2011 Legal Round-Up

30 December 2011

What does 2011 have in store?

8th Jan 2011

Default retirement age

The consultation on the government’s proposals to abolish the DRA closed on 21 October 2010 and, although the response to the consultation was expected “before Christmas”, it is now due later this month. Under the proposals employers giving notice of retirement after 5 April 2011 will no longer be able to rely on the DRA.

Limits on tribunal awards to increase from 1 February 2011

Notably, the maximum compensatory award for unfair dismissal will rise from £65,300 to £68,400 and the maximum amount of a week’s pay, used to calculate statutory redundancy pay (among other things), will rise from £380 to £400.

New statutory payment rates from 11 April 2011

The proposed rates of statutory benefits which are expected to apply from 11 April 2011, including:

  • Statutory Maternity Pay, Statutory Paternity Pay and Statutory Adoption Pay. From £124.88 to £128.73. The weekly earnings threshold for these payments will rise from £97 to £102.
  • Statutory Sick Pay. From £79.15 to £81.60, with the weekly earnings threshold also rising from £97 to £102.
  • Maternity allowance. From £124.88 to £128.73, with the earnings threshold remaining at £30.

Unfair dismissal qualifying period

The government is currently considering whether to increase the period of qualifying service required for “ordinary” unfair dismissal claims from one to two years. The decision is likely to be some months off but is eagerly awaited. The common view is that it will merely cause an increase in discrimination and “protected reason” unfair dismissal claims.

Agency worker regulations 2010

The government has announced that it will not be amending the current draft regulations before they come into force in October 2011. Please see here for a summary of the provisions.

Right to representation at disciplinary hearings

In April 2011 the Supreme Court is due to consider the Court of Appeal’s ruling in R (on the application of G) v X School and others that a teaching assistant was entitled to legal representation during disciplinary proceedings for sexual misconduct with a child. The decision was based on Article 6 of the European Convention on Human Rights (right to a fair trial) being engaged which, given the seriousness of the charge and its likely effect in ending his career, included the right to legal representation. If upheld this is likely to have a much wider interpretation.

The FSA’s remuneration code

The original code and the revised code (effective from January 1 2011) have at their cores the requirement that a firm “must establish, implement and maintain remuneration policies, procedures and practices that are consistent with and promote effective risk management”. To put this into effect, the revised code sets out the rules and guidance dealing with the structure of remuneration, its governance and the methods of performance measurement used to determine performance-related bonuses. Please see here for a summary of the provisions.

Potential Tribunal System Reforms Published

1st Feb 2011

“Resolving workplace disputes”, a publication outlining potential reforms to the employment tribunal system has been released and received support from employer groups.

Key proposals include:

  • An increase in the minimum qualifying period for standard unfair dismissal claims from one year to two years;
  • introduction of a fee for commencing tribunal claims;
  • the parties to contribute towards the running costs of employment tribunals and the EAT;
  • the requirement that all claims are submitted to ACAS pre-issue;
  • for employers who’ve been found breaching employment rights, the introduction of automatic financial consequences (further to normal payable compensation);
  • the extension of the jurisdictions/areas where employment judges can sit alone;
  • taking away the (general) necessity for tripartite panels in the EAT; and
  • a review of the formula for calculation of employment tribunal awards/statutory redundancy payment limits.

Detailing reasoning for these proposals can be found in the consultation: “Resolving workplace disputes”.

In The Press This Week

18th Feb 2011

We know how much you all enjoy riveting overviews of the Equality Act 2010, the default retirement age and other gripping topics… However, this week, we’ve been keeping our eye on the press and you’d be surprised where employment law related issues crop up…

In the aftermath of the recent media scandal surrounding Sky News ­ where two male sports presenters were criticised for making sexist off-air comments about a female assistant referee. Equality in the workplace is a major topic. Below is the Kervin & Barnes pick of the most relevant (and interesting) employment law related stories reported in the press this week.


“Compensation For A Thieving Former Employee” (Metro)

Simon Cremer (an employer at a flooring company) has been made to pay a former employee £13,000 for humiliating him by parading him through the streets.

