It's a trap!

Employment Law Newsletter - July 2014


In this issue ...

  Putting your house in order   Seldon is finally retired?  
  What can you say?   Tribunals latest  
  No profitable whistleblowing   Zero-hours contracts – a footnote  
  And have a great time  

Putting your house in order

Since receiving the Royal Assent, the Equality Act 2010 has contained a provision for employment tribunals to order an employer losing an equal pay claim to undertake an equal pay audit of its workforce. It has not been activated to date, but that is to change in respect of any claim made on or after 1st October. The draft regulations make clear that, where an equal pay claim has been lost, the tribunal will be obliged to order an audit. The audit would require the employer to publish gender pay information, explain any reasons for differentials between men and women (including any that would appear to be equal pay breaches) and specify a plan to prevent any such breaches continuing or occurring. The failure to conduct an audit that had been ordered would expose the employer to a fine of up to £5,000.

So, soon there will be two things to dodge – an adverse tribunal ruling in an equal pay claim and its corollary, the compulsory equal pay audit. To avoid the risk of having judicial scrutiny all over you like a rash, perhaps it's a good time to ensure things are watertight anyway by doing a voluntary equal pay audit.


What can you say?

The Information Commissioner has recently published guidance on the relationship between releasing employee liability information (ELI) pursuant to TUPE and the restrictions on disclosure of personal data under the Data Protection Act (DPA).

It is helpful in de-mystifying the subject, which crops up with reasonable regularity in our dealings with clients. Starting from the point that, because there is an obligation on the transferor to provide it to the transferee, the ELI required by TUPE (which includes names, pay et cetera of transferring employees) cannot infringe the DPA where it is properly due.

Instances of where full ELI might not be properly due, so that its transmission could infringe the DPA, are where the transferee requests more information than TUPE prescribes, early 'pre-TUPE' situations where there are multiple prospective transferees and, of course, non-TUPE transactions (such as share takeovers). Here, while recognising that those who will or could assume control will often legitimately want information for due diligence purposes, the guidance says that, in the absence of consent to disclosure, removing names or, better still, all 'obvious identifiers' (if you are wondering what the difference is, a job title can frequently identify an individual) is the best tactic.

And when the TUPE transfer happens, can employment records be passed to the new employer without the consent of the transferring employee? Yes, says the guidance, provided the information is necessary to effect the transfer and for on-going business needs. Conversely, what about the transferor keeping employment records? Again, that's alright as long as there is a justifiable need for retaining the particular information (generally the objective here will be to do with possible liabilities or providing a reference) and it is not preserved for longer than necessary.


No profitable whistleblowing

The Government recently sought views on further changes to the whistleblowing laws. One idea mooted was for there to be some kind of financial incentive for making a disclosure. This, along with any other significant legal change, has now been rejected. That seems sensible. First, there is often something rather tacky about offering a reward for doing what is meant to be 'the right thing' anyway. Second, such a provision would be likely to produce more cranky or even malicious allegations. And, third, its basis would seem to be totally at odds with last year's change that provided for a reduction in compensation for a whistleblower who, while disclosing something that is in the public interest, acted principally for selfish reasons. If this 'reward' proposal had gained traction, it could have resulted in some whistleblowers gaining on the incentive swings and losing on the compensatory roundabouts.


Seldon is finally retired?

You might recall the decision of the Supreme Court in Seldon v Clarkson Wright & Jakes about justifying compulsory retirements (if not, it featured in our June 2012 and July 2013 issues). Well, the latest, and perhaps final, episode of the 'Seldon saga' has just concluded in the Employment Appeal Tribunal (EAT), which confirmed the employment tribunal's decision that forced retirement at age 65 was 'a proportionate means' of achieving legitimate 'public interest' aims like retention, career development, succession planning and inter-generational fairness. The EAT adopted a pragmatic view, acknowledging that even a compulsory retirement age of 65 years and just one day, let alone one of 66 or 67, would inevitably be less age discriminatory than one of precisely 65, but ruling that that did not prevent 65 itself being 'proportionate'. And it endorsed the factors taken into account by the employment tribunal – general consent, case law from the European Court of Justice and the fact that, at the time, both the state pension age and the now-abolished 'default retirement age' were fixed at 65.


