policy of investigating company road-safety procedures when an accident involving a work vehicle occurs.

Police will investigate whether the company has carried out basic checks, such as making sure employees using their own cars for business purposes have a valid driving licence, are insured to drive on business and have an MOT certificate for their vehicle. In addition, they intend to investigate the reasons for a vehicle involved in an accident being on the road.

Research by the Parliamentary Advisory Council for Transport Safety has found that employers often fail to consider the dangers posed by employees driving whilst tired. Practices such as expecting employees who drive on company business to work long hours or putting pressure on them to fulfil as many appointments as possible in a given period could be regarded as contributory factors by police investigating the reasons for an accident.

The Corporate Manslaughter Act, due to come into force in April 2008, will make it easier to bring cases against organisations that are negligent in carrying out their health and safety obligations and this causes someone's death.

Contact James Bell for advice on implementing a company road-safety policy.

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CONSULTATION ON COLLECTIVE REDUNDANCIES

The Employment Appeal Tribunal (EAT) has ruled that the obligation on an employer, under section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA), to consult over collective redundancies extends to consultations over the reasons for the closure of a business (UK Coal Mining Ltd. v National Union of Mineworkers). In the EAT's view, the obligation to consult over avoiding proposed redundancies inevitably involves examining the reasons for the dismissals and that in turn requires consultation over the reasons for the closure.

This is an important decision as it overturns previously binding authority on this area of the law. One difficulty is that EC Directive 98/59/EC provides that an employer should begin consultations when 'contemplating' making collective redundancies, whereas this duty is given effect in domestic law as being a duty to consult when an employer 'proposes to dismiss' employees as redundant.

UK Coal Mining Ltd. took the decision to close Ellington Colliery, a deep mine in Northumberland, after the seam being worked became flooded in January 2005. The 329 employees were represented by the National Union of Mineworkers (NUM) and the British Association of Colliery Management (BACM).

The Unions argued that UK Coal Mining Ltd. had failed in its obligation to consult properly over the mass redundancies. The company claimed that in the light of legal authorities it did not have to consult over the closure itself and the exceptional circumstances surrounding the closure, which it maintained was for safety reasons, also meant that it was relieved from the full duty of consultation.

The Employment Tribunal (ET) accepted that legal authorities did establish that there was no obligation to consult over the closure itself. However, it found no credible evidence that the reason for the dismissals was safety. In its view, UK Coal Mining Ltd. had deliberately misled the Unions on this point. The real reason for the closure of the mine was economic. Even if there were special circumstances, the company had failed in its duty because it had not taken such steps as were reasonable in the circumstances. The ET concluded that there was no consultation at all when the redundancy proposal was still at a formative stage. It awarded the maximum 90 day protective award to the employees.

UK Coal Mining Ltd. appealed against the decision. The NUM and the BACM cross appealed that the ET was wrong to take the view that there was no obligation to consult over the reasons for the closure.

As regards the company's appeal, the EAT upheld the ET's decision and the size of the protective award. The ET was entitled to consider that there had been a serious failure to comply with the redundancy consultation requirements on the evidence presented to it. As regards the cross appeal, the EAT held that as domestic law now stands, the obligation to consult over the avoidance of dismissals has significantly widened the scope of the consultation obligations. In its view, in a closure context, where it is recognised that dismissals will inevitably, or almost inevitably, result from closure, dismissals are proposed at the point when the closure of the business is proposed. Where closure and dismissals are inextricably linked, the duty to consult over the reasons for the closure arises.

It is important that employers are aware of this requirement to consult at an early stage in the decision-making process. Carrying out a redundancy programme always requires care and failure to consult as required can lead to an Employment Tribunal requiring the employer to make protective awards to the dismissed employees. We can help ensure that this difficult process is carried out without the risk of unanticipated financial consequences."

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DISABILITY DISCRIMINATION - AWARENESS OF DISABILITY

An employer who knows that an employee is disabled must make reasonable adjustments in relation to that person. A recent case at the Employment Appeal Tribunal (EAT) examined the question as to what action an employer must take to gain knowledge of an employee's disability once they have been put on notice that the employee may be suffering from an illness (Jama v Alcohol Recovery Project).

Ahmed Jama was suffering from post traumatic stress disorder. He is of Somali origin and his mental condition was attributed to events that took place during the civil war in his homeland. He worked for the Alcohol Recovery Project (ARP) in Croydon as a housing worker at a 24-hour hostel for people with alcohol problems. He had a poor timekeeping record and was often absent from work owing to illness. However, these absences were generally described as being caused by physical complaints.

Because of the nature of Mr Jama's work, it was important that cover could be arranged if he were going to be late or absent, but he often failed to comply with ARP's procedures relating to prompt notification of absence. ARP had written to Mr Jama's GP to say that it had advised him to take time off work to seek medical help and the GP had referred Mr Jama for psychiatric assessment.

Mr Jama's timekeeping did not improve and his sickness absences continued, which led to disciplinary action against him. ARP was aware that he was seeing a psychotherapist for post traumatic stress disorder and he was advised to get a written report on his health. A disciplinary hearing was postponed whilst attempts were made to get this information but Mr Jama failed to produce any evidence of his condition and failed to attend appointments after he was referred to the Occupational Health Service. He was given a final warning.

Unfortunately, matters did not improve. Mr Jama did see a medical officer at the Occupational Health Service and she reported that he appeared fit for normal duties. After a further spell of absence, Mr Jama then gave an untrue explanation for his late arrival at work and he was dismissed because his actions were putting continual pressure on his fellow workers.

