Personnel FILE May 2011
Retirement - Review practices now or face penalties!
Employment Law update - abolition of the Default Retirement Age
Employment law specialist, David Hodge, advises businesses to act now to avoid costly claims of age discrimination.
David, who heads up Brethertons' Commercial Employment team in Rugby and Banbury, sits firmly on the side of employers but envisages many coming unstuck inadvertently as fundamental changes to age-related dismissals take effect.
"The whole landscape of retirement-based dismissals is progressively changing with effect from 5th April 2011 and I fear that the majority of businesses in the region remain unaware of these changes and the serious consequences of failing to adjust their current practices. How many businesses have taken the simple, but necessary, step of reviewing their contracts of employment and staff handbook to ensure that they do not find themselves in tribunal? My suspicion is not nearly enough!.....From October 2011, the word 'retirement' will all but disappear from an employer's vocabulary and potentially land those who fail to heed the changes and take the right advice in very hot water indeed. Of course the danger with discrimination claims is the potentially unlimited compensation available."
David and his team have put together a free advice-sheet to assist local businesses in understanding the changes and in implementing the necessary adjustments to avoid problems.
If you wish to continue to receive free email updates from Brethertons employment team, please sign-up here.
Bribery Act update
The Bribery Act has received Royal Assent, but its implementation (due on 6th April 2010) has been delayed once again pending the publishing of government guidance to render it ‘practical and comprehensive for business’ (31st January 2011).
The Act, which regulates the conduct of UK businesses both at home and abroad (where at least part of the business is located in the UK) principally:
The Act creates four key offences which can be summarised as follows:
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‘Active’ bribery (i.e. offering, promising or giving a bribe)
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‘Passive’ bribery (i.e. requesting or accepting a bribe)
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Bribing a foreign public official
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Failing (in the case of a commercial organisation) to prevent bribery
The only defence available to a commercial organisation is to evidence that it had "adequate procedures" in place to prevent the offence being committed by the associated person.
Penalties
The penalties for breaching the Act are potentially severe;
Common risks
Common areas of risk for many businesses are:
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Corporate hospitality and gifts: There can be no hard or fast rule, but overly extravagant corporate hospitality and the giving/ receiving of valuable gifts might be seen as bribery, especially in dealings with foreign public officials.
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Public procurement: If convicted of "active corruption" an organisation will be debarred from carrying out public contracts throughout Europe.
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Facilitation payments: So-called ‘grease’ payments intended to secure the expedition of certain duties are commonplace in some countries. However, the making of such payments will be an offence under the Act (which now has jurisdiction).
Practical Steps to Compliance
Most businesses will, in the first instance, wish to review their staff handbooks to implement and provide training on a robust anti-corruption policy and to confirm any breach as gross misconduct.
Many will also conduct a review of their commercial terms to ensure that business partners are contractually obliged to comply with good practice and to ensure that an ‘adequate procedures’ defence can be made out, if necessary.
Collective Redundancy Consultation – Court of Appeal Seeks Clarification
The Court of Appeal (in United States of America v Nolan) has sought guidance from the European Court of Justice (ECJ) as to the point at which the obligation to consult arises under Directive 98/59/EC, the Collective Redundancies Directive.
This issue has caused problems in the past and clarification will be welcome. Whilst the Directive provides that an employer should begin consultations when ‘contemplating’ making collective redundancies, this duty is given effect in domestic law – under Section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA) – as being a duty to consult when an employer ‘proposes to dismiss’ employees as redundant.
The question arose in this case following a decision by the Secretary of the US Army to close a US Army base in Hampshire, which resulted in the redundancy of some 200 civilian employees. One of the employees, Christine Nolan, brought a claim on behalf of the redundant employees for compensation by way of a ‘protective award’ under TULRCA on the ground that the USA had failed to consult with representatives of the civilian workforce in accordance with its obligations under section 188. She argued that the consultation period was far less than the 90-day period required and, in particular, that there had been a failure to consult before, and about, taking the operational decision to close the base.
The Employment Tribunal found that no meaningful consultation over the closure of the base, and the redundancies this would involve, had taken place and awarded Mrs Nolan a 30-day protective award. The Employment Appeal Tribunal upheld this decision, relying on the decision in UK Coal Mining Ltd. v National Union of Mineworkers that where closure and dismissals are inextricably linked, the duty to consult over the reasons for the closure arises.
The USA appealed to the Court of Appeal on the ground that the more recent judgment of the ECJ in a Swedish case (Akavan Erityisalojen Keskusliitto Alek RY and others v Fujitsu Siemens Computers) is authority for the proposition that, upon the true interpretation of the Directive, the consultation obligation is not triggered by a proposed business decision to close down a workplace but only arises at the later stage when the decision has been made and the intention to make the employees redundant has been formed.
