Employment law update

Employment Law Update Key changes from 2009 Agency Workers Regulations 2010 Developments in 2010

Key changes from 2009 Hayley Dear

Overview
Dismissals
Discrimination issues
Holiday entitlement and sickness
New ACAS Code

Dismissals
Date of termination
Where dismissal is communicated by letter, the date of termination will generally be the date on which the letter is read by the employee
Gisda Cyf v Barratt
Practical tips
Inform of dismissal face-to-face
If cannot meet with employee then send letter by recorded and first class post and email

Dismissals continued…
Time limits
A redundant employee may have more than three months to bring a claim for unfair dismissal if new information comes to light after the three month deadline has expired.
Heslip v Teva (UK) Limited
Practical tip
Do not assume it is “safe” to rehire after three months have passed

Discrimination - age
Default Retirement Age (DRA)
Employers can continue to rely on the DRA of 65 for the time being
Age UK v Sec. of State for B.I.S ( Heyday)
Practical tips
Continue to follow the statutory retirement procedure for retirement dismissals
Likely Government review of DRA this year

Discrimination - religion and belief
“ Philosophical belief”
A belief in climate change and the need to act in the interests of the environment and a belief that that psychics can help solve criminal investigations are capable of amounting to “philosophical beliefs” under the legislation and therefore subject to protection
Grainger plc and ors v Nicholson
Power v Greater Manchester Police

Discrimination – religion and belief continued…
Christian beliefs
A registrar threatened with dismissal for refusing to register same-sex civil partnerships and a relationship counsellor dismissed for refusing to counsel same-sex couples, did not suffer discrimination on the grounds of their Christian beliefs
Ladele v Islington LBC
McFarlane v Relate Avon Ltd
Practical tips
Review anti-harassment policies
Be mindful of potential conflicts between beliefs and duties
Keep your eye on the ball!

Discrimination - sexual orientation
Sexual orientation
An employee who was known by his colleagues to be heterosexual was protected from homophobic harassment
English v Thomas Sanderson Blinds Ltd
Practical tip
Be aware of office banter!
Treat employees fairly and consistently

Discrimination - race
Work Permits
An employer’s refusal to consider job applications from candidates requiring a work permit constituted unlawful indirect race discrimination
Osborne Clarke Services v Purohit
Practical tips
Do not exclude applicants on the basis of ability to work in the UK
Select candidates on merit alone
Consider obtaining a sponsor licence to avoid delays in the recruitment process

Holiday entitlement
Annual leave entitlement
Statutory annual leave under the Working Time Regulations 1998 increased in April 2009 from 4.8 weeks to 5.6 weeks (with a maximum statutory entitlement of 28 days) for full-time workers
Practical tip
Check your contracts of employment and policies!

Holiday entitlement and sickness
Holiday accrual and sickness absence
Employees on sick leave continue to accrue holiday and must be given the opportunity to take holiday on their return to work, even if absent for the whole leave year
A claim for back-dated holiday pay can be brought by using the concept of a series of “unlawful deductions from wages”
Stringer and ors v HMRC (Stringer)

Holiday entitlement and sickness continued…
Sickness during holiday
An employee was entitled to a replacement holiday period as he was unable to take holiday during a period of illness
Pereda v Madrid Movilidad SA
Application of the principle in Pereda to private employers confirmed recently by UK Employment Tribunal
Shah v First West Yorkshire Limited

Holiday entitlement and sickness continued…
Practical tips
Allow those on long-term sick leave to continue to accrue holiday entitlement
Review sickness and absence policies and update
Encourage those on long-term sick leave to take accrued leave during that period (if financially beneficial to them)
Require immediate notification if employee falls ill whilst on holiday
Allow employees opportunity to take accrued leave on return from sickness
Remember that employees only have the right to take statutory (not contractual) leave at another time or carry it over if there is insufficient time in the current leave year for them to take it.