Mr Jama brought a claim for disability discrimination. The Employment Tribunal (ET) held that because Mr Jama had post traumatic stress disorder he was disabled within the meaning of the Disability Discrimination Act 1995 but, at that time, ARP did not know and could not reasonably be expected to know that he had the condition and so it was under no duty to make reasonable adjustments to accommodate his disability.

Mr Jama appealed. The EAT upheld the ET's decision. It found that Mr Jama had failed to produce evidence of his condition and the reasons given for his absences usually related to physical complaints. The other symptoms he complained of were not necessarily caused by post traumatic stress disorder. In its view, although it is insufficient for an employer put on notice that an employee may be suffering from some illness simply to sit back and do nothing, that was not what happened in this case. The employer had attempted on a number of occasions to make enquiries as to what the problems were. It had referred the employee to his GP, it had referred him to the Occupational Health Service and had asked him on a number of occasions for some documentation from his medical advisers, but nothing had been provided.

The EAT therefore concluded that the employer in this case had done all that it could reasonably have been expected to do and the appeal was dismissed.

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DISABILITY DISCRIMINATION - EMPLOYERS' OBLIGATIONS

The Disability Discrimination Act 1995 (DDA) imposes a duty on employers to make reasonable adjustments to working practices and premises in order to ensure that a disabled employee or job applicant is not disadvantaged.

A question which has sometimes arisen is whether or not a failure to consult a disabled employee regarding possible adjustments that could be made is in itself a failure to make a reasonable adjustment.

The Employment Appeal Tribunal (EAT) has confirmed (Scottish and Southern Energy PLC v Mackay) that the correct approach is that set out in the 2006 case, Tarbuck v Sainsbury's Supermarkets Ltd, in which the EAT expressly held that whilst it is good practice to consult, the failure to do so does not itself involve an independent breach of any duty to make reasonable adjustments.

Mr Mackay had worked for Scottish and Southern Energy since joining the company as an apprentice electrician in 1980. By 2003, he was working on his own as an appliance repair engineer. He found that changes in working practices increased the work pressure on him and in May 2003 he was certified as unfit to work because of depression. Over the next two years and more, the company sought medical reports, which confirmed that there was little prospect of Mr Mackay returning to his job in the near or even medium future. At one stage he did work for a short time, shadowing other employees at a power station, in the hope that this would help him become fit for work, but the company advised that he could not continue to work in a supernumerary capacity, after which Mr Mackay again became unfit for work.

By May 2005, Scottish and Southern Energy was of the view that it was unreasonable to expect the company to accommodate Mr Mackay's absence much longer. The company suggested there should be one more medical review and a further meeting at the beginning of August.

On 7 September 2005, Mr Mackay indicated that he would accept a vacancy as a craftsman in the Stornoway power station and would undertake the training required. The company had investigated the possibility of him being able to carry out the job at the power station. His doctor had indicated that this was unlikely unless Mr Mackay's condition had changed but, if he believed himself capable of doing the work, the doctor thought he would be able to take up the duties some time in the future. However, the company had formed the opinion that he had neither commitment nor enthusiasm for the post and the decision to dismiss him was confirmed by letter on 30 September 2005. Mr Mackay appealed against the decision but the appeal was rejected.

Mr Mackay brought a claim for disability discrimination, on the ground that his employers had failed to make reasonable adjustments, in breach of section 3A(2) of the DDA, and for unfair dismissal.

The Employment Tribunal (ET) noted that in many respects Mr Mackay's employers had carried out a meticulous and detailed investigation into his condition but found that they had discriminated against him, by reason of his disability, because they failed to consult him fully regarding the possibility of retraining. The ET also concluded that Mr Mackay's dismissal was unfair. His employer had not specifically broached with him the question of retraining as a mechanical craftsman, when it was known that one of the existing workers was due to retire, specifically to gauge his reaction. In its view, no reasonable employer would have failed to do this.

Scottish and Southern Energy appealed. With regard to the finding of disability discrimination, the EAT found that the failure to consult identified in this case fell within the scope of the decision in Tarbuck v Sainsbury's Supermarkets Ltd. and so the premise on which the finding had been made was false.

As regards the finding of unfair dismissal, even though there was evidence that the employers had in many respects been extremely solicitous for Mr Mackay's welfare, the ET had taken the view that it was not possible to form a properly considered opinion on whether Mr Mackay had the commitment to do the craftsman job as the matter had not been raised with him directly. The EAT found that the ET was entitled to reach that conclusion.

This decision provides clarification of the extent of an employer's duty under the DDA to make reasonable adjustments. However, this is a difficult area of the law and in such cases employers are advised to seek advice on the individual circumstances.

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EMPLOYMENT BILL PUBLISHED

The Employment Bill had its first reading in Parliament on 6 December 2007. As expected, this will repeal the statutory dispute resolution procedures, which came into force in October 2004. This move follows an independent review of the workings of the procedures which found that they had led to workplace disputes becoming formalised, with lawyers becoming involved at an earlier stage than had previously been the case. Instead, Employment Tribunals will be given discretionary powers to amend awards if parties have unreasonably failed to comply with the ACAS Code of Practice on disciplinary and grievance procedures. The Code is being substantially revised for reissue by the time the Bill is enacted. The Bill also makes changes to the law relating to conciliation by ACAS, removing the fixed periods for conciliation.

