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Employment Law Newsletter - June 2012


And there's more coming your way

The Enterprise and Regulatory Reform Bill was presented to Parliament on 23rd May and has its second reading on 11th June. It will give effect to several changes that were announced in the recent Queen's Speech and to one that was not.

Some parts were predictable. Prospective claimants will have to contact ACAS and participate in conciliation before they can lodge certain claims with the employment tribunal. Tribunals may fine employers up to £5,000 for 'aggravating' (this is not defined, but probably covers qualities such as serious, deliberate and malicious) breaches of employment law. And 'whistleblowing' employees will have to show that their complaints were in the public interest, not simply about their own contracts.

But some parts were surprising. The Secretary of State may limit the compensatory award for unfair dismissal: either to at least one year's (currently about £26,000) but no more than three years' median earnings; or to a specified number (at least 52) of weeks' pay. This is a strong hint that the Government is not minded to go along with the current notion of the Conservative benefactor, Adrian Beecroft, that the plan for small, or 'micro', businesses to be allowed to dismiss people for a small, fixed payment, regardless of fairness, should be extended to all employers.

As one door starts to close, another creaks open. EU law may have thwarted its plans to limit awards for discrimination, but the Government is broaching consultation on abolishing other protections against discrimination: the power of employment tribunals to make 'recommendations'; employers' liability for harassment by third parties; and the use of a questionnaire to obtain information. Employers might well be glad to see the back of these, particularly of the questionnaire, which takes up a lot of time in pursuit of information that is often of little or no relevance to a claim.


Something about Northern Ireland

Our April issue reminded you of the increase in the qualifying period for unfair dismissal. It omitted to mention that this change does not apply to Northern Ireland, where, despite much assimilation with the rules in the rest of the United Kingdom, the legislature and legislation are still separate. That said, the Northern Ireland Executive has just published a discussion document, seeking views on the desirability of certain amendments to employment law. The mooted changes are similar to those in train elsewhere and include a proposal to lift the qualifying bar.


There are (more) limits

We are still awaiting the Government's decision about measures to bring the Working Time Regulations in line with the jurisprudence of the European Court of Justice on carrying over annual leave precluded by sickness (the Stringer/Schultz-Hoff and Pereda rulings from 2009). In the meantime, the ECJ itself has been refining its approach to carry-over. One example was KHS AG v Schulte, covered in our December 2011 newsletter, which gave accrued leave a 'shelf life' so that, after a given period, a sick worker's right to carry it forward would be lost.

Now comes Neidel v Stadt Frankfurt. The headline of the ECJ's ruling is that the right to carry over leave only applies to the basic 4 weeks of leave guaranteed by the Working Time Directive, not to additional entitlements arising under national implementing legislation, such as the extra 1.6 weeks available under the Regulations. This effectively overrules the more adventurous decisions of UK tribunals, such as that in Adams v Harwich International Port, that the right applied to the whole 5.6 weeks. The other aspect of Neidel is that a rule providing for loss of carry over after only nine months is in breach of the Directive. In contrast, the Schulte ruling had found that a 15-month period for such a result was compatible with the Directive - it was sufficiently longer than the reference period over which the leave in question had been accrued (12 months). So, the question seems to be whether 15 months is the minimum period that can be prescribed for loss of rights to carry over. Perhaps the Government's announcement, when it finally appears, will have an answer.


How much is it worth?

When an employee is disabled and, consequently, is placed at a disadvantage at work, there is a positive duty on the employer to consider and, where appropriate, to effect reasonable adjustments to reduce or eliminate that disadvantage. One obvious form of reasonable adjustment will be reduced working time, whether as a 'permanent' feature or during a phased return. But is an associated reasonable adjustment the maintenance of full-time pay?

In Newcastle upon Tyne NHS Trust v Bagley, the employee, because her disability was employment-caused, received 85% of her normal salary when off work. If she were, as recommended, to return to work for three days per week, that benefit would cease and she would be entitled to 60% of her normal pay. She declined to return on this basis as, she said, she could not afford it. But her argument that the Trust had failed to make a reasonable adjustment by maintaining the 85% benefit was rejected. The EAT noted that the duty on reasonable adjustments was about measures to allow someone to continue working, not about compensating someone.

Whether or not the duty on reasonable adjustments can also encompass a wholly different job that is appropriate for a disabled employee (in any event, unfair dismissal law would require such consideration), the same principle would apply here - if the alternative job attracts less pay than the 'original' job, so be it.


The cost of ageing

Is the saving of cost a 'legitimate aim' that may (when pursued by 'proportionate means') justify otherwise unlawful age discrimination? As economic pressures on employers continue and because age-related benefits are still common, this question is one to which judges have had to turn more frequently. For direct age discrimination, the formal principle is now established by the Supreme Court in Seldon v Clarkson, Wright & Jakes, a case concerning compulsory retirement at age 65.

'Social' aims can be legitimate - perhaps 'to share out opportunities for professional employment between the generations' (do say 'to create headroom': don't say 'to shift old dead wood).

But the aims of a business, such as to cut cost and boost efficiency, cannot be legitimate. That said, social objectives look pretty easy to find when required. Just before Seldon, in Woodcock v Cumbria PCT, the CA found a dismissal for redundancy just before the employee's 50th birthday lawful, even though the only visible motive was to avoid having to pay the greater severance available to those over 50. Would that survive post-Seldon? Probably. In Woodcock, the CA had found another aim that, apparently being a matter of social policy, qualified as legitimate to provide the justification. What was it? ...to make an employee redundant. Sounds pretty much like making it up as you go along.


Early retirement and TUPE

TUPE explicitly excludes the old-age, invalidity and survivors' benefits of an occupational pension scheme from its coverage. But other aspects can survive and be transferred to the incoming employer. This is the case with entitlements in early retirement under public sector pension schemes (so-called 'Beckmann' rights). Procter & Gamble v SCA was about entitlements on early retirement under a defined benefit scheme in the private sector. The question was how extensive that transfer of liability was. The High Court held that, because TUPE operates only to protect, not to improve, employment rights and because the employees transferring from P&G to SCA remained entitled to a deferred pension from the former at normal retirement age, SCA was bound by the early retirement facility only until an employee reached that age.


Knowing is all

In Hounga v Allen, the Court of Appeal has confirmed that, if people participate in arrangements for employment that they know to be inherently illegal, they also do so 'actively', even if their knowledge is accompanied by a genuine element of duress. So they will be unable to enforce employment rights. Thus, Ms Hounga, a Nigerian national, who did not have a valid work permit and knew that her employment as an au pair in the UK was consequently illegal, was unable to bring claims for unfair dismissal or racial discrimination. Her unequal bargaining power, made all the more evident by the denigrating treatment accorded her by her employer, counted for nothing in this respect.

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

If you would like to discuss this or any other issue facing your organisation please speak to your usual contact at Collinson Grant or Richard Hendry 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.