Holiday entitlement - termination
Holiday pay on termination
Pay-in-lieu of untaken holiday on termination of employment is not necessarily confined to the current holiday year
Wang v Beijing Ton Ren Tang (UK) Ltd
Practical tips
Ensure that contractual provisions are clear regarding carry over of holiday
Do not make oral agreements outside the contract!

Disciplinary and grievance procedures
Abolition of Statutory Procedures in April 2009
New ACAS Code – main changes
No automatic unfair dismissal for failure to comply
No requirement to lodge grievance before issuing claim
No mandatory uplift in compensation (was minimum of 10% for failure to comply)
Maximum increase or decrease in compensation limited to 25% (was up to 50%)

Disciplinary and grievance procedures continued…
New ACAS Code of Practice – in a nutshell…
Act promptly, consistently, investigate, keep employee informed and allow them to put their case forward, allow employee to be accompanied and give them a right of appeal
Does not apply to redundancy dismissals, non-renewal of fixed-term contracts or collective grievances
Failure to follow can lead to increase or reduction in compensation of up to 25%
Not too different from old procedures – if your old procedures were compliant with the statutory procedures then they are likely to be compliant with the new Code

Disciplinary and grievance procedures continued…
Practical tips
Check disciplinary and grievance procedures comply with the new Code
Make procedures non-contractual
Train staff on use of the procedures
Do not be afraid to refuse an employee’s request to be accompanied by a legal representative – this should only be permitted in very narrow circumstances

The Agency Workers Regulations 2010
Bridget Wood

Overview
How will the new Agency Workers Regulations affect agencies and their clients?
Introduction
What rights will “agency workers” have?
Who is an “agency worker”?
Possible workarounds
How will clients be affected?
How will agencies be affected?
Wider implications
Conclusion

Introduction
European Agency Workers Directive first proposed in 2002
Blocked for 5 years by UK and some other member states
May 2008 TUC and CBI “deal” – UK resistance removed
December 2008 Agency Workers Directive became European law
UK must implement within 3 years whoever is in power in UK

Introduction continued…
From May 2009: two rounds of consultation by the Department for Business Innovation & Skills (BIS)
21 January 2010 The Agency Workers Regulations 2010 laid before Parliament
Come into force 1 October 2011
Subject to any amendments any new government makes following this year’s general election
BIS to publish guidance on the Regulations
Terminology

What rights will “agency workers” have?
Directive = equal treatment from day 1
CBI-TUC “least worst” option deal in May 2008
12 week qualifying period under UK legislation
various exclusions from scope

What rights will “agency workers” have? continued…
12 week qualifying period
minimum break of 6 weeks between assignments in order for the 12-week clock to be restarted
clock is also reset if the agency worker commences a new assignment which is “substantively different” from the one working on prior to the expiry of the qualifying period
anti-avoidance measures aimed at preventing obvious avoidance
Entitled to the same “basic working and employment conditions” as a comparable permanent employee of the client
Client will have to assess whether there is a comparable permanent employee with whom to establish equal treatment
“ Basic working and employment conditions” = pay, the duration of working time, night work, rest periods and breaks and annual leave

What will “pay” include?
basic pay; and
any entitlements that are directly linked to the work undertaken by the agency worker while on an assignment, for example:
paid holiday (above Working Time Regulations entitlement if that is what a comparator is contractually entitled to)
payment of overtime
shift allowances
unsocial hours premiums
bonuses directly attributable to the amount or quality of the work performed by the agency worker, e.g. based on piece-work

What will “pay” not include?
benefits such as share participation
profit sharing schemes
occupational sick pay
occupational pensions
contractual redundancy payment
bonuses based on organisational performance and those designed for long-term motivation and retention of staff

Notice of client’s permanent vacancies
a “day 1” entitlement – not subject to the 12 week qualifying period
no requirement to advertise staff re-deployment vacancies
Access to client’s onsite facilities
a “day 1” right
canteen, childcare facilities, transport services
Access to training
to encourage access to government training
Rights for pregnant women and new mothers
e.g. paid time off to attend ante-natal appointments