Other provisions included in the Bill are:

" tough new penalties for employers and employment agencies caught paying less than the National Minimum Wage (NMW) and a fairer method for dealing with NMW arrears so that workers are not disadvantaged;

" compensation for consequential loss in unlawful deductions from wages and redundancy pay claims;

" clearer rights for trade unions to determine membership so that they can prohibit individuals who belong or who have belonged to a particular political party. This follows the judgment of the European Court of Human Rights in Aslef v UK.

The Government anticipates that the Bill will receive Royal Assent by summer 2008.

Further information on the Employment Bill can be found on the website of the Department for Business, Enterprise and Regulatory Reform.

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FEAR OF DISEASE NOT ACTIONABLE

The House of Lords has recently issued its judgment in a case involving a claim for compensation from employers by employees who had been diagnosed as having 'pleural plaques'. It has confirmed the earlier decision of the Court of Appeal that damages are not payable.

Pleural plaques are fibrous scar tissue in the lungs and are the result of exposure to asbestos. They are benign, but indicate that the risk of developing mesothelioma and other lung cancers is heightened. It was admitted that the exposure to asbestos was due to negligence on the part of the employers.

The claimants argued that notwithstanding the fact that they had not as yet developed an asbestos-related disease, the increased risk of so doing caused them distress. Most of the claimants sought 'provisional damages' - an award based on the probability that they would develop lung disease. The action of one of the claimants was also based on the fact that he had developed clinical depression as a result of the fear he had of developing lung cancer following his becoming aware that he had pleural plaques.

The Lords did not accept that the employer was liable in either case. Development of the plaques was insufficient basis for a claim. They were not of themselves harmful and the mere fear of a future illness was not a factor which could of itself give rise to a claim for damages. In the case of the claimant with the psychiatric injury, the Lords concluded that the injury, though real, was not a 'reasonably foreseeable' result of the exposure to asbestos and could therefore not give rise to a claim. In the words of Lord Hoffman, "Applied to the broader question of psychiatric illness, that means that in the absence of contrary information, the employer is entitled to assume that his employees are persons of ordinary fortitude."

It is understood that the Scottish Parliament intends to introduce legislation to reverse this decision in Scotland.

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FLEXIBLE WORKING RIGHTS

Whilst anyone can ask their employer for more flexible working arrangements, since April 2003 parents and others (such as guardians) who are responsible for looking after children under the age of six years (or 18 years if the child is disabled) have had the legal right to request to work flexible hours and to have their request taken seriously by their employer, provided they have worked for their employer for 26 weeks continuously before the application is made.

From 6 April 2007, this right was extended to those with caring responsibilities for adult relatives. The definition of 'carer' is an employee who is or expects to be caring for an adult who:
" is married to, or the partner or civil partner of the employee; or
" is a near relative of the employee; or
" falls into neither category but lives at the same address as the employee.
The 'near relative' definition includes parents, parents-in-law, adult children, adopted adult children, siblings (including those who are in-laws), uncles, aunts, grandparents and step-relatives.

With effect from 1 October 2007, changes were made to the list of employees who are eligible to make a request for flexible working in order to care for a child. Specifically, the definition of 'adopter' now refers to a person with whom it has been decided to place a child for adoption, rather than a person matched for adoption, and the definition has been expanded to include situations where the child concerned is not being placed for adoption by a UK adoption agency. In practice, this means adoptions from overseas and adoptions by relatives. In addition, private foster carers are now eligible for the right, as are employees who have parental responsibility for a child by virtue of a residence order.

Common types of flexible working are:

" part-time - working fewer hours, perhaps by working fewer days per week;
" flexi-time - choosing when to work. There are usually core hours which an employee has to work;
" annualised hours - the employee's hours are worked out over a year, often with set shifts with the employee deciding when to work the other hours;
" compressed hours - working the agreed number of hours over fewer days;
" staggered hours - having different starting, break and finishing times for employees in the same workplace;
" job sharing - where an employee shares a job designed for one person with someone else; and
" home working.


Where the legal right to request flexible working exists, an employer must consider a request seriously and must follow a set procedure and timetable. An employer can only refuse such a request if they can demonstrate a clear business reason for doing so.

If you receive a request for flexible working arrangements and would like individual advice, please contact James Bell.

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GAY YOUTH WORKER - DIOCESE WILL NOT APPEAL

The Diocese of Hereford has announced that it will not be appealing against the Employment Tribunal's (ET) decision that the Bishop, the Rt Rev Anthony Priddis, had discriminated against a gay Christian man who applied for but did not get the post of Diocesan Youth Officer (Reaney v Hereford Diocesan Board of Finance).

John Reaney, 42, won his claim in July 2007, under the Employment Equality (Sexual Orientation) Regulations 2003. He had considerable experience as a youth worker and was by far the best candidate for the job. He had given an assurance that he would remain celibate whilst working in the post. However, as Mr Reaney had only recently ended a relationship, the Bishop did not think that he was capable, at that time, of making a promise that he would not enter into another one in the future. He was therefore not satisfied that Mr Reaney met the requirements of the employment.

In the ET's view, Mr Reaney had given his assurances on the celibacy issue and it was not reasonable for the Bishop to conclude that this requirement of the post had not been met. In an ordinary employment context, a potential applicant for a job cannot give 'cast iron guarantees as to circumstances which may happen in the future'.