The Court of Appeal chose not to venture further views on the correct interpretation of the Directive, concluding that it could only decide the appeal with the benefit of further guidance from the ECJ.
This is an important issue as employers need to understand the exact nature of their consultation obligations in such circumstances.
Compromise Agreements and the Equality Act 2010
A compromise agreement is a legally binding agreement by which an employee undertakes to refrain from instigating Employment Tribunal (ET) proceedings against his or her employer or, if proceedings have already commenced, to discontinue them, in return for consideration. Compromise agreements were created by the Employment Rights Act 1996 and must comply with certain conditions, one of which is that for the agreement to be valid, it must expressly specify the cause of action being settled. In order to ensure that the employee fully understands which rights are being waived, the compromise agreement should list all potential claims.
On 1 October 2010, the core provisions of the Equality Act 2010 came into force. Employers are reminded that compromise agreements made after that date that are intended to settle discrimination and equal pay claims should specifically refer to claims under the Act as well as to the legislation it replaced with regard to periods of employment prior to that date.
A further condition is that for a compromise agreement to be valid, the employee must have received advice from a relevant independent adviser as to the terms and effect of the proposed agreement and, in particular, its effect on his or her ability to pursue a claim before the ET.
The wording of the Equality Act has raised some doubt as to who qualifies as a relevant independent adviser in relation to a compromise agreement over discrimination claims, as the literal wording of the Act provides that an adviser who has acted for an employee with regard to the contract or complaint would not qualify as an independent adviser in respect of any compromise agreement reached. As it stands, this means that the employee’s own solicitor would not qualify, whereas previously only an adviser to the other party was excluded. This would seem to be a drafting error, as the explanatory notes accompanying the Act indicate that the relevant section is intended to replace provisions in previous legislation which had the same purpose.
This raises the possibility that an agreement compromising claims under the Act could be challenged as invalid and it is to be hoped that Parliament will clarify the position as soon as possible.
Disability-Related Discrimination – New Act Restores Position
The core provisions of the Equality Act 2010 came into force on 1 October. The Act largely consolidates existing discrimination law, which had previously been found in a number of different pieces of legislation.
One of the changes made by the Act is to make it easier for a claimant to establish a case of ‘disability-related discrimination’, which was made more difficult following the decision in London Borough of Lewisham v Malcolm. In that case, the House of Lords ruled that a disabled tenant who was evicted from his flat for breach of the terms of his tenancy agreement (he had sub-let the flat in contravention of the lease terms) had not suffered discrimination despite the fact that he suffered from schizophrenia. The Court ruled that the Council, which was unaware of his condition, would have treated any other tenant the same way.
The Act replaces the concept of disability-related discrimination with a new protection from discrimination arising from disability. This means that a person discriminates against a disabled person if they treat them unfavourably because of something arising from, or in consequence of, their disability. In circumstances similar to those in Malcolm, a landlord would have to show that the treatment of a disabled tenant was a ‘proportionate means of achieving a legitimate aim’ in order to avoid being regarded as having discriminated against them. The Act does, however, provide a defence where the landlord can show that it did not know, and could not reasonably have been expected to know, that the tenant had a disability.
Gross Misconduct and Breach of Contract
When an employee is sacked for gross misconduct, has the employer breached his contract of employment?
This was the question before the courts in Dunn and another v AAH Ltd. Stephen Dunn was the Managing Director of AAH Ltd., one of a group of companies of which the head company, Celesio AG, was based in Germany. Mr Dunn had failed to inform AAH of a fraud of which he had been aware for five months.
When his employer discovered this, Mr Dunn was sacked for gross misconduct. He then sought compensation.
Celesio had in place a set of mandatory Risk Management Guidelines for the directors of its subsidiary companies to follow. These obliged subsidiary directors to report immediately any potential risks to Celesio. In addition, Mr Dunn’s contract of employment obliged him to ‘perform all the duties and exercise all the powers of his office to the best of his ability and …comply with all lawful directions and instructions given’.
The argument went all the way to the Court of Appeal, which ruled that Mr Dunn had repudiated his contract because his behaviour was such that it undermined the employer’s trust and confidence in him to such an extent that it was no longer reasonable for AAH to continue to employ him.
In Brief - The Equality Act 2010 – Online Starter Guide
The Equality and Human Rights Commission has published an online starter guide on obligations under the Equality Act 2010, for use by those in the private, public and voluntary sectors. The core provisions of the Act came into force on 1 October 2010.
