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Articles contributed by Clifford Chance
The Sex Discrimination Act 1975 renders it unlawful to victimise a person through less favourable treatment because they have brought sex discrimination or equal pay proceedings. Similar provisions exist in relation to other areas of discrimination.
The provisions of the Disability Discrimination Act 1995 (DDA) impose an obligation on employers to make a reasonable adjustment where a provision, criterion or practice is placing a disabled employee at a substantial disadvantage when compared to an employee who is not disabled.In some situations, a disabled employee's condition may be such that they are likely to have greater periods of absence than an employee not suffering from such a disability. Where an employer's sick pay scheme imposes a limit on the number of days that full pay may be paid to a sick leaver, such a disabled employee will be at a greater disadvantage.
The Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) can result in unpalatable restrictions on the purchaser of a business (for example, detrimental changes to the terms and conditions of a transferring employee will be void). Because it is well established (Brookes v Borough Care Services) that a share sale does not of itself transfer the business for the purposes of TUPE, transactions are sometimes structured as share sales to provide the purchaser of a business with greater flexibility in relation to its plans for the workforce, all other considerations being equal. Once the share sale is complete, it is not unusual for a parent/holding company to take an active interest in the management of the company acquired. However, a recent Court of Appeal decision gives rise to the possibility that an excessive level of involvement could, in fact, trigger a TUPE transfer of the business to the holding company.
The Transfer of Undertakings (Protection of Employment) Regulations 2006 provide that the dismissal of an employee because of, or for a reason connected with, a business transfer is automatically unfair. If, however, the dismissal is for an economic, technical or organisational (ETO) reason, the dismissal is not deemed automatically unfair. It is instead judged by the employment tribunal according to the normal principles of fairness, ie was there a substantively fair reason for the dismissal and was a fair procedure followed?
The DTI has published an independent review of the current dispute resolution regime. Its key message is that the current dispute resolution regulations are too inflexible and prescriptive and as a consequence have been unsuccessful. A number of recommendations have been made, the most significant of which is that the statutory dismissal and grievance procedures should be repealed.
The Employment Rights Act 1996 (ERA) provides that an employee who is dismissed as a consequence of having made a protected disclosure is to be regarded as unfairly dismissed.
new allegations of misconduct require a separate procedure to be followed
Where an employer is contemplating dismissing an employee it is obliged to follow the statutory dismissal procedure in relation to the proposed dismissal. Step one of the procedure requires the employer to set out in writing the alleged conduct which has led it to contemplate the dismissal or disciplinary action and then invite the employee to a meeting to discuss the matter.
Part 2 of Schedule 2 to the Employment Act 2002 sets out the standard form and modified grievance procedures. The standard grievance procedure involves three steps, the first of which is that the employee must submit a written grievance to the employer. The employee is not, however, required to inform the employer of the basis for the grievance as part of step one but must do so, although not necessarily in writing, before the step two meeting takes place.
It is the fiduciary duty of a director to act in good faith in the best interests of their company. They must do their ‘best to promote its interests and to act with complete good faith towards it' and not place themselves in a position in which their own interests conflict with those of the company (see Item Software (UK) Ltd v Fassihi and others). Employees who are not actual or de facto directors have an implied contractual duty of fidelity to their employer which includes not working in a competing business while still employed.
All employers have a common law duty to take reasonable care to protect their employees from foreseeable harm to their physical or mental health. In order to succeed with a personal injury claim in relation to, for example, psychiatric injury resulting from a breakdown, an employee must be able to demonstrate that:
In the case of Palacios v Cortefiel Servicios SA the ECJ was asked to consider whether a national law allowing for compulsory retirement upon attaining a certain age was inconsistent with the EU Equal Treatment Framework Directive (2000/78/EC), pursuant to which the Employment Equality (Age) Regulations 2006 were implemented.
What is the status of a disciplinary warning that has expired? In Airbus UK Ltd v M G Webb the EAT had to consider whether an expired warning, or more particularly the conduct in respect of which the warning had been given, had to be treated for all purposes by the employer as if it had never occurred in the context of subsequent disciplinary proceedings relating to similar misconduct.
