...and a new one just begun - preview of 2010

Discrimination

"If people did interviews for jobs in a bag they wouldn't get turned away because they were black or green or long hair." John Lennon to David Frost, 1969

The Equality Bill

The most significant piece of new employment legislation for 2010 could be the passing of the long-awaited Equality Bill. Will Labour be able to keep one of its outstanding manifesto promises and get the Bill passed before the end of the current Parliament? Will we finally get the Equality Act 2010? Well the plan seems to be to push full steam ahead so the Bill becomes law by getting royal assent in April, albeit the majority of its provisions will not come into force until October or later. This may mean many of the more "difficult" issues (relating to equal pay and women) are simply watered down and left until later, a problem a new Government may well inherit.

The primary aim of the Bill is to consolidate and harmonise the existing equality legislation. However, it will also introduce some significant new provisions including:

  • Positive action allowing employers to take into account under-representation of a particular protected group when selecting between equally qualified candidates for appointment or promotion. This will only be possible where candidate A is "as qualified as" candidate B for the position. What "as qualified as" might mean is as clear as mud. The Government is simply leaving this to future Equality and Human Rights Commission (EHRC) guidance.
  • Measures to make gender pay discrepancies more transparent. This includes curbing the use of secrecy clauses which prevent employees discussing their pay. Other provisions, such as those requiring private sector employers with more than 250 employees to publish pay gap information look increasingly unlikely to make it into the Act due to mounting opposition.
  • A new ground of disability discrimination, called "discrimination arising from disability". This is intended to replace the current concept of disability-related discrimination and avoid the unwanted consequences of the House of Lords' Malcolm decision which made it harder for claimants to show disability-related discrimination.
  • A widening of the definitions of direct discrimination and harassment to cover claims based on "association" and "perception" for all protected grounds.
  • "Multiple direct discrimination claims". Perhaps better described as "dual discrimination claims", allowing direct discrimination claims to be brought based on a combination of two protected characteristics - e.g. "you dismissed me because I am an Asian woman".  
  • New powers for employment tribunals to make recommendations in discrimination cases, for the benefit of the whole workforce and not just the claimant.
  • Extending age discrimination laws to cover those providing goods, facilities and services.  
  • Creation of a single public sector equality duty covering all strands of discrimination legislation (this provision is not expected to be brought into force until April 2011).

We eagerly await the final form Bill. Will the Bill be talked out of Parliament, or will it get in under the wire?

Age discrimination

The latest buzz word is apparently "wellderly", referring to the growing number of well, older people wishing to work beyond the age of 65. The Government has already started its review of the default retirement age (DRA), in light of the High Court's comments in the Heyday case. Harriet Harman is now calling the DRA "arbitrary" and so the complete removal of the DRA may be on the horizon. On the other hand, we may instead see a half way house and a new DRA of 68, to match the new state pension age.

We may also see employee-friendly changes to the statutory right to request to work beyond retirement. Bodies, such as the Equality and Human Rights Commission, are currently campaigning for a requirement for employers to state the reasons for refusing a request (although employees have always been able to serve an age discrimination questionnaire).

While any change is unlikely to come into force for some time, employers should try to stay ahead of the game by starting to rethink how they manage their older workforce if forced retirement is no longer an option. Specific areas for consideration are flexible retirement options, performance management and workforce demographics and planning.

We are also likely to get more age discrimination and redundancy selection cases making their way through the tribunal system. In particular we await the outcome of two cases, one currently before the Employment Appeal Tribunal (EAT) and the other before the Court of Appeal asking: "can consideration of minimising pension liabilities be a legitimate aim justifying less favourable treatment due to the employee's age?" As mentioned in part one, although in these cases selection for redundancy was not based on age, complying with dismissal procedures was cut short to avoid enhanced pension rights vesting. We await further court guidance on when economic considerations can be used to justify discriminatory treatment.

We are also expecting an European Court of Justice (ECJ) decision for a number of German references concerning justification of maximum recruitment ages for fire fighters, doctors and dentists.

Disability discrimination

As mentioned in part one, last year the EAT turned its hand to legislative drafting by adding two entirely new sub-sections to the Disability Discrimination Act to cover associated discrimination: discrimination not due to the claimant's disability but because of another person's disability. Permission to appeal to the Court of Appeal is currently being sought to see if the EAT has gone too far in its interpretation of the existing legislation.

