...and a new one just begun - preview of 2011
Changes introduced under the Equality Act 2010 regarding pre-employment health enquiries have been hotly debated. Under the Act there is a general prohibition on employers asking about the health of an applicant. There are, however, exceptions to this - they key one being a carve out where health questions are necessary to establish whether the applicant could carry out an intrinsic part of the job. Questions may not go further than is 'necessary'. Employers need to take care in phrasing their questions to avoid such questions being relied on as evidence in complaints from unsuccessful job applicants. No doubt case law will be forthcoming soon!
Vetting and barring
We await the outcome of the Government's review of the vetting and barring scheme and the separate review of the criminal records regime. The reviews are examining whether the current regimes strike the right balance between respecting civil liberties and protecting the vulnerable and the public at large. The outcome of the review is expected in the 'first half' of the year. The smart money is on a scaling back.
On the case law front, leave is currently being sought for the Court of Appeal to consider loss flowing from the provision of a reference alleged to amount to unlawful victimisation. In such a scenario, there are two wrongful acts - giving the discriminatory reference (old employer) and taking it into account when deciding whether to offer the job (prospective employer). Who is liable for loss of future earnings, the old or prospective employer? Is the chain of causation broken by the prospective employer's action?
In the Bullimore case, the Employment Appeal Tribunal (EAT) held that the old employer should still be liable as it was clearly foreseeable that the prospective employer would react the way it did and therefore the loss suffered related to the giving of the reference. We await further Court of Appeal guidance.
Section 159 of the Equality Act 2010, which provides for positive action in recruitment and promotion, will come into force in April. This will enable employers to apply voluntary positive action in recruitment and promotion processes to address under-representation in the workforce.
Positive discrimination remains prohibited but the situations where employers may take positive action have been extended to allow an employer to base selection of the successful candidate on a protected characteristic in a tie-break situation, faced with two or more candidates of equal merit.
In practice, the comparison of candidates' qualifications is not usually straightforward. Confusion over what 'as qualified as' means, coupled with the risk of litigation by disappointed applicants not having a protected characteristic, may result in employers steering clear of using this new discretion.
The right to request time off for training introduced last year in businesses with more than 250 employees is due to be extended to all employers from April. The 'right to request' training applies to all employees who have completed six months' service where the training will improve both their effectiveness at work and the performance of their employer's business.
The procedure closely mirrors the flexible working application procedure. Employers are required to consider all requests seriously but may refuse a request for specified business reasons or if, in their view, the training would not improve the employee's effectiveness at work and/or the performance of their business.
This is one of the areas still under review by the Coalition Government. This is a hot favourite to be axed as part of the aim of reducing red-tape for employers. Nevertheless, all employers should assume for the time being that the right will continue to apply and be extended from 6 April.
Goodbye DRA, hello EJRA
The Government has confirmed its plans to phase out the default retirement age (DRA) from 6 April. Despite calls from the business community for the Government to clarify and consider delaying the abolition of the DRA, the Government has stuck to its guns, confirming the original timetable with full abolition from 1 October. Employers will still be able to operate their own contractual retirement age, provided it can be objectively justified as a proportionate means of achieving a legitimate aim - 'Employer Justified Retirement Age' (EJRA).
We await the publication of the draft regulations which will put the flesh on the bones of the current proposal. On a positive note, the Government has confirmed that the regulations will contain an exemption to the principle of equal treatment on the grounds of age, for group risk insured benefits provided by employers. The Government appreciates that these insured benefits can be more expensive to provide for an older workforce, and that, if no exemptions exist, employers are likely to simply remove the benefits for the entire workforce.
As employers consider introducing an EJRA, what may amount to a legitimate aim and whether the means used to achieve that aim are proportionate, will be of increasing importance. We expect related cases to continue to make their way through all levels of the tribunal and court system this year. In particular, the Seldon case is one to watch out for. Seldon concerns the application of a retirement age amongst a partnership, rather than to an employer. The Court of Appeal confirmed that intergenerational fairness and workforce planning were indeed legitimate aims and a retirement age of 65 for partners was objectively justified. An application for leave to appeal to the Supreme Court is currently pending.
Costs as justification
To what extent can economic factors feature as a proportionate means of achieving a legitimate aim? Last year the EAT held that it was legitimate to seek to avoid incurring costs where compliance with dismissal procedures was cut short so as to avoid enhanced pension rights vesting and that the process followed was justified. An appeal as to the scope of the so-called 'costs plus' justification is currently pending before the Court of Appeal in the Woodcock case.
What constitutes a disability?
The definition of a disabled person in the Equality Act is slightly different to that used in the Disability Discrimination Act. In particular, the list of 'capacities' has been removed. There have also been recent case law developments concerning the statutory meaning of 'likely' and the cumulative effect of more than one impairment.