Who is an “agency worker”?
Within scope:
temps who are pay-rolled by the agency
anyone who undertakes “personally” to work for the client
umbrella company workers
Outside scope:
genuinely self-employed, e.g. company contractors
agency workers working on “managed service contracts” = specific service (e.g. IT support or catering) controlled and delivered by service provider – client pays for an output rather than hiring individual agency workers to work under the client’s supervision and direction

Possible workarounds
11 week assignments?
beware anti-avoidance measures
client concerns about agency worker turnover?
“ Swedish” derogation
agency workers with permanent contract of employment with agency
paid between assignments

Possible workarounds continued…
Self-employed contractors
excluded if agency or client has the status of a client or customer of a profession or business undertaking carried on by the self-employed contractor
confirmation of how this exemption will work in practice in BIS guidance?
“ Project” basis without client “supervision or direction”
paid for delivering pre-scoped deliverable
substitution rights: not personal service

How will clients be affected?
Administrative burden
agencies and clients will need to assess if agency worker is caught and, if so, compile data about pay etc.
Higher cost of agency workers?
widely reported concerns that costs will increase, but depends on type of agency workers engaged
lower paid agency workers?
high paid professional/technical agency workers?
cost of providing “day 1” rights?

How will clients be affected? continued…
Claims against clients?
if an agency worker brings a claim and the agency can show that it took “reasonable steps” to ensure equal treatment by seeking the appropriate information from the client, the client will be liable to the extent there is a breach of the Regulations
client will be liable for failure to meet its obligations to put in place “day 1” rights

May have to come to terms with new contracting models designed to avoid the application of the Regulations, for example, discontinuity resulting from turnover of agency workers to exploit the 12 week rule may:
reduce cost effectiveness of engaging agency workers?
increase recruitment and training costs?
Concerns about providing pay data on comparable permanent employees to agencies?
Will be asked by agencies to sign new contracts setting out the client’s obligations to provide such data

Good news
the Regulations will give agency workers (and Tribunals) a framework under which agency workers can claim (relatively) limited rights to same “basic working and employment conditions” as a comparable permanent employee
better than the current position where agency workers assert rights as direct employees of the client and sympathetic Tribunals feel their only recourse is to “find” employment status
… which could trigger serious tax and class action employment claims for client per US experience

How will agencies be affected?
Costs will all be passed on to agency?
increased pay rates will be deducted from agency’s margin?
cost of comparator exercise will be borne by agency?
clients will ask for indemnities from agencies?

How will agencies be affected? continued…
Agencies will have to request “comparator” information:
if commercially sensitive: offer confidentiality/non-poach undertakings?
offer “comparator consultancy” as a value add?
chance for more sophisticated agencies to build deeper relationships with clients?
contract terms will need to be re-written to include obligations of client to co-operate and provide data

How will agencies be affected? continued…
More “turn over” of agency workers:
helps margin where sliding scales apply, but more work finding new agency workers and potential loss of contract every 11 weeks?
elaborate systems of agency worker swaps between clients?
Immediate issue: educating and allaying fears of clients

Wider implications
Trend towards employed model? Allows use of tax free travel, accommodation and subsistence expenses (not a “permanent place of work” if moved from client to client)
Trend towards clients setting up their own umbrella companies? Potential for VAT mitigation; agency becomes margin-only introducer of candidates
Umbrella companies contracting directly with clients (as part of trend away from regarding agencies as “owners” of candidates)?