The other "big" disability discrimination issue of 2009 (the Malcolm case mentioned above) will be further considered by the Court of Appeal in April, when it looks at whether the House of Lords' decision in that housing case does indeed have the same consequence in employment cases.

Ultimately both issues will be resolved by the parliamentary legislative draftsmen through the new provisions contained in the Equality Bill. We will still, of course, have the difficulty of claims arising before the new provisions come into force.

Religion or belief

Last year Mr Nicholson was able to persuade a tribunal and the EAT, on a preliminary point, that a belief in man-made climate change and the existence of a moral duty to live in a way that mitigates or avoids it, was potentially capable of being a "philosophical belief".

This year the case will proceed to the substantial merits hearing. The tribunal will now need to determine two issues. First, will Mr Nicholson be able to establish, rather than simply assert, that he genuinely holds such a belief. From reports to date, it appears likely that he will be able to do so.

Secondly did his employer actually discriminate against Mr Nicholson because of his belief when dismissing him for redundancy? His employer may yet be able to establish that his belief was not a factor in his selection for redundancy. Alternatively, it may be that his selection was influenced by how his belief affected the way in which he performed his job, rather than by the holding of the belief itself. It will be interesting to see how the tribunal addresses the extent to which an employer may treat an employee unfavourably for a reason related to the way in which they perform their job, where that performance is influenced by a protected belief.

The Court of Appeal will also hear early this year the latest instalment in Mrs Eweida's case asking: "can a ban on wearing a cross visibly amount to religious discrimination?" What Mrs Eweida has so far been unable to establish is that not being able to visibly wear the cross places Christians at a particular disadvantage.

The wearing of a visible cross, although motivated by faith, was found by the tribunal and EAT to be a personal decision by Ms Eweida and not a requirement of her Christian faith or scriptures. If Mrs Eweida is able to persuade the Court of Appeal otherwise, it is unlikely that the employer will be able to objectively justify its policy (which has since been changed) having potential implications for dress codes more widely.

Equal pay

Numerous large-scale public sector equal pay claims continue to be a feature of 2010 as they have for the past few years. Public sector employers continue to search for ways of resolving multiple claims with very limited resources. In particular this year we are expecting more decisions concerning the treatment of bonus payments available only to predominantly male groups allegedly due to a genuine material factor other than sex - the so called refuse collectors v indoor cleaners debate.

We are also expecting Court of Appeal guidance on the issue of "piggyback" claims: can a man pursue a claim by comparing himself with a comparable female employee who has herself succeeded in an equal pay claim with a higher paid male comparator?

As for private employers, (unless they have significant involvement in the public sector) the number of equal pay claims is likely to remain at the current modest level with the Government reportedly abandoning proposals requiring large private employers to publish pay gap information.

Time off for...

"How can there be so much difference between a day off and an off day?" - Source unknown  

Holidays

Last year, the inter-relationship between taking paid annual leave and being on sick leave was highlighted in three cases: Stringer, Shultz-Hoff and Pereda. Briefly, workers on sick leave are entitled to take paid statutory holiday if they wish. If they are prevented from taking holiday leave due to their illness, or do not wish to do so while on sick leave, then they must be allowed to reschedule, even if it means carrying leave over into a new leave year. Following on, we expect to see more claims to roll over annual leave by sick employees.

This year we are waiting on a decision regarding the rolling over of holiday leave by an employee not off sick. In Lyons v Mitie Security Ltd, employees were required to give one month's notice of intention to take holiday leave. Three weeks before the end of the holiday year, Mr Lyons asked to take his outstanding holiday for that year. His request was rejected because he failed to comply with the month's notice requirement. As his contract provided that holiday could not be carried over, his untaken holiday for that year would be forfeited. The tribunal rejected Mr Lyons' claim. Are employers legally obliged to ensure that the employee actually takes their statutory holiday leave within the relevant year or permit carry over? The EAT is to hand down its decision early this year.

One thing for sure is that the provisions of the Working Time Regulations which clearly prevent the carry over or buying out of statutory holiday leave need to be revised. However, there has been no indication from the Government that any review of the Regulations is planned.

Sickness

The demise of the sick note as we have known it for over 60 years is imminent. During 2009 the Government consulted on its proposal to introduce "fit notes", to replace the current "sick note" system from Spring 2010.