Consequently, the Office of Disability Issues is updating its statutory guidance on what constitutes a disability. The revised statutory guidance is expected to come into force in April.
Are volunteers protected under the discrimination legislation? This is a question that will hopefully be answered this year. The Court of Appeal is expected to hand down its judgment in X v Mid Sussex CAB early this year. Although the case concerns the Disability Discrimination Act, the judgment will be relevant to all forms of discrimination legislation, including the new Equality Act 2010. During the passage of the Equality Act through the House of Commons Committee stage, an amendment was put forward that would have provided specific protection against discrimination to unpaid volunteers. However, the amendment was rejected.
Large-scale public sector equal pay claims have been an ever present feature of the last decade and will continue to feature as we enter 2011.
The Equal Pay Act is about equality of individual terms, not equality of overall remuneration packages. This is because a package approach tends to obscure discriminatory pay practices. But does this mean claimants can 'cherry-pick' aspects of various male comparators' remuneration packages so as to achieve a higher overall remuneration than any of them? Are all elements of remuneration during normal working hours a single 'term' or can you separate out allowances such as unsocial hours payments? The Court of Appeal will consider this issue later this year in Brownbill.
The treatment of bonus payments available only to predominantly male groups allegedly due to a genuine material factor other than sex rumbles on. This summer the Supreme Court will have its turn looking at the sex-taint issue (Gibson), by which time we should have the EAT's decision in the high profile Barker case against Birmingham City Council.
Gender pay gap information
Section 78 Equality Act 2010 paves the way for regulations to be introduced requiring certain employers to disclose pay information to show the extent of any gender pay gap. The Government does not, at present, intend to bring this provision into force. Instead, the Government will work with businesses to develop a voluntary scheme for gender pay reporting in the private and voluntary sectors while encouraging public bodies to provide gender pay gap information in line with their wider equality duties.
Suitable alternative vacancy
If a woman's role becomes redundant while on maternity leave, she is entitled to be offered suitable alternative employment if such a vacancy exists. Her right effectively trumps that of any other employee whose role is redundant at the same time. Leave to appeal is currently pending before the Court of Appeal in relation to the scope of what amounts to 'suitable available vacancy' (Simpson). At tribunal level we are expecting guidance as to whether the right arises when the woman is placed at risk of redundancy or only when she is formally made redundant at the end of the redundancy process (Townsend)? The Equality and Human Rights Commission, who is supporting the case, contends it is the former.
How do you balance the principle of equal treatment on the one hand and the special treatment to be afforded to pregnant women on the other? In relation to a sex discrimination claim, the legislation provides that "no account is to be taken of special treatment afforded to women in connection with pregnancy or childbirth". But what is the scope of this exemption?
Was a male employee discriminated against when, in a redundancy scoring exercise, the employer awarded the maximum score to his female colleague on maternity leave for a criterion which could not be judged due to her maternity leave? A tribunal in the de Belin case thought that it was unlawful discrimination. The judgment of the EAT is expected in the early part of the year.
The Scottish Court of Sessions will consider whether an employee allegedly dismissed because of his partner's pregnancy, can bring a claim for associative pregnancy discrimination? The EAT rejected such a claim brought under the Sex Discrimination Act and refused to refer the issue to the ECJ. While the underlying Directive protects a 'person' treated less favourably on the ground of sex, it specifically limits protection to 'a woman' in relation to pregnancy discrimination.
While the provisions of the Equality Act 2010 allow for 'associative' direct discrimination claims, the EAT pointed out this may not be the case in relation to pregnancy discrimination cases. Hopefully the Court of Sessions will clarify the position under both the old and new statutory provisions.
Additional paternity leave and pay provisions come into effect for parents of children due on or after 3 April 2011. Broadly speaking, a father may elect to take up to 26 weeks' additional paternity leave within the first year of the child's life provided the child is at least 20 weeks old and the mother has returned to work before using her full entitlement to maternity leave. The leave will be paid at the same rate as statutory maternity pay but only if the leave is taken during the mother's 39 week maternity pay period. The balance will be unpaid. Corresponding provisions come into effect in relation to adoptive parents.
The previous Government stated that it believed that the new provisions did not place a requirement on an employer to offer paternity pay above the statutory requirements where it offered enhanced contractual maternity pay. This is based on the special protection afforded to the biological condition of pregnancy under both European and domestic legislation and case law. However, arguments will no doubt be made that the provision of pay to a woman on additional maternity leave should not be regarded as protecting her biological condition, but rather her child-raising responsibilities. A recent European case lends some support for such an argument (Alvarez).
The Coalition Government is expected to consult later this year on more extensive provisions for flexible parental leave to encourage shared parenting "from the earliest stage of pregnancy". Hopefully the Government will address the issue of enhanced contractual pay in its consultation.