Mark Gilbert began legal proceedings against Mr Cremer for loss of earnings and the anguish caused by the incident (which occurred in 2008).

Sporting a sign around his neck that read “THIEF I stole £845 Am on my way to police station”, the employee was marched through Witham, Essex. This followed Mr Gilbert’s admission he had cashed a company cheque at a local Cash Converters.

The 47-year-old employer commented that paying out £5,000 in compensation and £8,000 in legal bills for Mr Gilbert “stuck in his throat” he also said “he stole from me yet he is the one who is walking away with the money. It makes me so angry”.

Mr Cremer settled, as he would potentially have faced an even more sizable payout if the case had gone to court.

The full news article can be read here.

“Gay Waiter Awarded £21,571 In Harassment Claim” (Metro)

Vincent Ma, a waiter at Michelin-starred restaurant Yauatcha in Soho, Central London, was humiliated in relation to his sexual preferences by his colleagues and a restaurant customer.

Humiliation included the 31-year-old’s two male managers simulating sexual acts in front of him, a restaurant customer pinching his nipple, and numerous homophobic jokes from colleagues.

The London tribunal ruled that Mr Ma suffered sexual harassment and was constructively dismissed. Mr Ma also brought a claim for disability discrimination in relation to his diabetic condition but it was rejected.

The full news article can be read here.

“Husband Paid Wife’s Legal Fees For Unfair Dismissal Claim Against Him” (Daily Mail)

46-year-old Helen Hutcheson quit her job and started legal proceedings against her husband for unfair dismissal after he refused to pay her £3,000-a-month as manager of his Aberdeen dental practice.

Mrs Hutcheson claims John Hutcheson agreed to pay her the sum but reneged on this promise. John and his business partner Karen Robertson denied such an agreement had been made.

At the tribunal in Aberdeen, a judge threw out the case on the grounds that she had not worked at the practice long enough to bring an unfair dismissal claim.

Despite these proceedings and the fact her husband paid her legal fees; Mrs Hutcheson insists “There is absolutely no animosity between my husband and I ­ none at all. We are fine.”

The full news article can be read here.

Changes to Termination Payments

18th March 2011

On 6th April 2011, the Income Tax (Pay As You Earn) (Amendment) Regulations 2011 come into force.

At present, when a payment is made to a departed employee after their P45 has been produced, income tax is deducted at basic rate only (and they are responsible for any additional tax) using a ‘BR’ tax code. After 6th April 2011, tax at the full 20%, 40% or 50% rates must be deducted from post-termination payments (using the ‘0T’ tax code).

To read more about these changes, click here.

Wardle v Credit Agricole Corporate and Investment Bank 2011

12th May 2011

Discrimination: compensation for future losses

The Court of Appeal has handed down its decision in the case of Wardle v Credit Agricole Corporate and Investment Bank, which is authority for the proposition that when calculating future losses, tribunals should assess the loss suffered up to a certain point in time when an employee would be likely to secure another job on similar terms, rather than award compensation up to the point when there was certainty that the employee would secure another job on equivalent terms. However, losses after that date should be ignored. The tribunal’s prediction may not be accurate but this is the best that can be achieved to bring ‘finality’ to the assessment of compensation for future loss.

The claimant unsuccessfully applied for promotion. He then brought a claim for discrimination on the grounds of his nationality. Shortly after this, he was dismissed. He issued a further claim for unfair dismissal and victimisation. The Tribunal upheld his claims and he was awarded compensation for loss on the basis that there was an 80% chance that he would have left his employment in any event at a certain point in time.

LJ Elias concluded that career long loss should only be awarded in exceptional circumstances and that the Tribunal’s approach to the assessment of compensation for future loss over the claimant’s career was flawed.

He also confirmed that disregarding the SDDP would not justify an uplift of 50% and that the maximum uplift should only be applied in the most serious cases.

To read the full case, please click here.

Bailey v R&R Plant (Peterborough) Ltd 2011

2nd June 2011

Retirement notice under the statutory retirement procedures (now repealed).