It is common practice for employment contracts to contain a variety of post-termination restrictions prohibiting the departing employee from soliciting former colleagues, clients and customers and sometimes prohibiting them from competing for a defined period following the termination of employment.
The Transfer of Undertakings (Protection of Employment) Regulations 1981 (TUPE) gave effect to the Acquired Rights Directive, the underlying purpose of which is to safeguard the rights of employees who transfer. Having regard to this underlying protective aim, the courts have concluded that where detrimental changes to terms and conditions are made as part of a package of changes in connection with a business transfer, they are void.
From time to time an employer may find that it needs to redeploy an employee to another post, but the individual's contract does not contain any express provisions allowing for such redeployment. The Employment Appeal Tribunal (EAT) has examined the case law on this area and provided useful guidance on when such redeployment may take place.
In Palihakkara v British Telecommunications Plc the EAT was asked to consider whether P was entitled to bring sex and race discrimination claims even though she had concluded a compromise agreement:
‘... in full and final settlement of all claims past or future arising out of the termination of her employment... including... claims in respect of... unfair dismissal, discrimination on grounds of race, sex and/or disability.'
The employment status of workers supplied by employment agencies has come under scrutiny in recent years. In Brook Street Bureau (UK) Ltd v Dacas, the Court of Appeal indicated that when assessing the employment status of an agency worker, employment tribunals should actively consider whether there is an implied employment contract between the worker and the end-user client regardless of what has been agreed by the parties.
At present, the Working Time Regulations 1998 give all workers the right to four weeks of paid leave per year. For an employee working a five-day week, this gives rise to an entitlement of 20 days. Some employers currently include the eight public and bank holidays in their employee's holiday entitlement. Following a period of consultation, the government has announced that it intends to grant additional paid leave to reflect the eight bank holidays. In short, it proposes to increase the statutory entitlement to paid holiday initially from four weeks to 4.8 weeks from 1 October 2007. Paid holiday entitlement will then increase by a further 0.8 weeks to 5.6 weeks with effect from 1 October 2008, subject to a maximum statutory entitlement of 28 days. Employees will not be required to have a minimum period of employment in order to qualify for this additional holiday entitlement.
By Tania Stevenson
A dismissal on the grounds of misconduct will only be fair if the following conditions are satisfied:
If a claim is brought in the Employment Tribunal and a ‘response' (ie an ET3) is not lodged in time, the employment tribunal can issue a default judgment against the respondent in relation to either liability alone or in relation to both liability and remedy. In addition, the respondent may take no further part in the proceedings (except for very limited purposes, eg to be called as a witness by another).
In many workplaces where there is union recognition it is common for the employer to operate an enhanced redundancy scheme, the origins of which can be traced back to a collective agreement. The Employment Appeal Tribunal (EAT) was asked, in Framptons Ltd v Badger, to consider whether employees were entitled to an enhanced redundancy payment after the expiry of a collective agreement which was the source of the redundancy terms.
It is common practice (particularly in the City) for employers to describe their bonus arrangements as discretionary and to provide that no bonus will be payable if an employee is not in employment, or is under notice (given or received), on the bonus payment date. There has, however, always been a degree of uncertainty about the enforceability of such a provision - the concern that the employee is effectively a ‘consumer' in the relationship and that such a provision falls foul of the Unfair Contract Terms Act 1977 (UCTA) because it allows the employer to render a substantially different performance from that reasonably expected of it. Employers have also been advised that labelling a bonus as discretionary does not give them carte blanche to act arbitrarily, as the courts have held in a number of cases that there is an implied term that an employer's discretion will not be exercised in a capricious or perverse manner (see Clark v Nomura International Plc and Horkulak v Cantor Fitzgerald).
New award limits will apply in relation to unfair/redundancy dismissals that take effect on or after 1 February 2007. Employers who are currently costing termination exercises that will take effect after 1 February 2007 will need to factor these new limits into their calculations.
It is common practice for employment handbooks to be divided into contractual and non-contractual sections. Typically, policies and procedures will be contained in the non-contractual section to minimise the risk of breach of contract claims being brought if policies are not strictly adhered to, and to allow the employer greater flexibility when changing the policies and procedures without the need to obtain prior consent from employees before doing so. Although, strictly speaking, consent may not be required, it would nevertheless be good practice to consult and give notice before implenting new policies and procedures.
