Oliver McCannn
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Employers Update - February 2011
Welcome to the February edition
of Employ!
In this month’s Employ! we take a
look at the latest developments in
the abolishment of retirement
dismissals, as well as the increase
in Employment Tribunal limits,
proposed reforms to the Employment
Tribunal system and the Royal
Wedding “Bank Holiday” in addition
to important case law developments.
We also answer your questions so
please keep submitting questions for
future editions of Employ!
If you have any queries or wish to
have a chat about Taylors Employment
Services please contact Oliver
McCann on 0844 8000 263
or
oliver.mccann@taylors.co.uk.
Oliver McCann - Partner and
Head of Employment
James Bellamy
- Employment Solicitor
Tel: 0844 8000 263
Email:
oliver.mccann@taylors.co.uk
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Employ! has previously
reported on the abolishment of the
retirement age in the
October 2010,
December 2010 and
January 2011 editions. The regulations
to abolish the retirement age have now been
laid before Parliament and published. Whilst
most of the regulations are as expected,
there appears to be a serious mistake!
What do I need to know?
As currently drafted, you will only be
allowed to rely on the transitional
provisions (as communicated in October’s
Employ!) if the employee “attains 65”
between 6th April and 30th September.
Arguably, the wording is such that any
employee who is already 65 and is to retire
between 6th April and 30th September will
fall outside the transitional arrangements
and, as such, if they are dismissed on
grounds of retirement, they will be able to
claim age discrimination and unfair
dismissal, even if the full retirement
process has been followed.
This is a technical issue, but unless it
is amended, it may well succeed! Watch this
space and for those currently trying to
retire those individuals who have already
turned 65, it would be wise to pause for
thought and take legal advice.
Note also that the regulations provide
that it is not an age contravention to
provide insurance benefits to the under 65s
but not to the over 65s. Taylors will report
more fully on this in due course once the
dust has settled!
Earlier this month the maximum
compensation amounts which can be awarded by
Employment Tribunals increased and the
government announced its proposals for
future Employment Tribunal system reforms
which if implemented would be welcome relief
for many employers.
What do I need to know?
Key compensation limit increases
are:
- the maximum compensatory award for
unfair dismissal increased from £65,300
to £68,400;
- the limit on the amount of a
guarantee payment payable to an employee
in respect of any day increased from
£21.20 to £22.20;
- the minimum amount of compensation
where an individual is found to have
been unlawfully excluded or expelled
from a trade union increased from £7,200
to £7,600; and
- the maximum amount of a week’s pay
for the purpose of calculating a
redundancy payment or for various awards
including the basic or additional award
of compensation for unfair dismissal
increased from £380 to £400.
A full list of the changes can be found
in
The Employment Rights (Increase of Limits)
Order 2010.
Note there are certain claims for unfair
dismissal where the statutory limit does not
apply, ie. whistle-blowing dismissals and
health and safety dismissals. Discrimination
claims also have no limit on the size of the
compensatory award.
Remember - Taylors offers a
variety of employer protection packages
which not only ensure you have access to
employment law advice from qualified lawyers
but also insure you against compensation
awards and the legal costs of defending
Employment Tribunal claims. More information
can be found at
http://www.taylors.co.uk/employer-protection-scheme.htm
The Government has also commenced
consultation on reforms to the current
Employment Tribunal system including:
- increasing the qualifying period for
employees to be eligible to bring a
claim for unfair dismissal from one to
two years – a huge benefit to employers
with up to 4500 fewer unfair dismissal
claims anticipated from this change
alone!
- introducing fees to bring claims,
similar to the civil courts, which may
reduce the number of vexatious or weak
claims;
- requiring all claims to be lodged
with ACAS in the first instance for up
to a month in order to allow pre-claim
conciliation to be offered;
- extending the jurisdictions where an
Employment Judge can sit alone to
include unfair dismissal claims,
introducing the use of legal officers to
deal with certain case management
functions and taking witness statements
as read, rather than having them read
out by the witnesses themselves; and
- tackling weak and vexatious claims
by providing Employment Tribunals with a
range of more flexible and robust case
management powers, so that weaker cases
can be dealt with in a way that does not
mean disproportionate costs for
employers.
