PersonnelFILE Newsletter September 2011
Re-launch of Rugby HR forum
The Rugby HR Forum will host its inaugural meeting at the new Rugby Business Centre of Warwickshire College on Technology Drive on the 21st September 2011 from 8am. Mark Pawsey MP will be taking a look at the national and regional implications of public sector cuts and the need for private sector support, the employers’ charter and available government support for employers.
The HR Forum has been established by Brethertons LLP Solicitors in partnership with Intec Business Colleges and according to David Hodge (Head of Employment Law at the firm) has one key objective in mind, “The events will provide a much needed local focus group for Personnel Managers/Directors to share experiences and know-how as well as to discuss and consult over changes that affect HR matters both at a regional and a national level, with the ear of our local MP.”
Mark Pawsey MP, who will be speaking at the first event, plans on playing an active role in the HR Forum. He said “The Rugby HR Forum is a great idea and will provide an opportunity for local businesses to get together to discuss how HR matters affect their business. Having run a business in Rugby for 25 years, I am fully aware of the concerns of business owners. Human Resources is all about providing the best for your staff and getting the best from them, and it is for this reason that I am very happy to be involved.”
Please click here for more details.
Bribery Act Seminar
Brethertons LLP, in conjunction with Clark Howes Group LLP, is holding a FREE seminar for those of you who have a UK base and would like to learn more about the Bribery Act, including how to avoid liability for your business. The seminar will be held at Bicester Hotel, Golf and Spa on Wednesday 14th September starting at 8:00am. For more information, please click here.
Following a handful of highly publicised bribery or “sales assistance” scandals involving international companies, this new Act reforms the UK’s anti-corruption laws and extends the jurisdiction of the UK Courts to police where bribery offences at home and abroad are suspected.
One key provision of the Act is the new corporate offence of failing to prevent bribery, which renders businesses liable to a potentially unlimited fine (amongst other penalties) for unlawful acts of bribery by their employees, agents, business partners or other associated persons, unless that business can show that ‘adequate procedures’ were taken to avoid the alleged acts of bribery occurring.
The Act places the emphasis very much on the implementation of avoidance measures and places corporate entities firmly in the firing line of the Serious Fraud Office. Moreover, a business’ conduct overseas is now within the remit of the Act and the UK Courts, as long as that business has a base in the UK. In order to avail themselves of the adequate procedures defence, businesses need to take steps now to review their activities and to identify areas of exposure, where measures can and should be taken to reduce risk. Anti-corruption policies within staff handbooks will form the foundation of a business’ defences, together with clear guidelines and training on the giving and receiving of gifts and corporate hospitality. However, audit and financial controls will also be a pre-requisite for most and some may also wish to extend risk assessments to business associates. National and international businesses must take this new legislation seriously and ensure that they take appropriate steps as soon as possible or risk hefty fines.
To find out more about the Bribery Act, and how it affects you, please download our fact sheet.
Further Steps in the Government’s Review of Employment Law
The Government has announced that as part of its ongoing review of employment law, aimed at eliminating unnecessary ‘red tape’, it will consider in detail the case for reforming:
Compensation for Discrimination
Whilst there needs to be remedies for discrimination, employers have expressed concern regarding the high levels of compensation sometimes awarded by Employment Tribunals (ET) in cases of discrimination – and the lack of certainty as to the level of award they may be required to pay. The amount of compensation payable in discrimination cases is unlimited and employers worry that high awards may encourage people to bring weak, speculative or vexatious claims in the hope of a large payout. This can lead to employers opting to settle such cases before they reach the ET;
The Collective Redundancy Rules
Employers are concerned that the current requirements regarding consultation when an employer proposes to make collective redundancies are hindering their ability to restructure efficiently and retain a flexible workforce. Employers in financial difficulty worry about how long they need to keep paying staff after it has become clear that they need to let them go. They also claim that it is not clear from the legislation at what point consultation on redundancies should start or end; and
TUPE
The Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) implement the European Directive on Acquired Rights and protect employees’ terms and conditions of employment when there is a relevant transfer of a business, a part of a business or a service provision change from one owner to another. These rules offer important protections but some businesses believe that they are ‘gold plated’ and overly bureaucratic.
