Osborne Announces Tribunal Reform from April 2012

October 4th, 2011

Chancellor George Osborne is intending to reduce the number of employment tribunal claims by increasing the qualifying period for employees from one to two years before they are entitled to make a claim.

According to the government, the new guidelines will help ‘boost the economy’. There is also the suggestion that those wishing to bring a claim to tribunal will need to pay a number of fees associated with their claim including:

• an upfront fee of £250 when lodging ET1;
• a further fee of £1,000 payable by Claimant when the hearing is listed;
• higher fees if the claim is for over £30,000;

The fees will be refunded if Claimant wins, and forfeited if they lose making it less appealing to make frivolous claims. However fees may well be be waived altogether for those without money or a job. This may lead to ex employees deliberately putting off going back into employment until the tribunal process is complete. The test for a ‘fee-waiver’ is based on the grounds of being on income support, which means  most ex-employees will automatically qualify for the waiver (but those still in a job will not).

Justine Watkinson, Partner and Head of Employment law at Hillyer McKeown LLP, commented “These reforms signal a positive move by the government towards re-dressing some of the imbalance that has worked its way into the current system. Certainly the requirement for a claimant to pay a fee has been long awaited. Whether this will ultimately result in the reduction of speculative claims remains to be seen but it is certainly a move in the right direction.”

Funding Programme Launched to Support North West Businesses

October 3rd, 2011

The TR&DE programme will provide specialist support including £3,000 of matched funding to develop R&D potential and maximise opportunities in emerging international markets.

The programme is being funded by the Northwest Development agency alongside the European Development Fund and will offer up to £3,000 in matched funding to businesses who want to expand their operations abroad. This will bring a significant boost to those businesses who qualify and could benefit not only from financial support but also advice.

The scheme is supported by UK Trade & Investment and will offer the experience of chartered accountants Grant Thornton and Lancashire-based venture capital firm Enterprise Ventures to help businesses achieve their potential.

The funding initiative is particularly aimed at SMEs lacking sufficient resources to plan their international business activities properly and will include practical guidance on issues including the protection of intellectual property and developing and implementing export action plans.
Each company will be given up to 18 hours of free specialist advice in addition to £3,000 worth of matched funding that will be used according to an agreed action plan.

The programme runs until March 2013 and will be open to North West SMEs which are claiming, or are eligible to claim, HMRC R&D tax credits. Businesses interested in the scheme should contact UKTI North West’s international trade team on 0845 603 7053 or email info@uktinorthwest.co.uk

Case Study – when is a worker not a worker?

October 3rd, 2011

Autoclenz Ltd v Belcher & Ors [2011] UKSC 41- Tribunals and courts entitled to look outside wording in contract to find the true nature of the agreement.

In this case the Supreme Court had to decide whether 20 car valeters, whose contracts specifically stated that they were self employed, were entitled to holiday pay and to earn the National Minimum Wage. The claimants believed that the respondents were not workers for the purposes of statutory definitions in the Working Time Regulations 1999 and National Minimum Wage Act 1998.

The Supreme Court held unanimously that the valeters were employees of Autoclenz, disregarding several terms in the contract that were contrary to their judgment.This has important implications for those putting together employment contracts of this nature.

The problematic area for employers now is that any wording that they have put in contracts that have been given to self employed contractors will not be applied literally by the Judiciary, and could be interpreted to have a much wider meaning than was originally intended.

New Bribery Act Extends Reach

October 3rd, 2011

The Bribery Act will came into force on 1st July 2011.  It replaces and repeals previous laws governing bribery and corruption, establishing four offences and creating a modern and more effective anti-bribery framework.

The offences contained within the act are two general offences concerning the paying and receiving of bribes (which include promising, offering, agreeing to or requesting bribes), a discrete offence of bribery of foreign public officials and a new offence of the failure of commercial organizations to prevent bribery.

The Act is wide-ranging and covers both the public and private sectors, with extraterritorial reach. Individuals who commit acts of bribery outside of the UK will be liable if these acts or omissions would have been an offence if committed within the UK and if that individual has a ‘close connection’ to the UK. Charges may be brought against companies ‘irrespective of whether the acts or omissions which form part of the offence take place in the UK or elsewhere’. The offence of bribing a foreign public official contained within Section 6 also removes any issues relating to international jurisdiction. Facilitation payments are also prohibited under this Act, making it in this aspect more stricter than its US counterpart.