A spokesperson for the Diocese confirmed that an appeal is not being planned owing to the high cost and length of time it would be expected to involve. There will therefore be a remedy hearing to determine the level of Mr Reaney's compensation.

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IMMIGRATION - NEW ENGLISH LANGUAGE QUALIFICATIONS FOR MIGRANT WORKERS

The Department for Innovation, Universities and Skills has launched new English language qualifications for migrant workers and employers. The new English for Speakers of Other Languages (ESOL) for Work qualifications will make it easier for migrant workers to get the practical English language skills they are likely to need in the workplace. There will be eight ESOL for Work qualifications, each having a slightly different focus and taking a different approach to assessment.

The new qualifications are shorter and more work-focused than traditional ESOL qualifications, giving learners practical English skills in essential workplace matters, such as health and safety and customer service. As well as better accuracy, efficiency and effectiveness, the new qualifications are designed to help employers benefit from improved communication and productivity and there will therefore be a fee payable for the course of study.

It is hoped that the qualifications will enable workers to improve their skills faster than through a traditional ESOL course. They are to be funded and delivered differently from traditional ESOL courses so that learners will be able to bypass the waiting lists that may exist on free ESOL courses.

The cost of the new ESOL for Work courses will continue to be funded by the Government but a contribution will be required from employers, who directly benefit from the provision. The Learning and Skills Council has set the tariff for ESOL for Work at £880. In 2007/08 the fee element is £330, for which the learner or learner's sponsor (employer) is responsible. The initial take up group for the new qualifications is expected to be those people who have come to the country for work and who need skills to function in work, as well as those seeking work at the end of short periods of employment.

Initially, the ESOL for Work qualifications will be available at Entry Level 3 and Level 1. Entry Level 3 is broadly equivalent to the standard expected of an 11 year old. Level 1 is broadly equivalent in difficulty to an English GCSE at grades D to G.

A leaflet on the new qualifications can be found here.

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IMMIGRATION - NEW RULES FOR STUDENTS & COLLEGES

From 1 November 2007, certification under the Academic Technology Approval Scheme (ATAS) became a mandatory requirement within the Immigration Rules for students from non-EU/EEA countries who intend to enter or remain in the United Kingdom for more than 6 months to undertake postgraduate studies or research in certain designated subjects, such as certain science, engineering and technology disciplines. The move is designed to stop the spread of knowledge and skills that could be used in the proliferation of weapons of mass destruction and their means of delivery.

The ATAS will also apply to those who are enrolled on an overseas course that is similar in subject matter to those covered by the scheme and who intend to come to the UK for more than 6 months in order to undertake a period of study/research which forms part of the postgraduate overseas course.

Students wishing to come to, or extend their stay in, the United Kingdom for such a purpose are now required to provide a valid ATAS clearance certificate with their application for an entry clearance or an extension of stay. Failure to provide a valid clearance certificate will result in the application being refused.

Further information can be found on the website of the Foreign and Commonwealth Office.

The new rules are part of Britain's new Points Based System (PBS) for managing migration. Any college recruiting students from abroad will in future need to be registered on a new Home Office Sponsors' Register. To qualify for the register they will have to show that they have been accredited by an approved body. This measure is designed to prevent a bogus institution acting as a front for the entry of illegal immigrants into the country.

For further information on the new rules for colleges that teach overseas students, see the website of the Department for Innovation, Universities and Skills.

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IMMIGRATION - TOUGHER PENALTIES FOR HIRING ILLEGAL WORKERS

The Government is introducing new measures aimed at preventing illegal working in the UK. Under a new system of civil penalties, employers who negligently hire illegal workers could face a maximum fine of £10,000 for each illegal worker found at a business. If employers have knowingly hired illegal workers they could incur an unlimited fine and be sent to prison.

The new measures will take effect in February 2008 and are part of a shake-up of the entire immigration system. This includes the introduction of a Points Based System for managing migration, which will consist of a five-tier framework. For each tier, applicants will need sufficient points to obtain entry or leave to remain in the UK. All but the most highly skilled immigrants will require a sponsor (normally their employer) who will be responsible for ensuring that a migrant worker complies with the rules of their entry to the UK and returns home at the end of their stay. Tier 1 of the system, which caters for highly skilled migrants such as scientists and entrepreneurs, is expected to be introduced on 4 March 2008.

The Border and Immigration Agency will be issuing a code of practice giving guidance on how employers can avoid employing illegal migrant workers whilst at the same time avoiding actions that could make them liable to a charge of race discrimination.

Sponsorship Under the Points Based System
The Government has now published a Statement of Intent for sponsorship under the Points Based System. This will apply to migrants other than nationals of the European Economic Area and those in Tier 1. The new licensed sponsor system is due to be introduced in the first quarter of 2008. When implemented, a licence will be needed to bring migrants to the UK. No one will be granted a licence without being approved in advance by the Border and Immigration Agency.

The Statement of Intent can be found here.

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IS A DIRECTOR AN EMPLOYEE?

When a company becomes insolvent, whether or not a shareholder and director is an employee, within the meaning of section 230 of the Employment Rights Act 1996 (ERA), for the purposes of a claim for statutory redundancy payment from the Secretary of State for Trade and Industry, can be difficult to ascertain. The Employment Appeal Tribunal (EAT) considered this issue in the case of Nesbitt and Nesbitt v Secretary of State for Trade and Industry.