The new "fit notes" allow doctors to indicate whether a patient is fit, not fit for work or fit for some work. The doctor will also be able to record information to help employers and employees discuss whether there are any changes to the employee's working environment or job role which could help achieve an earlier return to work. Changes may include a phased return to work, alternative hours, amended duties and workplace adaptation.

Employers will however not be bound to implement the suggested changes so change will be at the discretion of the employer with the agreement of the employee. The focus is on empowering individuals to return to work which is in itself a good thing, but the new system will no doubt raise difficulties where agreement is not reached over suggested changes.

The new system is also unlikely to negate the need to obtain a specialist medical report where the employer suspects that the employee's condition may amount to a disability or where there is a conflict of advice between company doctors and general practitioners (GPs).

Concerns have already been voiced by bodies representing GPs that GPs are ill equipped to take sole control of the scheme, suggesting the responsibility for issuing these fit notes should be shared with occupational health specialists. In light of mounting opposition from GPs there may be delay in its introduction.

On a positive note, it is also useful that GPs will be able to issue computerised statements instead of writing them by hand!

Paternity leave

The Government intends to introduce additional paternity leave and pay. The law will be brought into force in April 2010 and effective for parents of children due on or after 3 April 2011. Businesses will need to ensure their policies are updated in 2010 to provide for the forthcoming changes.

Broadly speaking, mothers will be able to transfer some or all of the second half of their maternity leave period. Mothers having maternity leave outstanding in the second six months of the child's life will be able to transfer that leave to the father when the mother returns to work. Up to three months' additional paternity leave (APL) will be paid at the same rate as statutory maternity pay (SMP) if the leave is taken during the mother's 39-week maternity pay period. The remainder will be unpaid.

The Conservative party has also expressed a commitment to extending paternity provisions, so the additional entitlement is unlikely to be affected by any change of government. The current Conservative proposal is to extend the provisions further to allow both parents to take paid time off simultaneously.

Parental leave

The EU Council has recently agreed to the Commission's proposal to amend the Parental Leave Directive. Most of the changes will have no impact in the UK as existing domestic provision are already compliant with the changes. The one area that will be affected is the extension of the length of the existing right to take parental leave from three to four months. The amending Directive is expected to be adopted in the next few months, although there will be a two-year period for implementation in the UK.

Training

A new right to request time off for training is introduced for businesses with more than 250 employees on 6 April 2010. The new "right to request" will be available to all employees who have completed six months service where they consider that the training will improve both their effectiveness at work and the performance of their employer's business.

The procedure for a "time off to train" application closely mirrors the existing flexible working application procedure. Employers will be required to consider all requests seriously. However, they will be entitled to refuse a request for specified business reasons (which also closely mirror those for flexible working) or if, in their view, the training would not improve the employee's effectiveness at work and/or the performance of their business.

The new right is likely to extend to all employers, regardless of their size, from April 2011.

Civic duties

Last year the Government announced plans to introduce time off for civic duties. However, the good news for employers is that these have been shelved, being replaced with a voluntary 'hearts and mind campaign'.

Discipline and dismissals

"In democracy everyone has the right to be represented, even the jerk." - Chris Patten (Politician b1944)

Disciplinary proceeding

As set out in Part 1, one of the current "big" questions is: do employees ever have the right to legal representation when attending an internal disciplinary hearing?

The reserved judgment of the Court of Appeal in R (on the application of G) v The Governors of X School and another will hopefully be out sometime early this year. It appears likely that the court will confirm that employees do have such rights when facing a career ending charge as opposed to simply losing a specific job. But, we shall have to wait for the Court of Appeal's determination.

ACAS code cases

With the 2009 Acas Code of Practice on Disciplinary and Grievance Procedures reaching its first anniversary in April, we expect cases on its interpretation to start making their way through the appeal system this year. Of particular interest is the approach to be adopted by tribunals to uplifts and reductions in compensation and what the tribunals will consider to be an unreasonable failure to comply with the Code of Practice.

Effective Date of Termination

In Part 1 we referred to unfair dismissal cases last year reminding us of the panto seasonal chorus of "Oh yes it does! Oh no it doesn't". There was only one case mentioned where that phrase did not apply - Gisda v Barratt. This case confirmed that where a letter of dismissal is sent via the post and there has been no deliberate avoidance of opening the letter, the effective date of termination is the date the letter is read not when delivered. Well the panto season does run into January and the case will be considered at the end of the month by the Supreme Court.