Tribunals latest

Although the total receipts from 29th July 2013, when fees were introduced, to 30th March 2014 look healthy (do we mean that?) at £4.5 million, the latest statistics on the volume of tribunal claims confirm that the introduction of fees is still having a dramatic effect. In the quarter to the end of March 2014, single claims were still about 58% down on those for the corresponding period in 2013.

It is true that the count of claims excludes those that have arrived with the tribunal office but are being considered for a remission (to you and us, an exemption or reduction) on the applicable fee. So, given the complexity of the remission rules (despite relaxations taking effect at the end of June, the guidance accompanying the new application form runs to almost 30 pages) and the limited resource that the tribunals have for processing applications, the true number of claims is likely to be slightly higher – but we would be surprised if, under the current regime, they ever got back to more than about 60% of 'pre-fee' levels. If a more dramatic swing towards those levels is to be achieved, it will only happen with the abolition of fees (only likely under a Labour Government) or a substantial dilution of the rules – perhaps on one or more of the thresholds for remissions as much as on the fees themselves. In that context, the Government has, in a Parliamentary answer in the House of Lords, recently said that it is already planning a review of the impact of fees.

Meanwhile, it seems that even those hardy claimants who do manage to plough through the financial and administrative mire cannot be assured of great rewards at their destination. A recent survey by Equal Opportunities Review has found that, in 2013, awards of compensation in discrimination claims produced the lowest average (mean) and the lowest median for 10 years.

Finally, just a couple of moderately interesting items in the Small Business, Enterprise and Employment Bill (featured, on another subject, in our June issue).

There will soon be a system to enforce the payment of tribunal awards. A reluctant employer will receive a 28-day 'warning notice' which, if it does not achieve the desired effect, will be followed by a 'penalty notice' – subject to a minimum of £100 and a maximum of £5,000, the penalty, payable to the Secretary of State, is for 50% of the unpaid award. The penalty will be cut in half if both it and the outstanding award due to the claimant are paid within 14 days.

And there are provisions about postponements – first, to limit the number available to a party and second, to allow for costs awards for 'late' postponement applications. Once the Bill is passed, secondary legislation will take care of the detail.


Zero-hours contracts – a footnote

Last month, we commented on the planned control of exclusivity clauses in zero-hours contracts (ZHCs) and, along the way, suggested that the draft legislation's definition of a ZHC might not prevent businesses' avoiding regulation by guaranteeing one hour's (for that matter, 30 minutes' or 5 minutes') work per week.

One of our readers has suggested that this would be self-defeating, because it would make the individual an 'employee', with consequent access to a range of employment protections. This legal effect cannot be seriously disputed. But the resultant risk to the business can easily be over-stated. A person working under a 'pure' or true ZHC, without any guaranteed time, can already be found to be an 'employee' (or, failing that, a 'worker', with some statutory protections) when, irrespective of the absence of formal obligation, some work is actually provided and done in each week or most weeks. And, on a contract guaranteeing minimal time each week, the exposure to liability for unfair dismissal, the cost of any redundancy payments or the burden of other employment rights would be pretty low anyway.


And have a great time

We don't 'do' a newsletter in August. That is not because we operate some 'office shutdown' over the next six or seven weeks. We shall be open for business as usual. Nor do we think that you disappear for the entirety of the high summer. But we reckon many of you, like each of us, will sneak in a week or two away and will have plenty of things to do beforehand or afterwards. That, combined with a generally somewhat less prolific output from the policy makers, legislators and judges, persuades us that we can hold off until September on the next issue of the newsletter.

Of course, these are 'famous last words'. In 2013, no sooner had we sent out the July issue and shut down the printing presses than we had to produce a 'newsflash' on the Parkwood Leisure v Alemo-Herron decision. Let's see how we fare this year...

In any event, do have an enjoyable summer period, whatever you are doing with it.


If you would like to discuss this or any other issue facing your organisation please speak to your usual contact at Collinson Grant or Jo Hale on 0161 703 5600

Although care has been taken in the preparation of this Newsletter, Collinson Grant cannot accept responsibility for errors, omissions or advice given. Readers should note that only Acts of Parliament and Statutory Instruments have the force of law and only the courts can authoritatively interpret the law.