Employment Department

Employment News round-up 2009

The last 12 months saw a lot of unforeseeable events which impacted on employment issues, such as the continuation of the economic recession, the expenses row, the onset of swine flu and also extreme weather conditions but to name a few. This had an impact on not only redundancies and employee job security, but staff absences, increased dismissal claims, and overrun tribunals (who have now resorted to piloting night hearings to combat the backlog!) Low staff morale and high profile strikes, in an ever decreasing job market were also features of 2009. 2010 promises increased rights for workers and increased company transparency in order to combat some of the issues faced this year.

Here is a roundup of the most topical news stories which took place in 2009, and what impact they may have on your business:

January 2009

Dealing with workplace stress – Dickens v O2

This case dealt with by the Court of Appeal, highlighted that employers could be held liable for work-related stress suffered by their employees, so long as their illness was foreseeable. This case also highlighted the importance of employer’s actions when it comes to dealing with identified workplace stress and the measures that can be taken to alleviate it.

When Mrs Dickens complained of workplace stress, she was offered a counseling service by O2, however, the Court of Appeal determined this was inadequate in the circumstances. Employers were warned about taking immediate, effective and proportionate action regarding employees who have stress related complaints.

Employers should be aware, that offering employees a generic helpline to discuss their work-related problems may well not be considered sufficient and to put sufficient methods in place when dealing with not only employees suffering from stress, but all work-related complaints.

February 2009

Changes to Cap on Statutory Redundancy Pay and Compensation

From 1st February 2009, the ‘cap’ on a weeks pay used for calculating a statutory redundancy payment increased from £330 to £350 (this has since risen, as from 1st October 2009, to £380).

Also the maximum award for unfair dismissal compensation rose from £63,000 to £66,200. (Please note however, this will be reduced to £65,300 after 1st February 2010). Employers should be aware of the changes already effected or about to come into force, in relation to these rates, and change their redundancy procedures accordingly.

Discretionary Bonus Schemes – Small and others v Boots Company PLC

In this case, there was a successful argument by warehousemen who worked for Boots, that they were owed a bonus, notwithstanding the use of the term ‘discretionary bonus’ in their employment documentation.

This case highlighted that even if employers describe their bonus schemes as ‘discretionary’ this did not mean that they effectively had a ‘get out’ to not pay their employees anything at all, or even just a small bonus. It was determined that a bonus in these circumstances was contractually enforceable. Any discretion referred to in the bonus scheme must be exercised rationally and in good faith in order to avoid a successful challenge from employees for payment.

March 2009

Religious Discrimination- Chondol v Liverpool County Council

Mr. Chondol was a social worker, who was dismissed following an internal disciplinary. He had been repeatedly warned about handing out bibles to people who came to him in his capacity as a social worker in order to promote Christianity, yet continued to do so.

Mr. Chondol claimed direct discrimination based on his religious beliefs. However, Mr Chondol lost both his original claim and also his subsequent appeal. His case highlights that as the reason for Mr. Chondol’s dismissal was the inappropriate promotion of his belief and not the belief itself, then the action to dismiss him was not discriminatory.

This case is good news for employers, who should not be reprimanded for objecting to an employee promoting a belief or personal view inappropriately in the workplace.

TUPE – Obligation to consult - Amicus & Others v City Building (Glasgow) LLP & Another

This landmark case concerned the alleged failure to inform and consult employees who were going to be affected by the transfer of a business. The EAT ruled in this case that the transferee employers were under no obligation to consult with transferred employees after the transfer had taken place, (ie their obligations to consult about measures they envisaged taking ceased on the date of the TUPE transfer).

Employers undergoing business transfers should be aware of this new development in TUPE case law and also watch out for further cases supporting this new stance on this issue in 2010.

TUPE - Post Transfer collective agreements- Alemo-Herron and Others v Parkwood Leisure Limited

This case involved public sector workers pay scales and how the claimants (who were transferring under TUPE to a new business ownership) wished to have them protected post- transfer.

The initial claim failed in the Employment Tribunal as it was felt that the Transferee (Parkwood) should not be bound to pay wages as a result of negotiations to which it was not a party. However, the EAT overturned this decision based on the authority in the 2006 case of Wherhof. It was held that this clause which was part of a collective agreement had wholly transferred under TUPE. The claimants could therefore have the benefit of the pay rises it afforded in the future.