The Employment Equality (Age) Regulations 2006 (the Age Regulations) allow employers to defend a claim of either direct or indirect age discrimination by objectively justifying the acts complained of. Recently, Unison launched a judicial review in the High Court to challenge the government's decision to alter the Local Government Pension Scheme arrangements. The Scheme allowed employees to retire early on full pensions provided that their age and years of service added up to 85 (the 85 year rule).
The EU principle of equal pay for equal work is implemented in England through the Equal Pay Act 1970. The Act implies ‘an equality clause' into every employee's contract of employment to the extent that one does not already exist from the outset. The effect of the equality clause is that where a woman can demonstrate that she is employed on:
Many organisations use atypical working arrangements to keep their ‘employee' headcount low and to avoid statutory employment obligations - giving them greater flexibility to hire and fire such casual staff at will. Employment status is significant not only in terms of what statutory employment protection may exist, but also from a number of other legal perspectives, including an employer's liability for making tax and social security deductions, and complying with immigration requirements, and health and safety legislation.
THE TUC and the Equal Opportunities Commission (EOC) have recently issued useful guidance documents for managers and employers on topical employment issues.
The provisions of the Disability Discrimination Act 1995 (DDA) impose an obligation on employers to make a reasonable adjustment where a provision, criterion or practice is placing a disabled employee at a substantial disadvantage when compared to employees who are not disabled.
An employee who suffers a breakdown as a consequence of the strains and stresses of their work situation will only succeed with a personal injury claim against their employer if they can demonstrate that there was a real risk of breakdown, which the employer ought reasonably to have foreseen, and that there were steps it could have taken to prevent the breakdown.
There is a vast amount of case law on the question of what test should be applied when determining the employment status of an individual. It has, however, been made clear that there cannot be a contract of employment without ‘mutual obligation', see for example the House of Lords' decision in Carmichael and another v National Power Plc. What does mutuality of obligation mean in practice?
In the case of British Aerospace v Green Millett LJ observed that when an employer carries out a redundancy exercise it is:
‘... sufficient for the employer to show that he has set up a good system of selection and that it was fairly administered, and that ordinarily there is no need for the employer to justify all the assessments on which the selection for redundancy was based.'
The ‘Stalkers Statute’, otherwise known as the Protection from Harassment Act 1997 (PHA), prohibits a person from pursuing a course of conduct which amounts to harassment of another. Harassment for these purposes can include alarming a person or causing them distress. To qualify, the conduct must occur on at least two occasions.
The Fixed-Term Employee (Prevention etc) Regulations 2002 restrict an employer’s ability to use successive fixed-term contracts. The Regulations achieve this by classifying an employee engaged under a fixed-term contract as a permanent employee if all of the following conditions are satisfied:
In July the government issued a consultation on the Smoke-Free (General Provisions) Regulations. These Regulations will form part of the smoke-free regime that will be implemented in summer 2007 by the Health Act (currently the Health Bill). The consultation closed on 9 October 2006.
The notion of ‘corporate homicide' or ‘corporate killing' first surfaced in the late 19th century with workplace deaths in the era of industrialisation. In recent years it has risen rapidly up the political agenda, especially as a result of tragedies such as the Zeebrugge ferry disaster. Indeed, over 300 people per year die or are fatally injured at work, demonstrating that the potential scope for liability is wide. In spite of this there have only been a handful of successful prosecutions of large companies where management failings have resulted in death.
As part of the Government’s aim of helping employees achieve a better work/family care balance, further changes are to be made to the maternity leave regime.
The Government has issued a consultation document on its proposals to increase the statutory minimum holiday entitlement from four weeks to 5.6 weeks per year (see ‘Increasing the holiday entitlement - an initial consultation' at www.dti.gov.uk/employment/holidays/index.html).
In Woodward v Abbey National Plc the Court of Appeal (CA) was asked to consider whether a claim could be brought alleging that an individual had been subjected to detrimental treatment on the grounds that she had made a protected disclosure, where that detrimental treatment arose after the termination of employment.
Failure to consult a disabled employee about reasonable adjustments is not disability discrimination
In Tarbuck v Sainsbury's Supermarkets Ltd, the EAT considered an alleged failure to make a reasonable adjustment under the Disability Discrimination Act 1995 (DDA).
