2013 Legal Round-Up30 December 2013
Summary of important changes to employment law and other hot employment topics
31st Jan 2013
‘Ending the Employment Relationship’ consultation
- The Government intends to introduce a 12 months’ pay cap on the compensatory award for unfair dismissal; moving away from the current cap of £72,300. This cap is designed to reach a better balance between ensuring that Claimants are fairly compensated and giving the parties more realistic expectations.
- To encourage more settlements it is proposed that the new compromise agreement templates will be made available together with a statutory code of practice. The code includes a definition of improper behaviour and what a ‘reasonable period of time’ should be for an employee to consider an offer.
- The Government will deliver guidance on when to consider the use of a settlement agreement / compromise agreement and which issues one should consider when negotiating the financial settlement.
To read more how the Government plans to reduce the number of workplace disputes, please click here:
Changes to TUPE
Under the Red Tape Challenge the Government conducted a review of the current Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE). The resulting proposals are designed to simplify and to improve the current regulations.
The main proposals are to:
- Repeal the service provision changes from the regulations
- Remove the requirement for Employee Liability Information
- Modification of the wording of the restrictions on changes to terms and conditions and protection against dismissal so that they are more in line with the wording of the Directive and the case law of the Court of Justice
The Government has prepared an Impact Assessment, and an Equalities Impact Assessment covering the proposals.
Have your say and provide your views on the changes (consultation closes on 11 April 2013):
Consultation period for collective redundancies to halve
The Department for Business, Innovation and Skills recently announced plans to change the rules on collective redundancies. The apparent purpose of those changes is to boost business by increasing the quality of the consultation process and by giving employers more flexibility to react to changes in the market. However concerns have been raised that the new minimum consultation period of 45 days will, in practice, be considered as the maximum and employees will therefore receive less pay.
Fitness for work - Help to manage sickness absence
According to the Department for Work and Pensions a new Health & Work Advisory and Assessment Service will be introduced in 2014. The objective is to help both employers and employees to better manage sickness absence. It will carry out an independent occupational health review which includes recommendations on action points to help employees return to work. The health assessment will be available once an employee is absent for four weeks or more.
Further consultations launched by the Government:
Proposals to implement the Acas Early Conciliation (EC) process
Reforming the regulatory framework for employment agencies and employment businesses
Reduction in the minimum consultation period
The minimum consultation period falls from 90 to 45 days where an employer proposes 100 or more redundancies at one establishment within 90 days.
Amendment of the consultation rules so as to exclude the expiry of fixed-term contracts from the calculation of the number of redundancies taking place.
Changes are intended to take effect on 6 April.
New rates of statutory maternity pay and sick pay
On 6 April 2013 the statutory sick pay will increase from £85.85 to £86.70.
On 7 April 2013 statutory maternity pay, ordinary and additional statutory paternity pay, and statutory adoption pay will increase from £135.45 to £136.78.
Changes to damages on grounds such as ‘pain and suffering’
In Simmons v Castle it was held by the Court of Appeal that from 1 April 2013 the level of general damages on grounds such as ‘pain and suffering’ will be 10 per cent higher.
Apprentice star loses constructive dismissal claim
16th April 2013
In a judgment released last week, former Apprentice winner Stella English lost her constructive dismissal claim against Lord Sugar’s group holding company.
Ms English won the 2010 series of The Apprentice (filmed in 2009 and held back from airing on the BBC until after the 2010 general election). In proceedings at the East London Employment Tribunal, it transpired that both of the Apprentice finalists worked for Lord Sugar’s IT company, Viglen, in a period before the winner was finally determined. When she was announced as the new Apprentice, Ms English was given a 12-month contract with Viglen. Part-way through the contract, she resigned without notice.
Following discussions with Lord Sugar, she joined YouView a company he was the non-Executive Chairman of (albeit it was not part of the group) where she was due to see out the fixed-term contract. Ms English resigned without notice after 4 months in the new role.
She then brought a Tribunal claim for constructive dismissal on the bases that she had been: treated by Lord Sugar as an “overpaid lackey”; advised by his associate that there was never any real role for her at Viglen; and pushed in to accepting the YouView role. She alleged breach of the implied term of trust and confidence. She also claimed automatically unfair dismissal on the grounds of raising a protected disclosure but withdrew that claim at the end of the proceedings.