The guide has nine ‘bite-sized’ training modules which concentrate on essential features of the new legislation for employers and for service providers. It is available at http://www.equalityhumanrights.com/advice-and-guidance/new-equality-act-guidance/equality-act-starter-kit/.
Social Networking – where private becomes public
As recently as five years ago the phrase ‘social networking’ had little meaning in the context of the internet, which at that time itself fell far short of the potential that it has achieved today. Websites such as Facebook, MySpace and Twitter were barely recognised by the masses.
However, the passing of several years has brought significant expansion. Rapid technological advances in the internet have changed the playing field for all of us in both our work and private lives. Facebook, in particular, has seen its active user numbers rocket to a current figure of more than 400 million worldwide. The number and demographic of those users is equally astounding (gaining significant representation in all age groups from 13 to 50 plus) and as a result most businesses can guarantee that a considerable proportion of their staff are tuned-in. Social networking isn’t just for teenagers!
In the context of employment, like other websites, social networking sites are accessible to employees online and have the potential to lead to significant levels of lost man-hours. However, more pertinently, social networking sites have provided a new medium for information which in the past would have remained private, to be published to the world at large at the click of a button and to remain in situ for months. The potential for exposure of damaging information is significant and the ‘facebook phenomenon’ has led to employees’ private lives becoming know to employers and to employers business dealing potentially becoming exposed to public scrutiny.
Perhaps unsurprisingly, the most common concern amongst employers relates to statements or photographs posted by employees on their personal webpages, that the employer considers are inappropriate, derogatory or otherwise damaging to its business. To what extent is an employer entitled to address such matters?
There is clearly some tension between the rights of an employer to protect its legitimate business interests and the rights of the employee to enjoy a private life, as enshrined by the Human Rights Act. The courts and tribunals endeavour to strike a fair balance.
It is fair to say that derogatory statements by employees regarding your business, its staff or customers that are widely published are likely to provide grounds for taking disciplinary action (in much the same way as they would be if written in any other format) and there have been a number of well-publicised examples.
Readers may recall that a Bedford police inspector saw his promotion withdrawn because he had posted photographs of himself in a sexual context wearing his police uniform. Similarly, 76 staff from Marks & Spencer were disciplined for participating in a Facebook discussion board where customers were described as "idiots" and "cheap little b******s". Prior to that Virgin Atlantic sacked 13 crew members who posted remarks on their Facebook pages calling passengers "chavs".
In those kinds of circumstances, disciplinary action or dismissal may be justifiable, but one important factor that a tribunal is bound to take into account is how widely the statement is circulated and in effect, how much damage is likely to be caused.
In the matter of Taylor v Somerfield, Mr Taylor had posted a video on YouTube showing two of his colleagues hitting each other with Somerfield plastic bags, whilst at work. Taylor was dismissed for allegedly bringing Somerfield into disrepute. However, the employment tribunal hearing the case did not accept that dismissal was a reasonable sanction in the circumstances of that case. The tribunal took particular account of the fact that the clip had received only 8 ‘hits’.
Other information within an individual’s personal webpage that would be likely to warrant disciplinary action might include bullying or discriminatory comments regarding other staff.
However, what the courts will not do is simply sanction the imposition of an employer’s own moral views on acceptable behaviour, and employers can expect to have to evidence a specific business interest that is in need of protection, on each occasion.
Aside from internal disciplinary matters, there is also the potential for third-party liability to arise from the use of social networking sites and whilst incurring vicarious liability for comments made on an individual’s private Facebook page may seem remote, defamatory statements regarding competitors or clients could be a very real source of concern for those businesses that actively encourage their staff to use social networking sites for business development. Similarly, the inadvertent disclosure of confidential information or personal data is all too easy on such forums and is likely to lead to serious questions being asked of the employer’s checks and measures.
Practically, employers should set clear boundaries and make their expectations regarding the use of social networking sites clear by implementing a robust social media policy to sit alongside their existing IT policy. Such a policy will enable them to govern, so far as possible, employees’ activities both in and outside the workplace, in so far as those activities relate to or refer to their working environment.
Furthermore, employers should always ensure that any sanctions imposed as a result of any breach fall within the band of reasonable responses in the circumstances, or face the threat of a successful employment claim.
Forthcoming webinars
Overpayment of Salaries – the right to recover
Speakers: Jackie Ray and Paul Lydon
Date: Wed 8th June 2011
Time: 12:30pm
http://www.brethertons.co.uk/Home/News-and-Events/Events-and-Webinars.aspx