The Employment Appeal Tribunal has handed down its decision in the case of Bailey v R&R Plant (Peterborough) Ltd, which is authority for the proposition that when an employer provides written notice of its intention to retire an employee under the statutory retirement procedures, the employer must inform the employee that any written request to continue working must be in writing and must state that it is made under paragraph 5 of Schedule 6 to the Employment Equality Age Regulations 2006 (now repealed).

The EAT found that the Respondent’s letter to the Claimant informing him that he would be retired and that he is entitled to make a request to continue working beyond his 65th birthday was invalid because the written notice did not state that the request must be made under paragraph 5 of Schedule 6. HHJ Richardson concluded by saying that “An employee is not informed of the statutory procedural right merely by being told that he may make a request not to retire…He is informed of the statutory procedural right only if he is told the essential conditions by which it may be exercised”.

The EAT held that the Claimant was unfairly dismissed by reason of retirement.
This case is of limited significance for the future as the statutory retirement procedure was repealed on 6 April 2011. Having said this, there are likely to be employers who have issued notices of retirement in the run-up to the repeal of the retirement procedure. In light of this decision, those notices will probably be held to be invalid if challenged by an employee.

Government’s planned changes to employment law

3rd October 2011

The Government is increasing the qualifying period for unfair dismissal claims from one year to two years from April 2012. Additionally, they will be consulting on a proposal to introduce fees for all Employment Tribunal claims.

The Government has announced planned changes to unfair dismissal law.  George Osborne and Vince Cable have set out that the qualifying period for bringing an unfair dismissal claim will increase from one year to two years from 6 April 2012.  The stated goal is “to increase business confidence to take on more workers”.

The government estimates that by having to have two year’s service with an employer before being able to claim for unfair dismissal there will be a reduction in claims of 2,000 per year.  However, a consequence may be that more employees seek to circumvent the two-year qualifying period by claiming that their dismissal was for a reason relating to whistle-blowing or health and safety (two of a list of ‘automatically unfair dismissals’) or they may claim that their dismissal was due to discrimination ­claims all of which may well be more costly for an employer to defend.

In addition to the scheduled plan above, the Government is currently proposing to introduce fees for lodging a claim at an Employment Tribunal.  A consultation on this proposal is due to begin before the end of November 2011 and if it goes ahead fees are likely to be introduced from April 2013.  The FT has reported that the fee could be £150-250 for filing a Claim Form with a further £1,000 fee when the case was listed for a hearing.  The fees are likely to be refunded to the Claimant if they win and lost if they lose.  The fee structure could also include an element of means testing.

At the same time the Cabinet Office has announced a “Red Tape Challenge” with the aim of reducing the employment regulations that they see as burdens on business.  They have grouped these in to four categories ­ compliance and enforcement; taking people on; managing staff; and letting people go ­ and have invited comment from employers and employees over the next three weeks.

Cameron: “far, far, better pensions than people in the private sector”

3rd Nov 2011

Revised government proposals for the reform of public sector pensions would, according to David Cameron, continue to provide ‘far, far, better pensions than people in the private sector’.  The revised proposals provide:

  • protection for any accrued benefits;
  • an increase in the “cost ceiling” by 8% on the previous offer. This means that the accrual rate ­ the percentage of salary earned as a pension every year ­ will be based on one-sixtieth of an average salary rather than the initial sixty-fifth; and
  • no changes for those within ten years of retirement. This means the changes will not come into full effect until April 2022.

The TUC also stated that the Government has committed to any agreed reforms not being reopened within the next 25 years.

The government’s concessions do not alter the draft reforms which include:

  • a move from final salary to career average;
  • proposed employee contribution increases by 3.2 per cent on average;
  • increases in the retirement age consistent with state pension age; and
  • an indexation change from RPI to CPI.

As at the time of writing, the planned day of action on November 30 remains live.

Agency Workers Regulations Come Into Force

4th Oct 2011

On 1 October 2011, the Agency Workers Regulations 2010 come into effect. These Regulations provide for agency workers to be put on the same basic terms as the permanent employees of their “hirer” after a qualifying period of 12 weeks.