Whistleblowing claims

The definition of a "qualifying disclosure" includes a "breach of any legal obligation". This is broad enough to cover a breach of the whistleblower's own contract of employment, even where, on the face of it, there does not appear to be a "public interest" aspect. A dismissal for having made a protected disclosure is automatically unfair, disapplies the one year service requirement and there is no cap on compensation awards. As such it is increasingly common for claimants to add in a whistleblowing claim to an unfair dismissal claim.

In Cavendish Munro Professional Risks Management Ltd v Geduld, the EAT held that to qualify as a protected disclosure, it is necessary to disclose information about a situation, it is not enough to make merely an allegation. It illustrated the distinction by using a hospital scenario. A statement that "the wards have not been cleaned for the past two weeks. Yesterday, sharps were left lying around", discloses information and so is potentially a protected disclosure. Whereas, a statement that "you are not complying with Health and Safety requirements", is simply an allegation not the disclosure of information.

A decision on whether the Court of Appeal will hear an appeal in this case is due to be made next month.

Also, from 6 April 2010, new rules come into force to allow tribunals to pass copies of claim forms containing a protected disclosure claim to the relevant regulator.

Negligent misstatement

Was a former chief executive of a council guilty of negligent misstatement, when failing to mention a history of stress and depression in a pre-employment medical questionnaire? The High Court rejected the council's claim in Cheltenham Borough Council v Laird. However, the question will be considered by the Court of Appeal in February.

Compromise agreements

In Gibb v Maidstone & Tunbridge Wells NHS Trust, the Court of Appeal will consider whether the High Court was correct to find that a compromise agreement entered into by an NHS trust with its former chief executive was void and unenforceable because the NHS trust had acted outside its powers in agreeing an "irrationally generous" compensation payment.

In this case, the payment was agreed in exchange for Ms Gibb leaving her job quietly just days before the release of a damning report into failures by the trust. In light of the focus on needing not to be seen as rewarding failure, will we see more such cases?

Working time

"What we do during our working hours determines what we have; what we do in our leisure hours determines what we are." - George Eastman (Inventor 1854-1932)

The Opt out

At the end of 2008, it looked like after five years of negotiating, the revision of the Working Time Directive (WTD) had finally been agreed with the opt-out of the 48-hour working week being retained, but with some significant new restrictions. The compromise was only possible by linking revision of the WTD with the new Agency Workers Directive. The Commission's relief at finally brokering an agreement was short lived when the European Parliament rejected the compromise, continuing to insist on the complete removal of the opt out.

Back in April 2009 talks aimed at salvaging the compromise solution proved futile. One diplomat involved in talks reportedly said: "It is dead. There's no resurrection possible". Ironically, by not accepting a compromise, the European Parliament ended up with a worse position having already played the trump card. Instead of continued use of the opt out having new significant restrictions, the opt out remained in place unchanged indefinitely!

The Commission, never one to be beaten, is currently working on a revised proposal with the social partners and hopes to be able to put forward a comprehensive legislative proposal in the summer.

Bankers & bonuses

"Bankers know that history is inflationary and that money is the last thing a wise man will hoard." - Will Durant (Historian 1885-1981)

Financial Services Bill

The Government has made it clear that it intends to push the Financial Services Bill through Parliament before the general election. Of particular interest to employment lawyers are new tougher rules on pay and bonuses aimed at ensuring remuneration policies do not contribute to excessive risk taking.

Once in force, the Financial Services Authority will be able to make rules to prohibit specified types of remuneration, make contractual terms void if they breach such a prohibition and provide for the clawback of payments made under void terms. The desire is to impose these changes on current contracts, not just those that may be entered into in the future.

In particular, issues around bonus pay structures will be addressed following the recommendations of the Walker Report into corporate governance in the financial services industry. The Report makes a strong connection between recent failures in the financial system and the industry's overdependence on short-term rewards to incentivise its employees. It recommends an overhaul of the structure of remuneration for executives to incorporate greater deferred remuneration in bonuses and fewer short-term rewards.