The Act will bring into force a major shift from the current law and will place obligations on corporate organizations to ensure that they deploy robust anti-corruption procedures. This will be a strict liability offence, so no intent will be required on the part of the organization and mean prosecutions can be attained much easier and quicker by the Serious Fraud Office.

If adequate anti-corruption procedures are established, then the company may be able to escape liability for any corrupt activities carried out by its employees.
The Government has a statutory obligation to provide guidance on what constitutes ‘adequate procedures’. A consultation on this topic has just closed and the first set of guidelines is expected in the New Year to allow companies time to adjust before the new law comes into force.

The guidance will not be prescriptive in nature; it is intended to allow companies to develop procedures which are appropriate for their own circumstances and the sectors in which they operate. However, a letter from Lord Bach (then-Parliamentary Under-Secretary of State) indicated that the following should be incorporated:

  • The Board of Directors will have overall responsibility of designing and implementing an anti-corruption program and establishing an anti-corruption culture, with a senior officer being directly accountable for the implementation and running of the program.
  • Commercial organizations must incorporate anti-corruption elements into their code of conduct, risk management, due diligence, decision making, procurement and contract management, employee vetting and disciplinary procedures. The organization must ensure relevant staff are appropriately trained in these areas.
  • Organizations should establish gifts and hospitality policies and registers
  • Companies must establish ‘whistle blowing’ procedures and properly investigate all allegations.

The maximum penalty for individuals found guilty of an offence of bribery will be increased from seven to ten years’ imprisonment, a fine, or both. The maximum penalties for corporate organizations is an unlimited fine.

Collateral consequences such as director disqualification, debarment from public procurement and asset confiscation will follow may also occur from convictions that may be brought under the Act.

Many companies will already have sufficient anti-corruption procedures in place as a matter of good practice, but as the Bribery Act will criminalize an organization’s failure to prevent bribery from April 2011, it is important for companies to review their existing policies and procedures now, paying particular attention to the risks they face in the sector in which they operate.

Useful Links
•    BBC News- Bribery Act targets corrupt firms
•    Bribery Act 2010

Are you Providing a Nest Egg for Employees?

October 3rd, 2011

All employers will soon have to enrol their staff in the new national pension or an equivalent scheme.

The government has decided that all employers, regardless of size, will have to enrol their staff in a new national pension scheme, unless they already offer a comparable salary scheme to their employees.

The reality is that life expectancy is increasing putting an increasing burden on the public purse, yet millions of people are saving less and less for their pension later on in life. The Government has tried to address this rapidly growing problem and employers will soon be under a new duty to enrol eligible employees automatically into a pension scheme whilst also paying a contribution towards it.

Some details of the ‘auto enrolment’ obligations are still outstanding, however other aspects of it are becoming increasingly clear. The duty to enrol will begin in October 2012 for very large employers. Implementation will then be staggered for decreasing sized employers based on the number of employees that they employ, through to September 2016. However employers can choose to comply early with the new requirements if they wish. The Pensions Regulator will write to notify all employers 12 months before the new duties are due to apply to them.

Based on the legislation and draft legislation currently available, the basic auto enrolment duty comprises that a ‘jobholder’ must be auto-enrolled if:

  • They are not currently enrolled in a workplace pension scheme
  • Are at least 22 years old and have not yet reached State Pension age;
  • Earn more than the minimum wage threshold, likely to be £7,475 (although lower earners can opt in, but their employers are not under a duty to contribute)
  • Have completed a 3 month waiting period, if the employer has chosen to implement one.

NEST (National Employment Savings Trust Corporation) has been established as the new pension scheme which is designed to complement existing pension provisions, and is available to any employer who wishes to opt into it.

The impact of this is that there is a pension scheme available to employees either by use of NEST or an existing pension scheme which meets the qualifications of the auto-enrolment obligation.

Levels of contribution to NEST will be phased in over a five year period, and within the initial four years of the new obligation, contributions of 1% of earnings will need to be made by the employer to the jobholder. Following this;

  • The jobholder must contribute 4% of his earnings to NEST;
  • The jobholders employer must contribute 3% of his earnings into NEST; and
  • A 1% contribution will be made up of tax relief.