Employers should be aware of the fact that if they inherit collective agreements concerning employees, that they have no right to override them, even though they were not a party to them. Employers who are purchasing transferring businesses should be aware of their ongoing obligations to inherited employees, and watch out for any TUPE developments in this area in 2010.

April

Significant changes to Grievance and Disciplinary procedures

A distinct overhaul to the current employment disciplinary and grievance procedures was implemented in April 2009 with ACAS implementing a new Code of Practice surrounding the statutory dispute resolution procedures.

In the past the Tribunal would have afforded an automatic uplift for failure to follow the set- 3 stage procedure in both an employee grievance and/or disciplinary. However, this was modified so that now the Tribunal have the discretion to award a 25% uplift, depending on the facts of an individual case.

Employers should make sure they update their disciplinary and grievance policies in order to reflect changes introduced by the new Code of Practice.

Increase in holiday entitlement for workers

Workers had their holiday entitlement increased from 4.8 weeks to 5.6 weeks (which can include Bank Holidays). For example full-time employees, working an average 5 day week will be entitled to 28 days holiday per year. Part time workers, are entitled to pro-rata holidays based on this 28 days.

Employers should be aware of these changes, and implement them in practice. Each worker is legally entitled to this minimum amount of time away from work and this should be adhered to in order to avoid potential claims.

Amendment to flexible working rights

It was decided in April 2009 that flexible working rights should be amended to include applications for those caring for the following dependants:

• a child aged 16 and under (previously only for a child aged 6 and under); • a disabled child who is under 18, and who is in receipt of disability living allowance; • an adult who requires care.

Once again, employers should modify their flexible working policies in order to allow for the expansion of depedants to be covered by flexible working rights.

Employers are also reminded that they are under a continuing duty to consider seriously all requests for flexible working and provide a genuine business reason for not being able to accommodate an employee’s request to change their hours because of the needs of a dependant.

May

Belief in climate change is a protected under employment law – Nicholson v Grainger

Mr. Nicholson argued that his beliefs in climate change were philosophical beliefs under the Equality (Religion and Belief) Regulations 2003, upon which an employer cannot discriminate against an employee. Mr. Nicholson therefore argued that employment law should protect his belief.

His right to pursue his claim was granted (even though his employer appealed) based on the fact that his climate change beliefs went over and above mere opinion and actually affected the way Mr. Nicholson lived his life.

In granting him the right to pursue his claim, the Judge actually stipulated that this would not open the ‘floodgates of litigation’ whereby every dismissed individual could not argue they were dismissed for any ‘belief’, they would have to show they were discriminated against and dismissed on the basis of that belief.

June

Should employees be allowed legal representation in internal employment hearings? – Kulkarni v Milton Keynes Hospital NHS Trust

In the Kulkarni case it was determined that in certain situations employees should be permitted to have legal representation in internal disciplinary hearings, even though s10 of the Employment Rights Act only provides for an employee companion to be a trade union representative, or a colleague, and most employer’s policies will only provide for this.

Even though the High Court refused for Mr. Kulkarni to have a legal representative, the Court of Appeal overturned this decision and determined that in certain circumstances where, for example, whole career loss could be suffered, then legal representation should be permitted. This principle has since been followed in a further case involving a teacher, who could have faced, not only losing his job, but also being reported to the Secretary of State and being unable to work with children again.

Employers should take into account, where the situation is very serious, and an employee’s career could be jeopardised by the decision made, that an employee may be able to pursue the right to ask for a legal representative. Employers should consider all such requests seriously, as it may impact on any future claims brought against them regarding procedural fairness.

Accrual of holiday pay when on sick leave - Stringer v HMRC

This was a House of Lords case, which determined that employees could continue to accrue holiday pay whilst on sick leave, and also could take any accrued holidays. Workers on the return to work should be able to take this accrued holiday, and also be paid for the accrued holiday should their employment terminate.

Employers should not only be aware of this extended right, employees have in respect of their holidays whilst on sick leave, but also that they have the right to take such accrued holiday on their return to the office.

July

Disability Discrimination extends to Carers – Coleman v Attridge Law

This landmark case finally decided in the ECJ determined that disability discrimination protection extended to carers of those who were disabled the result of which had a negative impact on their working environment.