The question of whether or not disability-related sickness absence should be discounted for the purposes of sickness absence procedures and redundancy selection is unclear as there is very little case law guidance. The Employment Appeal Tribunal (EAT) recently looked at the issue in Royal Liverpool Children's NHS Trust v Dunsby.
The Part-time Workers (Prevention of Less Favourable Treatment) Regulations 2000 provide that a part-time worker has the right not to be treated less favourably than the employer treats a comparable full-time worker as regards the terms of their contract, or by being subjected to any other detriment.
The DTI Guidance on the Working Time Regulations 1998 has now been amended to reflect the European Court of Justice’s (ECJ) decision in Robinson-Steele v RD Retail Services Ltd and others, in which it was held that rolled-up holiday pay arrangements infringed the EC Working Time Directive.
In Fisher v Hoopoe Finance Ltd, the Employment Appeal Tribunal considered whether an employer had fulfilled its duties during a redundancy exercise.
On 6 April 2006 the Commission for Racial Equality’s new statutory Code of Practice on Racial Equality in Employment came into effect. This Code replaces the CRE’s original Code of Practice, which was published in 1984.
The second anniversary of the introduction of the statutory dispute resolution procedures is looming on the horizon. By now, employers should be accustomed to following the statutory dismissal, disciplinary and grievance procedures in appropriate circumstances.
The question of whether a bonus is payable (at all or in part) to an employee who has been absent on maternity leave for all or part of the relevant bonus period is a complex issue that continues to perplex employers and lawyers alike. Unfortunately, given the variety of permutations that bonus arrangements may take, there is not a single answer that is applicable in all cases. The case law on this subject has been quite elusive with only a small number of first instance decisions directly on the issue, and a number of ECJ cases not directly on point dealing with bonuses and parental leave (Lewen v Denda) and pay rises during the currency of maternity leave (Alabaster v Woolwich).
Where an employer proposes to dismiss an individual by reason of redundancy the statutory dismissal procedure will apply unless the dismissal is part of a collective redundancy procedure, that is the employer is proposing to dismiss 20 or more employees within a 90-day period. Dismissal on the grounds of redundancy is a potentially fair reason to dismiss. However, the dismissal must also be procedurally fair, and comply with the statutory disciplinary and dismissal procedure (DDP).
In some sectors, companies maintain registers of suitably qualified individuals on whose skills they can draw as and when their business needs dictate. Typically, under such arrangements the individual in question is not obliged to accept a particular assignment, nor is the company obliged to offer further assignments on completion of any assignment accepted. Such bank workers are frequently regarded by the end-user as a temporary contractor.
One possible danger of not spelling out the precise terms of an employee's engagement is illustrated by Bellingham v Secession Ltd, in which the employment tribunal implied very generous sick pay terms into an employment contract.
It is not an uncommon practice for employers of workers who have atypical working arrangements (eg casual employees with no fixed number of hours' or days' work per week, shift workers and consultants) to pay them a rolled-up rate of pay that is inclusive of holiday pay.
The government is currently consulting on new regulations that will make it clear that the HR1 notification to the Secretary of State of proposed collective redundancies should take place before notices of dismissal are issued. This amendment is being proposed as a consequence of the ECJ decision in Junk v Kuhnel in which it was held that no notice of dismissal may be given until:
Set out below are the new rates applicable to statutory maternity pay (SMP) and statutory sick pay. The new SMP rate will also apply to statutory adoption pay and statutory paternity pay.
On 6 April 2006 the Transfer of Undertakings (Protection of Employment) Regulations 2006 (‘TUPE 2006') will finally come into effect after a four-and-a-half year gestation period.This will replace the existing, and somewhat long-in-the-tooth, regime, which is governed by TUPE 1981. Although TUPE 2006 rests on the foundations of TUPE 1981, it introduces a number of new obligations and clarifying provisions (see box, right), which this briefing will outline.