Pending cases

Two groups of ex-Dresdner Kleinwort bankers are suing Commerzbank for millions in withheld guaranteed bonuses following successful claims by four of their former colleagues last year.

Over the past decade, judicial principles over "discretionary" bonuses have developed so that simply labelling a bonus scheme as "discretionary" does not necessarily mean it is not contractual. The use of the word "discretionary" in the context of bonus schemes may relate to the decision to pay the bonus, how to calculate the bonus or the amount of the bonus. Will the current economic crisis reshape judicial principles? One thing for sure is that 2010 will be an interesting year for bankers' bonus claims!

Possible future claims

If the Walker Report's recommendations on how to structure deferred remuneration are followed there is a risk that such bonus schemes may fall foul of the law on restraint of trade. Other risks include potential breaches of the Human Rights Act 1998 under Article 1 (right to protection of property) and EU law on the freedom to provide services.

Access to employment rights

"Work is valued by the social value of the worker." - Gloria Steinem (Activist b1934)

Agency workers

At the end of 2008, the Agency Workers Directive was agreed. The Directive provides agency workers with the right to equal treatment in basic working and employment conditions with employees of the end-user after a 12-week qualifying period.

The Government was originally planning to bring the UK regulations implementing the Directive this year. However, the Government has bowed to pressure to use the full permissible implementation period, and has pushed back implementation until October 2011. Consultation on new regulations closed in December and we should hopefully have the final form of the draft Regulations later this year.

Voluntary workers

A Scottish employment tribunal has referred to the ECJ the question: "Are voluntary workers protected under anti-discrimination legislation?". This case concerned a Christian minister who was a voluntary radio presenter on an Asian station. He lost his presenter's position following a "lively" debate on differences between Christianity and Islam.

Reality TV

A potential "entertaining" development may arise if the actor's union Equity follows up on its call for TV companies to pay talent/reality show contestants the National Minimum Wage and for contestants to have workers' rights.

Unlikely? Well the issue has gathered steam following a ruling in France back in June. The contestants on the French version of "Temptation Island" won a claim that they should be treated as workers with rights to overtime, holidays, sick pay and even wrongful dismissal upon elimination from the show! The French producers criticised the ruling as spelling the end of the genre in France. Perhaps the French judiciary are simply not a fan of that particular genre!

TUPE

"If at first you don't succeed, try, try again. Then quit. There's no point in being a damn fool about it." - W. C. Fields (Comedian 1880-1946)

Sales by administrators

2009 saw us eagerly awaiting judicial guidance on how the TUPE 2006 insolvency provisions operate in relation to companies in administration. Unfortunately, we will have to carry on waiting. The Court of Appeal decision in Oakland v Wellswood (Yorkshire) Ltd managed to side step the issue by instead using long-standing provisions in relation to continuity of service to settle that case. The wider question of whether, and in what circumstances, a buyer of a business in administration can avoid the automatic transfer of employees will again go before the EAT this year in the combined cases of Olds v Late Edition and Otford Tool v Barke.

Effect of collective agreements post transfer

Is a private sector transferee on a second generation outsourcing bound by a pay increase negotiated after the transfer by the local government collective bargaining machinery, where the contracts of employment expressly incorporate the collective agreement?

Similar questions have arisen for several years in both UK and EU case law. When the case of Alemo-Herron v Parkwood Leisure Ltd was before the EAT, the "dynamic" approach previously adopted in a number of UK cases, rather than the "static" approach adopted by the ECJ in Werhof, was utilised. This meant the transferee was bound by the post-transfer pay increase. Not surprisingly, the case went to the Court of Appeal whose judgment is expected to be handed down early in 2010.

And finally the 2010 numbers to know

"The value can go down as well as up."

Tribunal awards

Unchanged from the 1 October 2009 increases are:

  • week's pay: £380
  • maximum basic award/statutory redundancy payment: £11,400

With the first ever decrease, from 1 February 2010 the maximum compensatory award will decrease from £66,200 to £65,300.

Statutory payments

From April, the standard rate of statutory maternity, paternity and adoption pay increases from £123.06 to £124.88 per week.

The standard rate of statutory sick pay will remain at the 2009 level of £79.15.

The weekly earnings threshold for the above payments will rise from £95 to £97.

Final food for thought in an election year

"It's easy being a humorist when you've got the whole government working for you." - Will Rogers (Actor 1879-1935)