The consultation also includes a proposal
to introduce financial penalties for those
employers found to have breached an
individual’s rights. This could be up to
half the amount of the total award made to
the Claimant and would be payable to the
Exchequer – a revenue generating proposal!
Prince William and Kate Middleton
marry on 29th April 2011 with the government
declaring the day a “Bank Holiday”, much to
the delight of millions of employees across
the country!
Reports suggest that the cost to the UK
economy and business will exceed £5 billion
pounds by creating consecutive 4 day
weekends with Good Friday (22nd), Easter
Monday (25th), the new Bank Holiday (29th)
and May Day (2nd May). It seems there has
been little regard for the costly impact
this decision will have on businesses.
What do I need to know?
Whether an employer must recognise the
extra Bank Holiday depends on the
contractual position with your employees.
Those employers who allocate a set number of
days for annual leave, regardless of Bank
Holidays, or those employers who
specifically set out in the employment
contract which Bank Holidays they will
recognise, will be unaffected – they can
insist that the employee works on that day
if the business is open or that the employee
uses a day from his or her usual annual
leave entitlement where the business closes
or the employee wishes to observe it
(subject to the employer’s holiday policy
and booking requirements!).
Matters are more complex, however, for
those employers with employment contracts
which state “20 days plus Bank Holidays”.
Clearly, when the contracts were issued and
agreed, the employer intended this clause to
cover the “normal” 8 Bank Holidays in the
year and employers will seek to argue this
as the correct interpretation.
Employees, however, will rely on an old
Latin rule of contractual interpretation
(“contra preferentum”) which states that any
ambiguous term will be construed against the
party which imposed its inclusion into the
contract, ie. the employer. If the employee
is successful but has been denied the right
to take the day off as paid, then claims for
unlawful deduction of wages and breach of
contract may follow.
Employees will argue that there are
existing laws which allow for Bank Holidays
to be changed or moved or other days to be
declared, and that this should have been
expressly excluded for by the employer. For
example, 2012 will see the Queen’s Jubilee
celebrated by moving the late May Bank
Holiday to Monday 4th June and also by
declaring a further Bank Holiday on Tuesday
5th June – yet more bad news for employers!
With the above in mind, all employers
need to carefully consider their approach to
the Royal Wedding Bank Holiday. A balance
needs to be struck between compliance with
the terms of your employment contracts, the
importance of staff morale and the need to
operate your business on that day.
As there continues to be uncertainty
surrounding the economy, businesses continue
to seek advice on restructuring their
operations to improve efficiency and
effectiveness.
Often employers create an entirely new
role which replaces one or two existing
roles. The employer will argue that the new
role is entirely different and requires
different skills, capabilities and
experience (and sometimes qualifications)
and, as such, there is a redundancy
situation as there is a reduction in the
number of employees required to carry out
“work of a particular kind”.
So what do you do if you create one
different role to replace two existing
roles? Are you obliged to follow the usual
redundancy selection criteria, or can you
adopt an interview process?
What do I need to know?
A recent case, Morgan v The Welsh Rugby
Union 2011, confirms the usual redundancy
guidance set out in the case of Williams v
Compare Maxam does not apply to cases where
the redundant employees are applying for “a
new and different” role. Engagement to this
new role has to be one based on the needs of
the business looking forward, in particular
focusing on the individual’s ability to
perform the new role. As such, it is
perfectly legitimate to abandon the standard
redundancy selection process and adopt an
interview process.
The only requirement is that the interview
process be fair and objective (ie. be based
on the individual’s ability to meet the key
skills and deliverables of the new role).
The case confirmed that as long as an
interview is fair and objective, it matters
not that an interview panel does not adhere
strictly to the job description/requirements
and that the format of the interview differs
substantially between two candidates. The
emphasis must be on appointing the candidate
who the interview panel feel best able to
fulfil the role.