Mrs. Coleman felt she was discriminated against because she had to have periods of time off work to care for her disabled son. Even though not disabled herself, Mrs. Coleman successfully claimed disability discrimination, as the ECJ ruled that able-bodied people who are associated with those who are disabled, should benefit from protection under the legislation.

Employers are advised to consider employee’s needs carefully, and possibly think of implementing more flexible working practices to deal with such issues.

August

Failure to make adjustments - Dean v Abercrombie and Fitch

This case was highly reported in the tabloids, largely due to the high profile of Abercrombie and Fitch (the ‘Company’)

A law student who worked for the Company, felt she was unfairly discriminated against because she had a prosthetic arm. She felt she was kept away from customers because of it and successfully sued the Company for over £9,000 compensation.

What was interesting about this case was the fact that the Tribunal did not think Miss Dean’s claim for direct disability discrimination was ‘well founded’ due to the fact that the Company had not treated Miss Dean any differently from other members of staff in regards to the ‘look policy’ of the Company. However, her claim was successful because it was found that the Company did not make any reasonable adjustment for her disability.

Employers should be aware that even though they may treat all staff the same, with regard to internal company policies, they still have a duty to accommodate and make adjustments for disabled workers. Employers should review any policies regarding this issue, making sure that their company is willing to make any reasonable adjustment to accommodate the needs of disabled workers.

September

Increase in Vento guidelines- Da’Bell v NSPCC

The Da’bell case determined an increase in the current so called “Vento guidelines” which set out compensation levels for injury to feelings. The compensation levels are still designed to represent employee suffering and not to be punitive towards employers.

Here are the new bands:

Lower band was up to £5,000 and is now up to £6,000 Middle band was up to £15,000 and is now up to £18,000 Higher band was up to £25,000 and is now up to £30,000.

The reasoning for the increase was that it was felt an increase was overdue, the levels having been originally set in 2002.

The Default Retirement Age is lawful (for now) – The Heyday Ruling

After a lengthy legal debate dating back to 2007, the proposition that the default retirement age (DRA) discriminated against older workers was referred to the ECJ in March 2009 and the final decision came through in September 2009. Lord Justice Blake determined that the DRA was NOT unlawful when it was introduced in 2006 but went on to say that there was now a compelling argument for it to be scrapped.

A further impetus behind this decision was the review of the DRA, which was brought forward to early 2010 by the UK government, so the general consensus of the decision was that it was temporary in light of the upcoming review. However, at the moment it is still lawful to forcibly retire employees when they attain the age of 65.

Employers should be mindful, however, that they still must follow the correct notification policy when wishing to retire employees. They must also take note that an impending review is most likely either to scrap the DRA altogether or make the age higher than 65 years, due to increased life expectancy, the impact of the recession on pensions, and also an increase in older workers willing to remain in employment past 65 years of age.

Employers should adjust their retirement policies accordingly when this inevitable change is announced, and also take into account their ongoing duty of care to each employee with regards to their health and safety, which may be heightened due to permitted workers increased age.

Annual leave is allowed to be carried over by a sick worker -Pereda v Madrid Movillidad SA

Following on from increased rights regarding holiday entitlement and sickness absence in the Stringer case (see above), Pereda determined that if an employee is on annual leave, but falls sick they are afforded the right to reschedule their annual leave for when they are not ill, and also to carry over any untaken holiday because of sickness absence in this regard.

In order to facilitate this, employers have been advised to manage and monitor sickness absence and annual leave very carefully.

Employers are advised to have a sickness communication policy which should extend to when an employee is on a period of annual leave, so that employees are obliged to let the employer know they have been sick and intend to reschedule their holidays. A holiday and sickness policy should also reflect terms on which employees may reschedule their holidays, how much notice they must give to the business and so on.

October

The Government delays the introduction of the Agency Workers Directive (’AWD’) until October 2011

This was decided in order to cut the costs of business regulation. There was increasing speculation that the AWD was to be implemented in the spring of 2010.

The AWD gives temporary/agency staff the same rights as permanent employees after they have worked for a continuous period of 12 weeks with one employer.

The thinking behind the decision to delay the AWD was because of the effect the economic downturn is having on most UK businesses, and gives them more time to prepare and adjust to the change. The AWD is at the moment due to come into force in October 2011.

Employers should be aware of this incoming change and plan for it accordingly. This effectively means that if a temporary/agency worker stays in employment for more than 12 weeks they are to be treated the same as any permanent staff member in relation to holidays, sickness, benefits etc and temporary/agency worker policies should be adjusted accordingly.