Mr and Mrs Nesbitt were directors of APAC Computer Training Ltd. They managed the company on a day-to-day basis and between them owned 99.99 per cent of the shares. From the start, they had written contracts of employment with the company, in the same form as those of other company employees. They were paid salaries commensurate with their roles as the senior managers of the business but did not receive directors' fees or dividends.

In the course of 2006, the company became insolvent and on 3 July of that year the remaining employees, including Mr and Mrs Nesbitt, were made redundant by the liquidator. The couple applied to the Insolvency Service for redundancy payments under the insolvency provisions of the ERA. Their claims were rejected on the ground that they were not employees within the meaning of the Act.

The Employment Tribunal agreed with the Insolvency Service on the basis that the Nesbitts were in joint control of the company.

The EAT overturned this decision on appeal. In its view, the fact of the Nesbitts' control over the company was not sufficient of itself to deprive them of employment status if they otherwise satisfied all the criteria for employment. Mr Justice Underhill stated, "I believe that the law is that the fact that a claimant under the employment protection legislation is a majority shareholder and a director of the company which employs him does not affect his status as employee unless the tribunal finds that the company is a 'mere simulacrum'… and thus, by the same token, that the contract between it and the putative employee is a sham."

In this case, apart from the level of control they had over the company, all the indications were that Mr and Mrs Nesbitt were employees. They had proper employment contracts (equivalent to those issued to other employees), they received all their remuneration by way of salary and they 'behaved like employees'.

One of the relevant factors to be taken into consideration in cases such as this is the contract of employment. We can assist you to ensure that your employment terms make sure you have the appropriate contractual relationship with your company.

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MANAGING RISKS - ADVICE ON THE CORPORATE MANSLAUGHTER & HOMICIDE ACT

The main parts of the Corporate Manslaughter and Corporate Homicide Act 2007 are due to come into force on 6 April 2008.

The Act establishes a new offence where there has been a gross failure in the way a company has organised or managed its health and safety activities which results in someone's death. The new offence will be called corporate manslaughter in England, Wales and Northern Ireland and corporate homicide in Scotland.

Employers should take the opportunity to consider how they manage all workplace risks to ensure that they are not vulnerable to criminal charges under the Act.

The Government has published useful guidance on the new Act which can be found here.

Organisations found guilty of the new offence will be liable to a fine, a remedial order and a publicity order. The sanction of publicity orders will not come into effect until the Sentencing Guidelines Council has issued guidance on how courts should use this new sanction.

If you would like advice on how health and safety law affects your business, please contact James Bell.

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MATERNITY LEAVE - A WOMEN'S RIGHTS

Employers with staff absent on maternity leave should be aware that a failure to offer them the same rights and opportunities as their colleagues could result in claims of sex discrimination.

The legislation governing a woman's rights whilst absent from work on maternity leave requires that the time must count as continuous service and be included where it affects her promotion. She is also entitled to be fully consulted about any changes affecting her job and should be notified of any career opportunities that become available during this time. If on returning to work after maternity leave an employee finds that she has been demoted, or her job has materially changed, she may also be able to claim constructive dismissal.

A woman in Scotland was recently awarded £20,000 in an out of court settlement after she claimed that her employer had failed to offer her the chance of promotion whilst she was absent on maternity leave and had downgraded her status on her return to work.

Melanie Given had worked for two years as an accountant for an offshore oil-services company, Offshore Hydrocarbon Mapping, in Aberdeen. She threatened to bring a claim of sex discrimination against her employer because her role when she returned to work after having a baby carried less responsibility and status than before and she was not offered the chance of applying for promotion during her absence. The company had initially appointed someone on a temporary basis to cover for Mrs Given while she was on maternity leave. However, that person was made a permanent member of staff and took over Mrs Given's duties in a newly created and more senior post.

Because her role had been so much reduced, Mrs Given felt 'pushed out' and was absent from work for two months suffering from stress and anxiety.

Offshore Hydrocarbon Mapping did not admit any culpability and said that the decision to settle the claim was made purely on economic grounds.

Mrs Given's case was supported by the Equal Opportunities Commission Scotland.

It is important to have systems in place to ensure that the rights of women on maternity leave are not ignored. Contact James Bell for individual advice on the specific rights relating to ordinary and additional maternity leave.

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MATERNITY PAY INCREASES DELAYED

When the Work and Families Bill received Royal Assent, in June 2006, the Government announced that as well as increasing the entitlement to Statutory Maternity Pay, Statutory Adoption Pay and Maternity Allowance to 9 months, which took effect in April 2007, its ambition was to increase this to a year's paid leave by the end of this Parliament.

In addition, a new right to an additional period of paternity leave for fathers was announced, to be introduced alongside the extension of Statutory Maternity Pay, Statutory Adoption Pay and Maternity Allowance to 12 months. This will enable fathers to benefit from leave and statutory pay of up to 26 weeks to care for their child in the first year if the mother returns to work and has not used up her full entitlement to paid maternity leave.

HM Revenue and Customs (HMRC) had been planning for these changes on the basis that they would be introduced for babies due to be born on or after 1 April 2009. However, whilst it remains the Government's goal to introduce the changes before the end of this Parliament, it has announced that they will not be implemented in April 2009.

HMRC are now planning for the new measures to be introduced for babies due on or after 1 April 2010, but have made it clear that no final decision has been taken as to the exact timescale for implementation.

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MUSIC WHILE YOU WORK

If you allow your staff to listen to music whilst working, the Performing Rights Society (PRS) has warned that you could be liable to pay a licence fee.