The review of these areas of employment law will commence this year.
Employment Relations Minister, Edward Davey said, “The areas we are reviewing are priorities for employers. We want to make it easier for businesses to take on staff and grow.
“We will be looking carefully at the arguments for reform. Fairness for individuals will not be compromised – but where we can make legislation easier to understand, improve efficiency and reduce unnecessary bureaucracy we will.”
Guidance on the Agency Workers Regulations
The Department for Business, Innovation and Skills has published guidance on the Agency Workers Regulations 2010 (AWR) for employers and those in the recruitment sector.
The AWR, which implement the EU Agency Workers Directive, will come into force on 1 October 2011, giving agency workers the right to the same basic terms and conditions of employment as if they had been recruited directly by the hirer, once they have completed a qualifying period of 12 calendar weeks in a particular job, but will not fundamentally affect their employment status or how agency staff are placed and managed.
Under the AWR, if you hire agency workers, from day one of their assignment you must ensure that they are treated no less favourably with regard to access to workplace facilities (for example a canteen, workplace crèche, mother and baby room, prayer room, car parking etc.) than an employee or worker who is employed by you directly. In addition, agency workers will have the right to be provided with information about any relevant job vacancies within the organisation that would be available to a comparable employee or worker.
After 12 weeks in the same job, an agency worker will be entitled to equal treatment with regard to key elements of pay, duration of working time, night work, rest periods, rest breaks, annual leave and paid time off for antenatal medical appointments and classes. The AWR do not, however, give agency workers any additional entitlement to maternity, paternity or adoption rights beyond those to which they would otherwise have been entitled. The qualifying period is not retrospective. An agency worker will only start to accrue the 12 weeks’ qualifying period after the AWR come into force on 1 October, even if the assignment commenced prior to that date.
The 50-page guidance includes information on how the 12-week qualifying period is calculated, and is available at http://www.bis.gov.uk/assets/biscore/employment-matters/docs/a/11-949-agency-workers-regulations-guidance. Employers are advised to consider how the AWR will affect them and have the necessary procedures in place by 1 October 2011 to ensure compliance. For individual advice, contact David Hodge, Head of Employment Law at Brethertons LLP.
Life After the Abolition of the Default Retirement Age
As a result of recent changes in the law, the last date on which an employer could lawfully notify an employee of a retirement dismissal using the statutory Default Retirement Age (DRA) provisions laid down by the Employment Equality (Age) Regulations 2006 was 5 April 2011. Employers can no longer dismiss an older worker on the ground of retirement unless this can be objectively justified.
Retirements Notified On or Before 5 April 2011
Under transitional provisions, retirements that were notified to employees on or before 5 April – i.e. to employees who will be 65, or will have reached the normal retirement age for your business where this is higher, before 1 October 2011 – can continue through to completion provided the DRA provisions are followed. An employee in this category will have been given a minimum of six month’s notice of retirement but no more than 12 months. If an employee who is retiring on this basis requests an extension to their period of notice of retirement, the employer can agree to this providing the extension is no more than six months and the employee retires on or before 5 October 2012. The employee’s right to request to work beyond retirement ceases on 5 January 2012.
Working Without the DRA
Abolition of the DRA does not mean that employees will never be able to retire, but that an employer cannot lawfully force an employee to retire at a set age unless the age can be objectively justified under the Equality Act 2010. If this is not possible, the employer faces the double threat of a claim for age discrimination and for unfair dismissal.
Employers therefore have two options. These are:
For a set retirement age to be objectively justified, its use must be a proportionate means of achieving a legitimate aim. This is not an easy test to pass, and businesses who do wish to have in place an EJRA are advised to seek legal advice before choosing this option. An EJRA will normally be appropriate for occupations where retirement at a particular age can be justified on health and safety grounds – for example for airline pilots or fire fighters. Employers must provide evidence that the chosen EJRA is necessary – not based merely on assumptions – and be able to demonstrate that no alternative or less discriminatory action could achieve the same result. Employers who have chosen to use an EJRA must follow a fair procedure, giving the employee adequate notice of their impending retirement and, if circumstances permit, consider any request to work beyond the EJRA as an exception to the normal policy. However, it is important to have procedures in place to ensure consistency of treatment of employees who request to stay on.