At present, parents of children up to the age of 16, or parents of disabled children up to the age of 18 have the right to request flexible working. So too do adult carers caring for a related person aged 18 or over who is in need of care. This created an anomaly so that a parent or carer of a non-disabled person aged 17 did not have the right to request flexible working. From April this gap will be plugged.
Later this year we expect to see new Government proposals to extend the right to request flexible working to all employees.
Trigger for collective consultation
When is the duty to collectively consult triggered? This is the thorny question which often vexes practitioners and the courts alike.
In 2009, the European Court of Justice (ECJ) purported to answer the question in the Fujitsu case. But was the ECJ saying that the consultation obligation arises:
- when the employer is proposing, but has not yet made, a strategic business or operational decision that will foreseeably or inevitably lead to collective redundancies; or
- only when that decision has actually been made and he is then proposing consequential redundancies?
The Court of Appeal, in Nolan, has been unable to fathom out what the ECJ was actually saying as some parts of the ECJ judgment favour option (i) but others favour option (ii). As the Court of Appeal respectfully puts it: "whilst the court appreciates that the ECJ has already provided an answer to that question in Fujitsu, it regrets that it is left with material uncertainty as to what that answer is." In other words, what are you saying? As a result the Court of Appeal is making a reference to the ECJ this year for clarification of this question. It will be some time before we have ECJ clarification, but this is one to watch out for.
On a personal note, the writer takes comfort in the fact that she is not the only person who read Fujitsu and was simply left scratching her head!
Public sector outsourcing
The current difficult financial times cast a wide shadow over expected developments regarding employee protection on a businesses transfer. Cost-cutting will feature prominently in public sector outsourcing.
Under the previous Government, codes were put in place which sought to prevent the emergence of 'two-tier workforces' where public sector employees were contracted out to a private sector service provider. The aim of the codes was to avoid a situation where the service provider hired new joiners on less generous terms than those of the former public sector employees. Will the need to reduce public spending mean this aim is now abandoned? To a large extent - yes. At the end of last year the Government abandoned the code as regards central Government transfers, replacing it with downgraded voluntary principles of good employment practice. The 'principles' are not mandatory and will not be part of the formal procurement process. Instead, the Government merely 'hopes' that suppliers will apply the principles.
While the Code currently still applies in relation to local authorities, this too is expected to be abandoned, most likely in April.
Also in April, the Supreme Court will hear and hopefully provide the definitive answer as to the effect of changes to collective agreements post transfer.
In 2009 the EAT held that a contractual term entitling employees (previously employed in the public sector) to pay increases "in accordance with collective agreements negotiated from time to time by the NJC [National Joint Council]" was protected on a TUPE transfer to the private sector so as to give a right to pay increases negotiated by the NJC post-transfer. But last year the Court of Appeal said no: transferees are only bound by the terms of the agreement in force as at the date of the transfer, not by any subsequent changes or new agreements to which they are not a party (Parkwood).
Finally, the question of whether, and in what circumstances, the buyer in a sale by a company in administration can avoid the automatic transfer of employees under TUPE remains uncertain. EAT clarification on this issue is expected shortly. Look out for the combined cases under Olds v Late Editions.
Out of Europe
The Agency Workers Regulations 2010 (AWR), implementing the EU Directive on temporary agency work, come into force on 1 October. The AWR provide that after 12 weeks in a given job, agency workers will be entitled to equal treatment with permanent staff in respect of certain basic working and employment conditions. Agency workers will also be entitled to information about permanent vacancies in the hirer's organisation and equal access to onsite facilities such as childcare and transport services from the first day of their assignment.
Before the election, the Conservative Party was opposed to the introduction of the AWR in their existing form. However, reopening the deal brokered by the Labour Government proved too difficult. As Edward Davey stated, the Government was "constrained" by the deal brokered in 2008 by the previous Government. 'Best practice' guidance is expected to be published by the Government in March.
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. However, the European Parliament's objections merely resulted in the status quo being maintained: opt-out retained in current form.
The European Commission is currently busy working on a revised proposal. Details of the new proposal are expected in the spring. Retention of the opt-out, albeit with some restrictions, is expected.
Cases raising questions regarding holiday leave and pay entitlements for those on sick leave continue to come before the tribunals and cause headaches for HR professionals. Further, German references are currently pending before the ECJ, although it may be some time before we have any further ECJ guidance as a result.
Breach of contract
It has been long established that where an employer fails to follow a contractual disciplinary procedure before dismissing an employee, the measure of the employee's damages for wrongful dismissal included not only contractual notice but also the salary the employee would have earned while the employer followed the contractual disciplinary procedure. It has also been established for a number of years that an employee cannot bring a claim for breach of the implied term of trust and confidence in respect of the manner in which the employee is actually or constructively dismissed (known as the "Johnson exclusion area").