PRS is a not-for-profit organisation that licenses the public performance of music on behalf of its 50,000 composer, songwriter and music publisher members. It pays its members royalties for each time a piece of their music is played in public.

According to PRS, a tariff for music in the workplace applies to 'the mechanical performance within the society's repertoire as a background to work, meals, stand-down times and breaks at work'.

PRS is taking Kwik Fit, the automotive parts repair company, to court for violating musical copyright because it claims that the company's mechanics play the radio loudly enough for it to be heard by colleagues and customers. In the view of PRS, this constitutes a 'performance' of the music, which requires the payment of royalties to the artists. PRS is claiming £200,000 in damages because Kwik Fit has refused to obtain the appropriate licences, claiming that the company has a policy banning the use of radios at its premises.

For those who allow music to be played at work, the situation is complicated by the fact that you may also need a licence from Phonographic Performance Ltd. (PPL). PPL collects and distributes airplay and public performance royalties in the UK on behalf of over 3,500 record companies and 40,000 performers.

The cost of a licence depends on how the music is used. For further information, see the PRS website and the PPL

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RASTAFARIAN LOSES DISCRIMINATION CLAIM

The Employment Equality (Religion or Belief) Regulations prohibit direct discrimination, indirect discrimination, victimisation and harassment in the workplace on the grounds of any religion, religious or philosophical belief.

A man has lost his appeal to the Employment Appeal Tribunal (EAT) that he was the victim of indirect discrimination because he is a Rastafarian and wears his hair in dreadlocks (Harris v NKL Automotive Ltd.).

Mr Harris worked as a driver for NKL Automotive through an agency. He complained that he was being given less work than the other agency drivers and, unlike some of them, he was not taken on by NKL Automotive as a full-time employee. The company felt that he did not represent it well but was willing to continue to use him as an agency driver, provided he tidied up his hair. The company had a dress code policy which required that drivers 'should have a smart professional haircut and should ensure hair is tidy'.

Mr Harris felt that he was being discriminated against because of his Rastafarian beliefs and brought a claim for direct and indirect discrimination on the grounds of his philosophical beliefs and of victimisation discrimination.

The Employment Tribunal (ET) accepted that Rastafarianism is a religious belief within the meaning of the Regulations. However, it rejected the claim of direct discrimination because NKL Automotive did not know of Mr Harris's Rastafarian beliefs. With regard to the claim of indirect discrimination, the ET found that Mr Harris had long hair when he was taken on as a driver and was not denied the opportunity of continuing as an agency driver provided his hair was tidy. A general standard of tidiness applied to all drivers and the ET took the view that to require hair to be tidy is a proportionate means of achieving the aim of a presentable appearance to customers.

The ET also concluded that Mr Harris had not been victimised by the agency but did not consider the allegation of victimisation by NKL Automotive. It did, however, conclude that the company had adopted a 'dismissive and unfortunate approach when dealing with his grievance in a somewhat peremptory way'.

Mr Harris appealed against the finding that there was no indirect discrimination and alleged that the ET had not given proper consideration to the victimisation discrimination claim.

The EAT remitted the question of victimisation discrimination to the same ET for consideration. As regards the claim of indirect discrimination, it rejected Mr Harris's argument that the requirement to have tidy hair is prejudicial to Rastafarians. In the EAT's view, 'if dreadlocks are compatible with tidy hair, or can be kept in a tidy manner, then the criterion does not in any way discriminate against those with dreadlocks'. The ET's finding was that the company did not object to hair worn in dreadlocks if tidy.

Employers who impose dress code restrictions should take care that these can be justified and do not discriminate against employees of a particular race or those holding particular religious beliefs. Contact James Bell if you would like advice on your dress code policy.

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THE EMPLOYMENT STATUS OF AGENCY WORKERS - CASES ON HOLD

The President of Employment Tribunals has issued a Practice Direction staying all agency worker cases until the Court of Appeal hands down its judgment in the case of James v Greenwich Borough Council.

Recent cases had tended to show that the circumstances in which a contract of employment between an agency worker and the end-user can be implied will be rare. In James v Greenwich Borough Council, the EAT stated that if any such contract is to be inferred, there must, subsequent to a relationship commencing, be some words or conduct which entitle the Employment Tribunal (ET) to conclude that the agency arrangements no longer dictate or adequately reflect how the work is actually being performed, and that the reality of the relationship is only consistent with the implication of the contract.

More recently, however, two further cases illustrated that if the conduct of the parties involved is such that a contractual relationship with the end-user must be implied in order to reflect the reality of the situation, the courts will rule accordingly.

In Harlow District Council v O'Mahoney, the EAT upheld the decision of the ET that Mr O'Mahoney was employed by Harlow District Council and that he had been unfairly dismissed. He had registered with APS Recruitment Ltd. and was sent for an interview with the Council, which was seeking the services of a plasterer. He worked there from January 2005 until May 2006, reporting directly to the Council. He wore a Council identity badge and was provided with a vehicle, tools and a mobile phone. During this period he transferred to a higher paid job without any involvement on the part of the recruitment agency. His holidays were regulated by the Council and he had been disciplined by and raised a grievance with its management. The only involvement the agency had was to pay Mr O'Mahoney's wages.

The EAT held that the fact that the agency paid wages to the worker on behalf of the end-user was not fatal to the existence of an implied contract of service between the worker and the end-user. Based on the finding of facts in this case, the reality of the relationship between Mr O'Mahoney and the Council was consistent only with a contract between them.