Gareth Kervin, Partner at Kervin & Barnes Solicitors (Mayfair, London) says: “These regulations are a significant change for anyone taking on temporary workers”.

He added: “They are likely to make temporary agency workers a less attractive option for employers”.

The Regulations were published earlier this year but it is likely that their effect will still come as a surprise to many. Employers need to be aware that they cannot contract out of these obligations protecting agency workers.

An agency worker is defined as someone working under a contract of employment with a temporary work agency, who is assigned to a hirer to work temporarily under that hirer’s supervision and direction (i.e. a temp sent by an agency to a company).

The Agency Workers Regulations 2010 apply to employment businesses and not employment agencies. The term ‘employment business’ refers to an organisation that supplies workers to hirers for temporary work; whereas ‘employment agency’ refers to an organisation that finds permanent employment for individuals.

The Regulations will not apply to those who are employed directly by the end user/hirer. Nor will they apply to the genuinely self-employed or those employed on a managed service contract. Agency workers with employment arrangements via intermediaries or umbrella companies will, however, come under the Regulations.

Gareth Kervin, Partner at Kervin & Barnes Solicitors (Mayfair, London) pointed out: “direct employment of those who previously were agency workers is one way in which employers are likely to mitigate the impact of the Regulations”.

The Regulations provide for ‘Day 1’ rights for agency workers including the right to be informed of vacancies within the hirer’s organisation and access to on-site facilities such as a canteen, gym or child-care facilities.

More importantly, following a period of 12 weeks, temporary workers will be entitled to equal treatment in relation to the same basic terms including: pay, certain bonuses, rest breaks and annual leave.

The equal treatment of agency workers is in comparison to those directly recruited by the end user and the agency workers’ ‘comparator’ can be either an employee or a worker. There is a 12 week qualification period before the right to equal treatment kicks in. However, this period is measured in weeks and not hours or days. For example, an agency worker taken on for a half day every Friday would be entitled to the same basic terms as a direct recruit after 12 weeks.

The period of continuity is broken when there is a break or six weeks or more (during or between assignments in the same job) or the agency worker commences a new or substantially different role.

Gareth Kervin, Partner at Kervin & Barnes Solicitors outlined: “certified sickness absence and annual leave both pause the period of service”.

In the case of maternity leave, an agency worker’s continuity will continue to accrue for the intended duration of the placement or its likely duration if none was specified. Employers are not required to pay maternity leave benefits to an agency worker but the worker will have the right to time off for ante-natal appointments and the same health and safety duties as apply to permanent staff.

Gareth Kervin, Partner at Kervin & Barnes Solicitors outlined: “Liability under the Agency Worker Regulations lies with the temporary work agency. However, if an agency can show that they have taken ‘reasonable steps’ to obtain the relevant information from the hirer then liability will lie with the hirer”.

He added: “It is solely the end user’s responsibility to provide the Day 1 rights”.

Another way in which employers and agencies are seeking to avoid the impact of the Regulations is for the recruitment agency to take the worker on permanently.  This is known as the Swedish derogation.  Gareth Kervin, Partner at Kervin & Barnes Solicitors said: “this method would allow agencies to reduce the impact of the Regulations on themselves and the end users”. He added “agency workers, however, would be left in a position where they were not protected by the new Regulations as they could be placed on minimal terms between their assignments”.

Inconsistent disciplinary sanctions were justified.

4th Nov 2011

General Mills (Berwick) Limited v Glowacki

In this case, the Employment Appeal Tribunal (EAT) have opened up the possibilities for employers to justify disparate responses to disciplinary offences.

Mr Glowacki, an electrician, was summarily dismissed for gross breach of health and safety procedures after attempting to repair machinery (a “palletiser”) by disabling certain of its sensors and climbing inside it.  The palletiser had warnings attached to it but these were ignored by Glowacki.