This year we await the outcome of two cases challenging the accepted orthodoxy having the potential to greatly widen the scope of recoverable damages.
The Court of Appeal last year held as a preliminary point, that an employee could, in principle, recover damages for loss of future employment prospects when, as the result of breach of express contractual term as to the conduct of disciplinary proceedings, findings of misconduct were made (which would not have been made had the disciplinary procedure been properly observed) resulting in dismissal. The Johnson exclusion does not apply in relation to express terms (Chesterfield).
The High Court also considered the scope of the Johnson exclusion last year. Mr Botham succeeded in his unfair and wrongful dismissal claims. His damages award was reduced due to contributory fault and further due to the statutory cap on tribunal awards. He then issued a separate High Court claim for the balance of the amount claimed under the unfair dismissal proceedings plus damages for legal expenses incurred in relation to legal representation at the internal disciplinary proceedings and the Employment Tribunal and EAT proceedings.
The High Court rejected his claim as, save for the expense of legal representation in internal disciplinary proceedings, the claim for damages was based on the loss which resulted from the claimant's dismissal and therefore fell squarely within the Johnson exclusion. As to the claim for the expense of legal representation in internal disciplinary proceedings, there is no obligation on the employer to meet the costs of that representation.
Both cases will be considered together by the Supreme Court in June, the Botham case leapfrogging the Court of Appeal.
Right to a fair trial
The debate over if and when Article 6 of the European Convention on Human Rights is applicable to internal disciplinary hearings will continue this year.
The Supreme Court will be considering if and when an employee has the right to legal representation at an internal disciplinary hearing in April (The Governors of X School). In addition, the Court of Appeal and Administrative Court will consider the issue of the impartiality of the internal decision-makers in February and March (Hameed and Puri).
Establishing that a dismissal is the result of having previously made a protected disclosure is an attractive objective as there is no financial cap on compensation and no requirement for a minimum period of service. Whistleblowing claims will continue to feature in 2011.
The law aims to encourage whistleblowing that is undertaken in good faith to the right people, and to discourage whistleblowing that is badly motivated or misdirected. The Court of Appeal is being asked to consider the fine line between an opinion that turns out to be wrong and one that is unreasonable and therefore cannot form the basis of a qualifying disclosure (Easwaran). Also, is it necessary that the whistleblower reasonably believes that all the allegations contained in the information disclosed are true, or is it sufficient that the whistleblower only believes part of the allegations are true (Korashi)?
We will also hopefully get some guidance on the level of awards from the EAT. In March, it will consider an appeal as to the level of a £1.2 million award made by the Exeter tribunal to a former hospital trust chief executive (Watkinson).
When deciding whether to dismiss for gross misconduct, is an employer entitled to take into account a previous similar incident for which no formal warning had been given? Is it relevant background demonstrating that the employee knew such behaviour was unacceptable? This is a question the Court of Appeal will consider at the beginning of the year (Fuller).
Qualifying periods and fees
Rumours are abundant about the Government's review of employment law as referred to in the Business Plan for 2011 to 2015.
In particular, it has been rumoured in the press that the Government is considering an increase in the qualifying period for unfair dismissal from one to two years. Although no act of Parliament is required to bring in any change in qualifying periods, simply an Order by the Minister, a consultation would be expected before any such change was made. The effect is likely to be more discrimination and whistleblowing claims to get round a longer period.
Also widely rumoured are the introduction of an issue fee for tribunal applications and possible reduction in the period during which employers must pay statutory sick pay. We can but wait and see.
The provisions of the Bribery Act 2010 are due to come into force in April. Organisations which fail to implement a programme to prevent bribery could be hit with an unlimited fine and serious reputational damage. It is a defence for an organisation to show it had 'adequate procedures' in place to prevent bribery being committed on its behalf.
The response to the Government's consultation on guidance as to 'adequate procedures' commenced in September is expected shortly. However, a recent announcement by the Ministry of Justice confirmed that the Bribery Act will be assessed as part of the Government's growth review. Critics of the Act claim it places too high a burden on businesses. Speculation mounts that implementation of at least some of the Act's provisions may now be delayed.
The 2011 numbers to know...
From 1 February tribunal award limits increase including:
- a week's pay - £400
- maximum basic award/statutory redundancy payment - £12,000
- maximum compensatory award - £68,400
Note: The new rates apply where the 'appropriate date' occurs on or after 1 February (e.g. for unfair dismissal the effective date of termination) and not the date of the corresponding tribunal hearing.
Statutory payments rates
From 11 April:
- the standard rates of statutory maternity, paternity and adoption pay increases to £128.73
- the standard rate of statutory sick pay increases to £81.60 per week.
And finally food for thought...
"For time and the world do not stand still. Change is the law of life. And those who look only to the past or the present are certain to miss the future."
John F. Kennedy