Ms English lost at Tribunal. The Tribunal found that there had been no breach of contract by the employer and, when considering specific events which she claimed as breaches, the Tribunal preferred the evidence of the other parties. For example, Ms English suggested that Lord Sugar had told her he did not “give a sh*t” about Viglen but the Tribunal found that this comment was not made. Ms English also alleged that she had been given the YouView role simply to protect the images of The Apprentice, the BBC, Lord Sugar and her but the role was a ‘sham’. The Tribunal did not accept this argument and found that Lord Sugar had gone out of his way to find her another role after she unexpectedly left Viglen and that his group agreed to pay her salary despite the fact that it would not receive any direct benefit of her work.
Employment Judge Warren went on to note that she had been ill-advised in bringing the claims.
We note, generally, that Tribunals currently have the power to strike out claims that are scandalous, vexatious or have no reasonable prospect of success. New Tribunal rules are due to be announced in the near future with the aim of bringing in stronger case management powers.
To access the full case judgment: please click here.
Good News For Hedge Fund Recruitment
19th April 2013
To curb speculative risk-taking, the European Parliament has voted to cap bankers’ bonuses. The basic salary-to-bonus ratio will be 1:1. This could be raised to a maximum of 1:2, if approved by at least 66% of shareholders owning half the shares represented, or of 75% of votes if there is no quorum.
To encourage bankers to take a long-term view, a minimum of 25 % of any bonus exceeding 100% of salary, must be deferred for at least five years.
The new rules will apply from 1 January 2014 if approved by the Council of Ministers.
To read more, please click here.
Employment law changes & Rates and Limits
21st May 2013
We have produced a short aide-memoire for the upcoming changes in employment law and another for the current employment rates and limits. They can be downloaded from the following links.
Upcoming employment law changes
To read the timetable of changes, please see here.
Employment Law Essentials: Rates and Limits
To access the current rates and limits for HR Managers and Employees, please click here.
Women in work & Ryanair cabin crew terms
29th May 2013
Here are some recent news stories which may be of interest to you:
Women in work
The Times recently reported that there are a record number of women in work in Britain. From January to March this year the number increased by 15,000 to reach a total of 13.8 million. (This is compared to 15.8 million men a number which declined by 58,000.) The Office for National Statistics outlined that the increase was due to the number of former stay-at-home mothers returning to the workplace as a result of the economic environment and the increase in the state retirement age for women.
Ryanair cabin crew terms
A former Ryanair cabin crew member contacted her local MP as a whistle-blower and, in turn, she has raised the issue in the House of Commons. Sophie Growcoot was employed by Crewlink (a Ryanair contractor) and her terms included that she: (i) pay £360 for her Ryanair uniform; (ii) take three months’ compulsory leave per year (in winter), during which time she would not be paid but could not take on another job; (iii) was only paid for time “in the air”; and (iv) was paid for 4 days per week but expected to be on call for a 5th day (which was only paid for if she was called in). This caught the attention of The Independent who reported the story here.
The following day there was a further Ryanair story in The Independent this time regarding pilots who were told they would be fired for gross misconduct if they signed a letter from the (unrecognised by the company) Ryanair Pilot Group to the Irish Aviation Authority. This story can be found here.
Enterprise and Regulatory Reform Act 2013 (ERRA)
27th June 2013
A number of measures in the Enterprise and Regulatory Reform Act 2013 (ERRA) came into force on 25 June. These include changes to ‘whistleblowing’ provisions and a new exemption from the qualifying period of employment for political opinion dismissals.
Measures brought into force on 25 June (by virtue of S.103 ERRA) include:
- S.13: no qualifying period of employment where reason for dismissal is employee’s political opinions or affiliation
- S.15: power to change the maximum compensatory award for unfair dismissal see the draft Unfair Dismissal (Variation of the Limit of Compensatory Award) Order 2013
- S.17: public interest requirement for “disclosures”
- S.18: power to reduce compensation where protected disclosure not made in good faith
- S.20: extension of meaning/scope of ‘worker’ for protected disclosure claims
- S.21: specific changes to deposit and costs orders.
A further change (by virtue of the Enterprise and Regulatory Reform Act 2013 (Commencement No.1, Transitional Provisions and Savings) Order 2013 SI 2013/1455) is:
- S.19: which protects workers who have made a protected disclosure, from detriment by a co-worker or agent of the employer.
Zero Hours Contracts
20th September 2013
What are they?
A zero-hours contract is a contract of employment which creates an ‘on call’ arrangement between employer and employee.
The employer is not obliged to provide work and the employee is not obliged to accept work. The employee agrees to be available for work as and when required and no particular number of hours is guaranteed. The employee is expected to be on call and is paid only for the hours worked.