The first step for employers is to recognise that the new obligations will soon apply to them, and they also need to make themselves aware of when they will be first affected. The next step would be to make plans to ensure that they are complying with the new duties. The Pensions Regulator has stressed that although the new duties will mainly apply to employers, trustees still have an important role to play by virtue of discussing auto-enrolment with their employers.

Employer must have knowledge of disability in order to be under a duty to make adjustments

September 30th, 2011

The questions which arose in the case of Wilcox v. Birmingham CAB Services Ltd were whether an employer had a duty to make adjustments to suit a disabled employee, despite having no knowledge of the disability at the time, and what knowledge, if any, would give rise to a duty to make reasonable adjustments?

The claimant made a request in 2007 to move to an alternative workplace which was closer to home, which was refused, the following day the claimant fell absent due to work-related stress, though at this stage there was no mention of any travel anxiety. The claimant then raised a grievance once the company had commenced its management attendance procedure, and subsequently delayed her employer’s attempts to get a medical report, but later agreed that her cognitive behavioural therapist could provide one. In this particular medical report it was stated that the claimant suffered from travel anxiety and suggested a short car journey to work. The company offered various possible solutions to the claimant, none of which were deemed suitable by her. In 2008 a meeting was held to discuss possible termination on the grounds of capability. The claimant refused a request by the employer to be examined by occupational health and later resigned, claiming constructive dismissal and a breach of the duty to make reasonable adjustments.

As the employer did not have actual or constructive knowledge of the claimant’s disability at the time, the EAT dismissed all claims and held that the employer was not under a duty to make reasonable adjustments. The EAT also held that the cognitive behavioural therapist’s report referring to an anxiety disorder was not sufficient to confer such knowledge; the claimant was reluctant to acknowledge a mental health condition; and she accepted that she had delayed her employers attempts to obtain a medical report.

Under S.4A of the Disability Discrimination Act 1995 an employer was not under a duty to make reasonable adjustments if he does not know, and is not reasonably expected to know that an employee is disabled and is likely to be at a substantial disadvantage compared to non-disabled employees as a result. This position is now reflected in paragraph 20 of schedule 8 to the Equality act 2010.

Justine Watkinson, Partner and Head of the Employment Law Department at Hillyer McKeown LLP, states that “when making decisions, employers should always seek up-to-date medical advice where concerns have arisen. The EAT stressed the fact-specific nature of this case, and highlighted that where an employee fails to provide information or obstructs the employer’s attempts to obtain medical evidence, it may be more difficult in attributing knowledge of any disability to the employer”.

Putting more into the teeth and less into the tail?

September 29th, 2011

As a means of achieving budgeting costs and strengthening front-line policing, Prime Minister David Cameron has made his most decisive comments yet with regards to his plans of cutting HR jobs within the UK police forces.

The general observation by commentators is that there could be significant problems caused by replacing HR officers with civilians. Martin Tiplady, former HR director of the Metropolitan Police has explained that there will always be a significant requirement for policemen in HR, and drew a parallel with soldiers with front line experience being needed to train army recruits, and police recruits needing to be assessed and trained by experienced police officers.

Ian Hanson, chairman-elect of the Greater Manchester branch of the police Federation, said, “There is no more slack to cut”, however Prime Minister David Cameron has insisted that he wants to put “more into the teeth and less into the tail.”

Former Chief Constable of Gloucestershire claims that the Government grant for policing will fall by £1.36bn or 14% which will see a reduction of about 16,000 officers, which is coincidentally the number of officers needed to police the streets in the recent riots. It is in the wake of these riots that the greatest opposition comes to Cameron’s police cuts, and more than two-thirds of people are opposed to the proposed cuts according to a recent poll.

Sick leave and holiday entitlement: the case so far

September 28th, 2011

Following a decision by the Employment Appeal Tribunal (EAT) in the case of Leeds v. Larner, it has been confirmed that where an employee has been off sick for an entire holiday year, statutory holiday leave can be carried over to the following holiday year, despite failing to make a request for leave during sickness absence. The key consideration for the Employment Appeals Tribunal was whether by failing to ask for leave, Mrs Larner had lost her entitlement to it under the Working Time Regulations (Regulation 13). Following the ECJ decision in Pereda, it was held that she had not, and that by virtue of being on sick leave she did not have the opportunity to use her holiday entitlement.