Wider implications continued…
Trend towards shorter term engagements and increased “turn over” of lower paid agency workers? Long-stayers managed out?
Use of company contractors/project agreements? Specialist higher paid contractors are likely to be relatively unaffected, especially if not under the “supervision and direction” of the client

Conclusions
Will be law in the UK from 1 October 2011
May be changes to the Regulations if we have a new government this year
BIS to publish guidance which should help clarify how the Regulations are intended to work
Don’t panic - beware scaremongering – unlikely to apply to all agency workers and little effect in many cases

Conclusions continued…
Identify which, if any, of your temporary workforce may be affected and break down by skill sets and pay grades
Clients and agencies need to start talking to each other about possible “workarounds”: no single solution will suit everyone – different industries will adopt different solutions for different skill sets and pay grades, but there will be solutions
Proper planning should mean that agencies and clients can set up contracting models avoiding major risk and allowing safe use of agency workers
Keep an eye out for updates following the general election and for the publication of BIS’s guidance

Developments in 2010 Michelle Lawlor

Overview
Equality Bill
Fit Notes
Additional Paternity Leave
Changes to compensation limits

The Equality Bill
Most provisions expected to come into force October 2010
Will replace 9 existing major pieces of discrimination legislation with 1 set of rules
Aims:
harmonise
strengthen

Equality Bill - protected characteristics
age
disability
gender reassignment
marriage and civil partnership
pregnancy and maternity
race
religion or belief
sex
sexual orientation

Equality Bill - simplifying the law
Definition of indirect discrimination standardised
Existing concept of “disability-related discrimination” replaced by a similar concept of “discrimination arising from disability”
Discrimination by association
Protection from harassment extended
Need for comparator removed for victimisation

Equality Bill - extending the law
Pre-employment health questionnaires
Pay transparency
Extension of “positive action”
Extra tribunal powers

Equality Bill - practical tips
Practical tips
Monitor the progress of the Bill
Review existing policies and procedures and consider Equal Opportunities policies and monitoring
Train employees
Read guidance from Equality and Human Rights Commission

Fit Notes
In force on 6 April 2010
Focus on fitness rather than sickness

Fit Notes - what are the changes?
Two options:
unfit for work; or
may be fit for work taking account of the following advice, such as:
a phased return to work
amended duties
altered hours
workplace adaptations

Fit Notes - what are the changes? continued…
Onus fully on employers to conclude what activities employee who is declared “may be fit for work” can or cannot do
Maximum duration of fit note reduced from 6 months to 3 months during the first 6 months off sick

Fit Notes - what stays the same?
Fit note is still not required until after the seventh calendar day of sickness
Requirements for the payment of Statutory Sick Pay have not changed
Employers’ obligations under the Disability Discrimination Act to make reasonable adjustments have not changed

Fit Notes - what is good about the new scheme?
Process of returning to work no longer requires 100% fitness
Encourages communication regarding possible changes that may facilitate a return to work
Employers not required to follow the GPs’ recommendations (subject to any obligations under the Disability Discrimination Act)
Fewer forms to deal with
New occupational health advice line available for employers with up to 249 employees from 1 April 2010

Fit Notes - what is bad about the new scheme?
No pilot of new scheme – inconsistencies?
Disputes about changes to be made inevitable
Greater expense for employers?

Fit Notes - practical tips
Practical tips
Amend policies and contracts
Provide training
Discuss changes with employee and carry out a risk assessment to assess fitness for work
Consider referral to an independent specialist

Additional paternity leave & pay
Regulations in force on 6 April 2010
Families of babies born/adopted on or after 3 April 2011 will be able to choose whether the mother should forfeit up to 26 weeks maternity leave, which can then be taken by the father as additional paternity leave (APL)
APL will be in addition to the current entitlement to 2 weeks statutory paternity leave

APL & Pay – practical tips
Practical tips
Update policies and provide training
Consider offering same terms and conditions for APL as employees receive during Additional Maternity Leave
Watch this space!

Changes in compensation limits
Unfair dismissal – compensation award £65,300 from 1 February 2010
Injury to feelings:
£500 to £6,000 for less serious cases
£6,000 to £18,000 for moderately serious cases
£18,000 to £30,000 for the most serious cases

Employment law update

by Blake Lapthorn on Mar 22, 2010

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