When are they used?
Zero-hours contracts are used predominantly in the private sector and traditionally in the healthcare and retail sectors. It has been reported that Sports Direct has 90% of its workers on zero-hours contracts while J D Wetherspoon has 80%. Their use has, reportedly, increased considerably through the economic slowdown.
What are the benefits for employers?
Zero-hours contracts allow an employer to maximise flexibility and meet varying demand. This is particularly attractive to employers susceptible to volatile demand. Zero-hours contracts allow an employer to scale up very quickly without the commitment to an increased wage bill.
What are the benefits for employees?
Zero-hours contracts may be ideal for some people such as retirees, students and part-time workers who want occasional earnings and want the flexibility to determine when they work. But people in the general working population, including those with mortgages and responsibility for supporting a family, run the risk of unpredictable hours and earnings.
What is all the fuss about?
Workers subject to zero-hours contracts are potentially subject to exploitation. The relationship can become very one-sided and the employee is forced to meet the employer’s requirements/conditions to receive work. A refusal to work in any one instance for any reason can result in a prolonged period of no work. Due to the uncertainty of the workers’ schedules, zero-hours contracts present problems for workers with children due to the difficulty of arranging child care.
What are different organisations saying?
The number of employers using the controversial contracts is unknown. Earlier this year the ONS predicted 250,000 workers are on them, the CIPD said there could be one million, and last week trade union group Unite predicted around 5.5 million workers could be on a zero-hours contract.
As one would expect, Trade Unions are concerned by the trend towards zero-hours contracts.
Quote from Len McCluskey, General Secretary of Unite:
“Zero-hours contracts create a throwaway workforce. They form a one-way street, whereby employers bear no risk, avoiding sickness and holiday pay and overtime.
Unite has undertaken the biggest survey of insecure workers of recent times. Some 5,000 people from right across the economy contacted us because they want a better deal at work. Very few said that they “enjoyed” the flexibility. The vast majority said that they wanted decent, secure employment.”
Conversely, the Institute of Directors, has defended the contracts as providing a flexible labour market, citing the lack of flexibility in Italy and Spain. Jacob Rees-Mogg MP, a former investment banker, has also argued that they benefit employees including students by providing flexibility and could provide a route into more permanent employment.
According to The Work Foundation only 26% of those on zero hours contracts want longer hours (see their statistics here).
What is the government doing about it?
Vince Cable, Business Secretary, is considering closer regulation of the contracts but has ruled out a ban. Among a number of policy announcements, Mr Cable said he had launched a consultation on how to tackle abuses in zero-hours contracts, particularly where employers do not offer guaranteed hours, but insist that workers do not work for anyone else.
Click here to see the press release from the Business Department on the consultation.
TUPE Reform – January 2014
7th November 2013
The government has proposed certain amendments to the Transfer of Undertakings (Protection of Employment) Regulations 2006. Whilst these changes are not quite as wide-reaching as originally anticipated, they are nevertheless quite substantial.
The proposals would take effect from January 2014 and would:
- allow the renegotiation of terms derived from collective agreements one year after the transfer, even if the reason for seeking to change them is the transfer, provided that overall the change is no less favourable to the employee;
- provide expressly for a static (not dynamic) approach to the transfer of terms derived from collective agreements i.e. the terms that transfer are those that are in place at the date of the transfer not changes that come into effect post-transfer (because of collective bargaining);
- provide that changes in the location of the workforce following a transfer can be within the scope of economic, technical or organisational reasons entailing changes in the workforce, thereby preventing genuine ‘place of work’ redundancies from being automatically unfair;
- amend Regulation 4 (restriction on changes to terms) and Regulation 7 (protection against dismissal) to bring them closer to the language of the Acquired Rights Directive;
- reflect the approach set out in the case law (OCS v Jones, Nottinghamshire v Hamshaw and Johnson v Campbell), namely that for there to be a TUPE service provision change, the activities carried on after the change in service provision must be “fundamentally or essentially the same” as those carried on before it;
- allow micro-businesses to inform and consult directly with affected employees when there is no recognised independent union, nor any existing appropriate representatives; and
- extend the time before the transfer when Employee Liability Information must be given to the transferee from 14 to 28 days.
The government will also amend the Trade Union and Labour Relations (Consolidation) Act 1992 to make it clear in statute that consultation which begins pre-transfer can count for the purposes of complying with the collective redundancy rules, provided that the transferor and transferee can agree and where the transferee has carried out meaningful consultation.