In a second unfair dismissal case (National Grid Electricity Transmission Plc v Wood) the EAT held that Mr Wood, who worked as an operations manager for the electricity company, was a 'wholly integrated member of staff', even though he had been put forward for an interview for the post by a recruitment agency which continued to pay his wages.

In this case also, the EAT found that the reality of the working relationship was such that a contract of employment between the worker and the end-user must be implied as the express terms of the contract between Mr Wood and the agency no longer reflected the actual arrangements. Mr Wood had to carry out the duties of the post personally - the agency could not provide a substitute - and he had direct negotiations with the company over classic features of an employment contract - such as pay, when he could take his holiday and his notice period.

To date, there have been several failed attempts by the European Union Council of Ministers to agree on proposals to improve the employment rights of agency workers. In the UK, whilst the recent Employment Bill contains measures to crack down on rogue employment agencies, the Government has announced that it has no plans to introduce domestic legislation giving agency workers equality of treatment with permanent employees independently of any European measures.

Meanwhile, we await with interest the Court of Appeal's ruling in James v Greenwich Borough Council for guidance on the correct approach in such cases.

Contact James Bell if you would like assistance in reviewing your temporary or permanent staff agreements.

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THE NEW EQUALITY COMMISSION

On 1 October 2007 the new Equality and Human Rights Commission (EHRC) opened. The Commission was established under the Equality Act 2006 and brings together the work of the three previous equality commissions, the Equal Opportunities Commission, the Commission for Racial Equality and the Disability Rights Commission. In addition, it also has responsibility for other aspects of equal treatment as regards age, sexual orientation and religion or belief and is tasked with the promotion of human rights.

The EHRC has extensive legal powers where there is an equality dimension to a case. It will take action on behalf of individuals, seeking to create legal precedents or to clarify and improve the law. It will also offer advice through its helpline and online resources and contribute funds to other organisations providing legal help and advice. The EHRC can also join in with proceedings taken by others, intervening to promote human rights.

It is hoped that the combined Commission will make it easier for individuals to get help and advice, especially when they are discriminated against on more than one ground. The CBI has called on the new body to make the provision of high quality information, advice and guidance on promoting diversity in the workplace its first priority.

In practice, the move to one super-watchdog is unlikely to make a significant difference, except for some streamlining of the process for making claims. The important point for employers is to be aware of the discrimination laws and to make sure these are complied with, both in terms of employment policies and practices. For advice on dealing with discrimination issues, contact James Bell.

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TUPE - LATEST CASES

The purpose of the Transfer of Undertakings (Protection of Employment) Regulations (TUPE) is to ensure that the transfer of a business has no prejudicial effects on its employees and that it does not subject them to less favourable treatment.

The TUPE Regulations state that a variation in a contract of employment will be void where the sole or principal reason for it is the transfer itself. However, the Court of Appeal has upheld the decision of the Employment Appeal Tribunal (EAT) in M D Power v Regent Security Services Ltd. that there is nothing in the legislation to prevent an employee from reaching an agreement with the transferee employer whereby he obtains an additional right by reason of the transfer. The transferred employee can then choose between enforcing the transferred acquired right or the newly obtained right.

Mr Power was employed under a contract which stated that his contractual retirement age was 60. Shortly before the business he worked for was transferred to Regent Security Services Ltd., he was sent a letter, effectively altering his retirement age to 65. Both parties agreed that this variation in his contract was made because of the transfer. After the transfer, Mr Power was told that the company was going to retire him on his 60th birthday. He objected on the grounds that his revised contractual retirement age was 65, but his employment was ended and so he brought a claim of unfair dismissal.

The Court of Appeal was of the view that an employee's rights on a transfer are not being safeguarded if he or she is prevented from taking the benefit of a term that was agreed with the transferee on or after the transfer.

A second case (New ISG Ltd. v Vernon and others) considered the right of an employee to object to becoming employed by the transferee when a relevant transfer under the TUPE Regulations occurs. Under Regulation 4(7), an employee's contract of employment will not transfer if he informs either the transferor or the transferee that he objects to becoming an employee of the transferee.

New ISG applied to continue an interim injunction, part of which related to restrictive covenants in the employment contracts of five employees who had left and gone to work for another firm. The employees contended that they had objected to the transfer of their employment to New ISG and so had never become its employees. It could not, therefore, enforce the covenants. New ISG contended that any objection had to take place before the transfer. In this case the employees had not raised their objections until two days after the deal had been completed. However, the employees had not been informed of the identity of the transferee until after the transfer had taken place. The Court ruled that in cases such as this a purposive construction should be put on the relevant Regulation. New ISG's construction undermined the fundamental freedom of an employee to choose his employer. New ISG could not therefore enforce the restrictive covenants.

If you are involved in a transfer to which the TUPE legislation applies, always take timely advice to make sure you fully understand the legal implications.

 

UNFAIR DISMISSAL - INVESTIGATION OF 'MALINGERING'

A recent case (Corus UK Ltd. v A M Mainwaring) sheds light on the steps an employer is required to take when investigating a possible case of malingering on the part of an employee who is off sick.

Mr Mainwaring was employed by Corus as a crane driver. In 2002, he began to suffer from back problems and from that time on was absent from work for substantial periods. In late January 2006, he again took sick leave because of his back condition. He was prescribed medication and physiotherapy by his GP and was told to perform normal duties, as the pain allowed, but to avoid heavy lifting and sitting for too long in one position. Mr Mainwaring also saw Dr Bevan, a GP whom Corus used as their occupational health adviser, regularly during his absence from work, including on 9 March and 16 March 2006. By 16 March, Dr Bevan was of the view that Mr Mainwaring would be able to return to light duties in two weeks' time.