Note that this case involved two internal
candidates. The case of Harris v Ralph
Martindale suggests that the interview
process for a new role should in the first
instance be limited to those at risk of
redundancy and only after a conclusion is
reached that the “at risk internal
candidates” are not suitable for the new
role, should the interview process open up
to other internal and external applicants.
However, this case does not create any rule
and indeed is arguably contrary to the
Morgan case - if the decision to appoint to
the new role must be forward-thinking and
the key is appointing the best candidate to
perform that role (particularly at senior
level), then to restrict the interview
process to “at risk employees” would be
contrary to that need by depriving the
employer of a proper selection for the new
role!
A recent Court of Appeal decision
confirmed that a nurse had been unfairly
dismissed by the London Hospitals NHS Trust
after she was reported by a fellow nurse as
saying “It’s been a long time since I’ve had
a man underneath me like this” whilst
straddling a half naked man who need
urgently to be sedated.
The Trust felt the comments were
unforgivably rude and worthy of dismissal.
What do I need to know?
As with any dismissal, to avoid it being
unfair, all the facts need to taken into
consideration!
In this case, the nurse had an
unblemished work record, intervened (despite
being off duty) to assist colleagues
struggling to handle a fitting patient in
urgent need of medical care, the patient was
unaware of the comment and, through her
actions, she helped to save the patient. For
her efforts, she was kicked by the patient
during the process as well. The nurse
explained that she made her comment in the
heat of the moment, embarrassed at her
position.
The Employment Tribunal felt that the
comment was at best lewd, and commented that
a large proportion of the population would
have found the comment humorous. The Court
of Appeal agreed that considering what the
population at large would think was relevant
to the issue of reasonableness when there
was disagreement as to the seriousness of
the offence.
IR35 rules provide that where an
individual provides personal services to an
end user through an intermediary (usually a
personal service company) in circumstances
where (but for the existence of the
intermediary) there would be an employment
relationship, then an employment
relationship will be implied and the
intermediary will be liable for tax and
employer NI as if it was the employer for
income received from the end user.
A recent case, MDB Design Services v HMRC,
has reiterated that the guidelines for
determining employment status in these
circumstances involve consideration of the
combined effect of a contract and it being
complied with in practice as well as
mutuality, control, business risk and
integration.
What do I need to know?
In this case, it was held that a sole
director of a service company contracted to
Airbus over several contracts was not an
employee of Airbus. The Tribunal held that
the relationship was typical of a contract
for services. Where aspects point towards an
employment relationship such as hourly
payments, work approval, on site working,
time recording and intellectual property
vesting in the end user, they would have
less weight if they arose from the special
needs of the end user and were therefore
still consistent with self employed status.
Note that on the issue of integration, a
recent agency worker case held that
integration into the end user’s business was
not fatal to the existence of an agency
worker relationship (Tilson v Alstom
Transport 2011).
In the last edition of Employ! we
reported on the introduction of the Bribery
Act in April 2011. The government has
confirmed that this will be delayed until
guidance on the Act is finalised and
published and, at that point, three months
notice given before it becomes law.
1. We have an employee who is a senior
salesman and who has recently handed in his
notice. We would like to place him on garden
leave, given his access to confidential
information and customer contact, which he
could unlawfully take advantage of. We have
noticed that we do not have an express
“garden leave” provision in his contract of
employment. If we proceed to place him on
garden leave do so does this constitute a
breach of contract?
No. Although express clauses would always
be recommended, in this case you could get
away with it. Recent case law has
established that even without an express
garden leave provision, you are entitled to
place an employee on garden leave provided
that he would not lose valuable skills
relevant to his profession whilst not able
to work and it would not prevent him from
earning a living (ie. commission only
contracts). In your present circumstances,
it would seem unlikely to fall within that
category.
Copyright 2006 - 2011 Taylors Solicitors
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