Increase in National Minimum Wage (NMW)

As usual, the NMW was awarded an increase this month and the new rates are:

• £5.80 to workers aged 22 years or above

• £4.83 to workers aged between 18 and 21 years

• £3.57 to workers aged between 16 and 17 years

Employers should be aware of the increase, and the illegality of paying someone below this amount, and also see below on how ‘tips’ in the service industry can no longer be used to ‘top up’ wages to the minimum level.

‘Tips’ in the service industry can no longer be used to ‘top up’ wages to the National Minimum level

As of 1st October 2009, it was no longer legal for employers to use tips, gratuities or service charges, paid via their payroll, to ‘top up’ employee wages to the national minimum. This means that those in the service industry will not only have to pay their employees the full NMW as their salary, but will also have to pay National Insurance contributions in full for each employee. However, these new rules left a lot of questions unanswered, such as what would happen to a tip which was paid on a credit card?

There is a new code of practice due from the government dealing with such questions, but this has yet to be published, nor a date determined for its publication. Employers are advised to look out for it, for more clarification on the rules surrounding ‘tips’ and wages. In the meantime employers are advised to change their pay rates accordingly, aware of the fact they can no longer pay less than NMW relying on ‘tips’ to make up the shortfall.

Duty to inform and Consult under TUPE – Cable Realisations Ltd v GMB Northern

In this case it was determined that as a transferor is under a duty to inform and consult affected employees of a likely transfer even where no measures are envisaged, that adequate time must be factored in for voluntary consultation to take place.

The employer lost both the initial hearing and also its appeal against this claim. It was determined that because the company, which was transferring to new ownership, had only communicated to their affected employees about the potential transfer, 2 days before 99% of the workforce would not be in the factory due to an annual shutdown, they were in breach of TUPE regulations.

It was determined that even though they had consulted affected employees in good time, adequate consultation between employees and their managers, would not have taken place as the factory was closed for the period of time before the transfer was to take place.

Employers should be aware of this case as it shows the importance of acting fairly towards transferring employees. There is no way of avoiding informing employees fairly and correctly of an impending transfer, and although on the face of it, the time given was adequate, practically, employees were not given a fair chance to consult, and those involved in business transfers should be aware of this.

November

Belief in psychics protected under employment law – Power v Greater Manchester Police

Based on the same argument in the Nicholson case (see above), Mr. Power was granted permission to pursue his claim in the Employment Tribunal for unfair dismissal. He had more than once reiterated to staff and colleagues the usefulness of mediums to the force and was subject to some ridicule, and believed it was the reason why he lost his job.

At the final hearing however, it was decided after new evidence of Mr. Power’s gross misconduct was presented that he was not dismissed for his belief in psychics and his claim was dismissed. The scope for a ‘belief’ worthy of employment protection however still remains a broadened one in light of the preliminary rulings in both this case and the Nicholson case. Employers should be aware that employees are afforded employment protection if they are able to demonstrate the strength of a particular belief which impacts on the way they lead their lives.

December

TUPE duty to consult applies to actually proposed measures – Royal Mail Group Ltd v Communication Workers Union

It was decided quite unusually in this case, that if the employer communicated incorrect legal, social, or economic implications of a proposed transfer but held a genuine belief that these were true at the time, then they would not be in breach of their obligations under TUPE, if they had failed to inform employees of the correct legal position.

However it was also stipulated in this case that this was not intended to encourage employers to evade the rules by misleading affected employees, and that the case turned on the fact that the employer’s understanding of the situation was genuine – albeit wrong.

Finally:

The last 12 months have seen some interesting developments in employment law and more is set to come in 2010. Look out for more information as to what we believe to be the changes which will have most impact on employers in next month’s bulletin.

If you have any queries on any of the above please contact Alison Loveday at alisonl@berg.co.uk to discuss further issues. Alternatively you contact Alison on 0161 833 9211.

Alison Loveday

Head of Employment Department and Managing Partner

Berg Legal

35 Peter Street

Manchester

M2 5BG

t 0161 833 9211 f. 0161 834 5566 e. help@berg.co.uk

The information and opinions contained in this document are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by Berg Legal, or any of its partners or employees. Professional legal advice should be obtained before taking, or refraining from taking, any action as a result of the contents of this document.

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