Older employees can still retire voluntarily at a time of their choosing and draw any occupational pension to which they are entitled under the rules of the scheme. If an employee has given formal notice that they wish to retire, the employer is under no obligation to permit them to withdraw their notice should they change their mind. If, however, an employee has only told their employer that they plan to retire, they can change their mind before formal notice is given.
Great care must be taken if an older employee is performing badly. Procedures for dealing with performance issues must be fair and applied consistently across all age groups. To avoid a claim of unfair dismissal, any dismissal must be for one of the potentially fair reasons for dismissal under the Employment Rights Act 1996. Care must also be taken that any decisions taken by the employer do not discriminate against an employee who has a condition that constitutes a disability under the Equality Act. In such cases, the employer has a duty to make reasonable adjustments to remove any barriers to the employee’s performance.
Group risk insured benefits are exempt from the principle of equal treatment on the grounds of age, so employers who provide such benefits can cease to provide or offer them to employees aged 65 and above, even if they continue to work beyond that age. The age at which group risk insured benefits can be withdrawn will increase in line with increases in the State Pension Age.
Whilst the abolition of the DRA gives employees greater choice and flexibility over when to retire, the move has been criticised as having a negative impact on an employer’s ability to plan workforce requirements to meet future business needs.
The Advisory, Conciliation and Arbitration Service has published guidance for employers, entitled ‘Working Without the Default Retirement Age’, which contains useful advice on a possible framework for workplace discussions that will help identify an employee’s future aims, and gives examples of ways of raising the issue of retirement without asking questions that could be seen as discriminatory. The guidance can be found at http://www.acas.org.uk/index.aspx?articleid=3203.
For further details on the Abolition of the Default Retirement Age, please download our fact sheet.
Redundancies Following a TUPE Transfer
When one business has acquired another similar business under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE), the need for redundancies often arises. In First Scottish Searching Services Ltd. v McDine and Middleton, the judgment of the Employment Appeal Tribunal (EAT) illustrates what approach the Employment Tribunal (ET) should adopt when deciding what constitutes a fair redundancy selection process when the selection pool includes employees of the transferor and the transferee.
First Scottish Searching Services Ltd. (FSSS) had acquired another property title search business, SPH, in 2009. The contracts of employment of employees of SPH were automatically transferred to FSSS in the TUPE transfer. FSSS had warned that redundancies would be likely and, in the event, used the same scoring matrix as it had adopted during an earlier round of redundancies in 2008. Former employees of SPH were assessed by managers who had transferred with them, whilst the scoring for existing FSSS employees was carried out by managers familiar with their work. The scores of the latter group were also compared with those achieved in the 2008 redundancy exercise. As it turned out, all of the employees identified as being at risk of redundancy had transferred from SPH.
Two of the dismissed employees contended that the redundancy exercise was biased and brought claims for unfair dismissal.
The ET criticised the redundancy selection system used by FSSS because it did not incorporate ‘some system for moderating the two sets of scores’. In its view, because there was a ‘clear and overt risk of unfairness’, the entire redundancy process was unfair. FSSS appealed against this decision.
The EAT upheld the appeal. The ET had failed to give any explanation of what it meant by ‘moderating’ the scores nor, indeed, how moderation came to be a feature of the case at all. There were no findings of fact as to what might actually have been done to achieve whatever it was the ET had in mind nor as to what would have been the likely outcome if ‘some system of moderation’ had been employed.
Under Section 98 of the Employment Rights Act 1996 (ERA), whether or not a redundancy dismissal is fair or unfair depends on whether the employer acted reasonably or unreasonably in deciding to dismiss the employee. In many cases, there will be a band of reasonable responses, with room for legitimate differences of opinion amongst reasonable employers as to what is a fair way to act. Case law establishes that it will rarely be appropriate for an ET to perform a detailed scrutiny of the scoring system or the application of the system in a particular case.