This was contrasted with the position of a fit worker who fails to request statutory holiday leave during the year who may lose their holiday entitlement if the contract so provides, having had the opportunity to exercise statutory holiday rights.

This ruling also confirms that employees on Permanent Health Insurance (PHI) may be able to carry over several years’ worth of holiday entitlement and be paid in lieu on termination. In the non-binding opinion given by the Advocate General of the ECJ in KHS v. Schulte , it was stated that Member States can lawfully require that carried over leave be taken within the following 18 months, or else be extinguished.

Justine Watkinson, Partner and Head of the Employment Law Department at Hillyer McKeown LLP says that “in light of this decision, employers will therefore hope that the ECJ is in agreement, and that when the Government amends the regulations following recent case law developments, it will choose to follow the option of the Advocate General of the ECJ in KHS v Schulte. Since the EAT failed to address the matter of how this sits with the Working Time Regulations 1998 which expressly prohibits carry over, it seems likely that further litigation on this matter will ensue, unless the WTR are amended”.

Amendments to Agency Workers Regulations

September 26th, 2011

The Government has unexpectedly published its final draft of guidance for hirers and agencies on the Agency Workers (Amendment) Regulations 2011 to amend the Agency Workers Regulations 2010 (AWR) which will come into force on the 1st of October 2011.

The amendments are certain to have a significant impact on the relationships between the hirer, the agency and the worker. The amended Regulation 5 gives temporary agency workers comparable rights in respect to basic working conditions and employment conditions relating to pay, working hours, overtime, breaks, rest periods and annual leave, as direct recruits of the hirer. In addition to this right, Regulations 12 and 13 provide that a hirer will be responsible for providing collective facilities and amenities such as staff restaurants and crèche facilities and information of any permanent vacancies must also be given to agency workers from ‘day one’. Under these regulations pension provisions and occupational sick pay do not form part of the definition of ‘equal treatment’ and the employment status of temporary agency workers does not change.

To qualify for the AWR Regulation 5 rights, the worker must work a 12 week qualifying period.

The continuity of the 12 week qualifying period will be broken when:

• There is a six week break between assignments or in the same job; or
• Where an agency worker takes up a new role with the same hirer, where the majority of duties are substantially different to the duties in the previous job.

Breaks due to illness, maternity or pre determined closure periods will not break the qualifying period.

It should be noted that there is an exemption under the AWR from the obligation to provide equality of pay to agency workers who are employed on permanent contracts of employment by a temporary work agency and paid between assignments if available to work.

Businesses that make use of agency workers should now be assessing the impacts that the amended Regulations will have on them. Arrangements for compliance with the regulations should be made and the cost implications on the business will need to be given thought. One way in which businesses may look to reduce cost burdens is to pass them on to the agency supplying the workers by way of reduced fees, particularly if the hirer negotiates a considerable number of workers to be taken on.

The Regulations may also have an effect on businesses which outsource services to a third party who in turn use temporary agency workers. If the contract is costed on an ‘open book’ basis, service providers may also look to pass on their increased costs.

Hirers should revisit any contracts and other documentation which have already been drafted, to see if they need amending in light of the changes made by the Amendment Regulations.

Minimum wage for sleeping on the job?

September 23rd, 2011

The decision of Wray v JW Lees has been handed down by the Employment Appeals Tribunal. The case is authority for whether time spent on an employer’s premises over night, specifically to deal with emergencies qualifies as “working time” for the purposes of being paid the national minimum wage which depended solely on the relevant provisions of the National Minimum Wage Regulations 1999.

The Employment Tribunal had erred in directing itself to the definition of working time in the Working Time Regulations 1998, which had no application in this context. The EAT was able, using the correct legislation to determine the claim on the facts found by the Employment Tribunal.

Justine Watkinson, Partner and Head of the Employment Law Department at Hillyer McKeown said: “It was clear that the claimant was not working during the night, and that sleeping did not constitute ‘work’ for the purposes of a national minimum wage claim. The exceptions in Regulation 15 (1) in relation to time work or Regulation 16 (1A) in relation to salaried hours of work applied. It was held that the requirement to sleep at the premises did not require the employee to do any work, and her position could be distinguished from that of a night watchman, as such duties involve responsibilities throughout the night, which the claimant was absent of.”