However, in early March 2006, Corus received an anonymous 'tip-off', from one of Mr Mainwaring's colleagues, that he had been seen outside work carrying out activities that were not consistent with his alleged sickness. Corus did not take a witness statement from that person but decided to undertake surveillance of Mr Mainwaring. He was filmed on three occasions, loading shopping in to the boot of his car and walking freely along the road, with no obvious sign of pain.

Corus sought the opinion of Dr Bevan. Having seen the video footage, he said that had Mr Mainwaring told him that he was capable of undertaking these tasks, he would have recommended that he was fit to return to work with immediate effect. There followed an investigation meeting, on 27 March, at which Mr Mainwaring was shown the video footage and Dr Bevan's report. Mr Mainwaring said that he was improving and was able to undertake tasks such as those shown. At the end of the meeting, he was suspended following the outcome of the investigation. He was subsequently invited to a disciplinary hearing and was then dismissed on the ground that he had dishonestly reported himself as unable to work when he was fit to do so. Mr Mainwaring appealed against the decision, but it was upheld.

Mr Mainwaring brought a claim for unfair dismissal. The Employment Tribunal (ET) found that the dismissal was unfair. It judged that Corus should have taken a statement from the witness who gave the tip-off as to Mr Mainwaring's conduct. It was outside the range of reasonable responses not to have done so as there might have been some other reason for the complaint, such as 'ill-feeling' or 'sour grapes'. In its view, this indicated that there was a 'mindset' in place to get rid of Mr Mainwaring. The ET also held that it was outside the range of reasonable responses not to have considered obtaining the advice of a consultant, rather than relying on a GP who was not a specialist back doctor. As Corus had failed to carry out a reasonable investigation, the conclusions reached could not have been reasonable.

Corus appealed to the Employment Appeal Tribunal (EAT). The EAT found that the ET had erred in law in omitting to refer to the full investigatory hearing meeting that had taken place and in concluding that Corus had a mindset to dismiss. The ET's view of the facts was not supported by the evidence. It had also erred in law in criticising Corus for not taking a statement from the informant. The evidence before the ET showed that the tip-off was no more than a trigger for their investigations. As regards not seeking the opinion of a specialist consultant, the EAT ruled that this judgment was also flawed. It drew a distinction between the type of evidence needed for internal disciplinary proceedings and that required for a substantial personal injury claim. In its view, 'it could not be said that no employer could be said to be acting reasonably if he did not obtain a consultant's report when he sought and obtained the advice of an independent occupational health physician'.

The case was remitted to be heard by a fresh Tribunal.

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ACAS GUIDE ON HOLIDAY AND HOLIDAY PAY

The Advisory, Conciliation and Arbitration Service (ACAS) has updated its guidance for employers on staff holiday pay entitlements to take account of the increase in the statutory minimum annual holiday entitlement to 24 days, which came into effect on 1 October 2007. The guidance clarifies the law in a useful question-and-answer format.

Subjects covered include the entitlement of agency workers and casual workers to paid leave, an explanation of the accrual system that employers can opt to use to calculate how much leave a worker has built up during their first year of employment and the rules on carrying leave over from one holiday year to another.

The guidance is available on the ACAS website.

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AGE DISCRIMINATION CASES ON HOLD

Following a Practice Directive handed down by the President of Employment Tribunals, all age discrimination cases in England and Wales that relate to dismissal on the grounds of retirement arising under Regulation 30 of the Employment (Equality) Age Regulations 2006 (which provides for lawful retirement at or over age 65) are being stayed pending the ruling of the European Court of Justice on a challenge to the legality of UK retirement law made by the Heyday organisation. Heyday wants the legislation amended to give workers over 65 the same protection from discrimination as younger workers. The judgment is not expected until at least 2009.

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HAZARDS AT WORK - UPDATED GUIDANCE

The second edition of the TUC's guide to health and safety at work is now available. The text has been revised and updated and includes chapters on smoking and asbestos as well as updates on relevant statutes, including the new Corporate Manslaughter and Corporate Homicide Act 2007, due to come into force in April 2008.

The 352-page book has a chapter on all major hazards at work. Each covers basic facts, examines who is at risk, looks at legal and other standards for prevention and control and gives information on the Health and Safety Executive and other guidance.

The emphasis is on ensuring that those with health and safety responsibilities are well-organised and are more involved in good practice.

Hazards at Work can be ordered online. The cost is £18.00 to TUC members or £45.00 to non-members.

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SHORT TERM AGENCY WORKERS - ENTITLEMENT TO SSP

The Government is to take steps to amend the Fixed-Term Employees (Prevention of Less Favourable Treatment) Regulations 2002 to ensure that agency workers on contracts of less than three months are entitled to Statutory Sick Pay (SSP).

This decision follows a ruling by the Court of Appeal (Commissioners for HMRC v Thorn Baker Limited and Others) that two agency workers on short-term contracts were not entitled to SSP because the Regulations, although intended to make it unlawful to discriminate between permanent and temporary employees, maintained the restriction on entitlement to SSP in relation to agency workers on short-term assignments.

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Information on this website does not consitute legal advice.  Reading this material is not a substitute for taking advice from a solicitor.
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