The ET had fallen into the trap of engaging in a ‘microscopic’ and ‘over minute’ reassessment of the redundancy selection process and had substituted its own opinion for that of a reasonable employer. It had sought perfection when this is not what is required by the ERA. There was no finding of fact as to any inconsistency of approach between the two sets of managers and no evidence of deliberate bias. Furthermore, the ET had failed to consider the impact on the redundancy decision of the claimants’ scores for length of service – a wholly objective criterion that no amount of moderation could have affected – which was clearly substantial.
For advice on any redundancy matter, please contact David Hodge, Head of Employment Law at Brethertons LLP.
Women on Maternity Leave – What is ‘Special Treatment’?
The Equality Act 2010 – as did the Sex Discrimination Act 1975 (SDA) which preceded it – allows ‘special treatment’ to be afforded to women to prevent them being disadvantaged on account of pregnancy or childbirth. An employer who treats a woman unfavourably because she is either pregnant or on maternity leave may face a claim of direct discrimination. The legislation also states that no account is to be taken of special treatment afforded to a woman in these circumstances where a complaint of less favourable treatment is made by a man. In a recent case brought under the SDA (Eversheds Legal Services Ltd. v de Belin), the Employment Appeal Tribunal (EAT) considered the scope of the term ‘special treatment’ in such circumstances.
John de Belin was one of two associates working in Eversheds’ Leeds office as part of its Real Estate Investor Team. The other associate was a Ms Reinholz. In September 2008, it was decided that one of the two would have to be made redundant. One of the performance criteria used during the redundancy exercise was ‘lock up’ – the time between undertaking a piece of work and the receipt of payment from the client. As Ms Reinholz was absent on maternity leave on the date selected for measuring this criterion, her employer accorded her the maximum score, in accordance with what was said to be its general policy applying to candidates for redundancy who were on maternity leave or away on sabbatical. The fact that Ms Reinholz was given the maximum score on lock up tipped the balance in her favour and Mr de Belin was selected for redundancy.
Mr de Belin complained that the redundancy process was unfair and he was the victim of sex discrimination. He suggested alternative ways of scoring lock up performance, but his employer believed that its approach was correct as it was required by law to ensure that Ms Reinholz was not disadvantaged by her maternity absence, otherwise it ran the risk of her bringing a sex discrimination claim. Mr de Belin was therefore dismissed as redundant.
Mr de Belin claimed that he was unfairly dismissed and had suffered sex discrimination. The Employment Tribunal (ET) upheld his claims. In its view, he had been treated less favourably because of the maximum notional score for lock up accorded to Ms Reinholz and he was awarded more than £120,000 in compensation. Eversheds appealed against the decision and lost.
The EAT ruled that it is necessary to construe the SDA in a manner which incorporates the legal principle of proportionality. The obligation to afford special treatment to a pregnant woman or a woman who is on maternity leave should not extend to favouring her beyond what is necessary to compensate her for any disadvantages occasioned by her condition. It should constitute a proportionate means of achieving a legitimate aim. The EAT held that the means adopted by Eversheds went beyond what was reasonably necessary. There were other ways of removing the maternity-related disadvantage to Ms Reinholz without unfairly disadvantaging Mr de Belin. In the EAT’s view, the most satisfactory way would have been to measure the lock up performance of both candidates as at the last date on which Ms Reinholz was at work, as this basis would have reflected her actual performance.
On the matter of compensation, however, the EAT held that the ET had failed to address Evershed’s argument that the amount awarded should have been discounted to reflect the possibility that Mr de Belin would have been dismissed as a result of a further redundancy exercise that took place in October 2009. The case was therefore remitted to a different ET for consideration on this point.
This case raises several questions for employers, not only with regard to the selection criteria used in any redundancy process but also regarding any differences in maternity and paternity pay arrangements. Contact David Hodge, Head of Employment Law at Brethertons LLP for advice on ensuring your policies and procedures get the balance right.