Glowacki claimed unfair dismissal and the Newcastle upon Tyne Employment Tribunal found in his favour. Interestingly, they found that the employer’s dismissal was for a fair reason and was within the band of reasonable responses for an employer to take in the circumstances. However, the Tribunal found that Glowacki had been treated differently to another employee who had been in a similar situation (gross breach of health and safety) in 2009 but who had not been dismissed for gross misconduct. The Tribunal concluded that the cases were “factually indistinguishable” and the difference in treatment had not been explained by the employer; thus Glowacki’s dismissal was unfair.

The employer appealed and was successful. The EAT made its own findings. Crucially, it accepted the employer’s explanation for the difference in treatment. The 2009 incident had led to very serious injury to the other employee such that they were unable to take part in a disciplinary process; that employee was ultimately dismissed on capability grounds. The employer set out that the other employee would have been summarily dismissed were it not for their serious injury.

The EAT held that there was a sufficient basis for the difference in treatment bearing in mind the “range of responses reasonably open to an employer faced with those facts”.

To read the full case, please click here

Employee on sick leave must request holiday to be paid for it

8th Nov 2011

Fraser v Southwest London St George’s Mental Health Trust 2011

The Employment Appeal Tribunal (EAT) has held that an employee on long-term sick leave must give notice of their intention to take statutory sick leave during the leave year in question in order to be paid for holiday pay.

F, a nurse, injured her knee at work in November 2005. She went off on long-term sick leave. Her entitlement to sick pay expired in August 2006. On the termination of her employment in October 2008, she brought a claim for unpaid statutory holiday pay in respect of the two previous leave years during which she had been away on long-term sick leave. F did not notify the Trust of her intention to take annual leave during her sickness absence.

The EAT concluded that F was not entitled to accrued holiday pay for the previous leave years because she failed to trigger her entitlement to be paid for it by giving notice under Regulation 15 of the Working Time Regulations 1998. The EAT went on to say that if F had made a request to take leave accruing in either 2006/2007 or 2007/2008, the Trust ‘might have been obliged to accede to that request’ and she might have been entitled to a payment in lieu of accrued but untaken leave.

Whilst the EAT considered a number of previous authorities on the issue of holiday pay, a recent Judgment of the EAT, NHS Leeds v Larner 2011 does not appear to have been considered.  The Judgment appears to be at odds with the Judgment in Larner which held that an employee on sick leave for the whole of a pay year was not required to submit a request, in the leave year, in order to be entitled to accrued leave on the termination of their employment.

It is understood that Larner is proceeding to the Court of Appeal. Until the issue is resolved by the Court of Appeal, employers should rely on the current authority (Fraser) where employees seek accrued holiday pay for previous holiday years following a period of sickness absence and where notice of leave has not been submitted.

Government proposal for ‘protected conversations’ in employment

28th Nov 2011

The Government has put forward a proposal for employers to be able to hold ‘protected conversations’ with employees and vice versa. In the words of David Cameron the impetus for this is so that “ a boss and an employee feel able to sit down together and have a frank conversation ”. However, we should query what this would mean for current employment protections especially given that the proposal is for the ‘protected conversations’ to be kept private and off-the-record, so that they cannot be brought before a Tribunal or Court.

This suggestion also comes after a plan to increase the qualifying period for ordinary unfair dismissal from one year to two years’ service and a separate proposal to introduce fees for Employment Tribunal claims.

As a firm advising both employers and employees we take a cautious view about what ‘protected conversations’ would encompass if they were introduced. For example, what is an employer’s position if the employee admits their performance failings in a ‘protected conversation’ but is entrenched in their employment? And what recourse would an employee have if a ‘protected conversation’ included elements of clear discrimination? Would it be impossible for an employer to dismiss an employee unfairly if they consulted via ‘protected conversations’? Or would a token procedure be necessary after the ‘protected conversation’? If an employee was a whistle-blower would their disclosure be treated in the same way if it was made in a ‘protected conversation’?

Furthermore, an employee and employer have a mutual obligation of trust and confidence ­ it is not apparent how that would be maintained in ‘off-the-record’ scenarios.

The main question is: which party is protected and from what?

At the current time, the Government have mooted this as a Consultation. We eagerly wait to see what the Consultation will report and whether the idea is dropped as quickly as it was thought up.

To read the text of David Cameron’s speech, please click here.