At present, when an employee with two or more years' service is made redundant they will be entitled to a statutory redundancy payment calculated according to the following formula:
The Part-Time Workers (Prevention of Less Favourable Treatment) Regulations 2000 provide that a part-time worker is entitled not to be treated less favourably than a comparable full-time worker. To succeed with a claim the worker must demonstrate that they are employed by the same employer under the same type of contract as the full-time comparator employee, and that both are engaged in the same or broadly similar work having regard to their level of qualification, skills and experience.
In ViaSystems (Tyneside) Ltd v Thermal Transfer (Northern) Ltd and others, the Court of Appeal looked at the issue of who was vicariously liable for the negligence of an employee working temporarily for another company. In that case the Court held that it is possible for both the general employer and the temporary employer (ie the company to whom the individual is temporarily providing his services) to be vicariously liable for the negligent acts of an employee. The key issue in the Court’s opinion was who had control of the individual’s work at the time that the negligent act was committed.
In Hawley v Luminar Leisure Ltd the Court of Appeal again considered the issue, this time in relation to a ‘door supervisor’ (aka a bouncer).
Where a provision, criterion or practice applied by an employer, or a physical feature of premises places a disabled employee at a substantial disadvantage in comparison with persons who are not disabled, the employer has a duty to take such steps as are reasonable to prevent that effect.
The ACAS Code of Practice on Disciplinary and Grievance Procedures states that it is a core principle of reasonable behaviour that an employee has the opportunity to state their case at a meeting before being dismissed for misconduct.
Section 3A(1) of the Disability Discrimination Act 1995 (as amended) (DDA) provides that it is discriminatory for an employer to treat a disabled person less favourably than others for a reason related to their disability where such less favourable treatment is not justified. Section 3A(3) states that treatment is justified if it is material to the circumstances of the particular case and substantial.
In Southampton City College v Randall the EAT held that the provisions in the DDA that impose an obligation on an employer to make a reasonable adjustment (see above) do not:
In October 2004 the statutory disciplinary, dismissal and grievance procedures came into force. In general, an employee will not be able to lodge a claim at the employment tribunal against their employer unless they have complied with Step 1 of the statutory grievance procedure (GP) and waited 28 days. This applies, amongst other things, to claims of constructive dismissal and discrimination (on whatever grounds). The GP does not, however, apply to complaints about dismissal (other than constructive dismissal). The standard GP is made up of three steps:
In February 2005 the government published its consultation document ‘Work and Families: Choice and Flexibility’, which set out its proposals for achieving a better work/care balance for families. The consultation closed on 25 May 2005, and the government published its response in October. The proposals are intended to form the basis of the Work and Families Bill that was presented to Parliament for its first reading on 18 October 2005.
When will an employer be deemed to have ‘constructive’ knowledge of an employee’s disability? This issue was considered by the EAT in Department for Work and Pensions v Hall in the context of claims for disability-related discrimination and failure to make a reasonable adjustment.
In North Western Health Board v McKenna the European Court of Justice (ECJ) considered whether it amounted to sex discrimination (i) for an employer to treat an employee absent due to pregnancy-related illness in an identical manner as employees absent for other ill-health reasons for the purposes of sick pay entitlement; and (ii) for an employer to offset absence due to a pregnancy-related illness against an employee’s total occupational sick pay entitlement.
Section 188 of the Trade Union Labour Relations Consolidation Act 1992 (TULRCA) imposes collective consultation obligations on an employer in the event that they propose to dismiss as redundant 20 or more employees at one establishment within a 90-day period. If an employer fails to comply with the section 188 obligations, an application may be made to the employment tribunal (ET) for a protective award of up to 90 days’ pay per affected employee.
In light of the EAT dicta in C&J Clark International Ltd v Hatcroft, when reviewing or drafting disciplinary and grievance procedures employers should include a clause that, broadly speaking, allows them to vary and/or suspend all or part of the procedure if it is considered appropriate in individual cases.
It is very common for employees returning from maternity leave to request a return on a part-time or some other flexible basis to accommodate their new childcare responsibilities.
A little behind schedule, the government has now issued for consultation the draft Employment Equality (Age) Regulations 2006 (the Age Regulations), which will outlaw discrimination on the grounds of age with effect from 1 October 2006.
In Bowyer v Siemens Plc, the Employment Appeal Tribunal (EAT) considered a rather obscure area of employment law - unfair dismissal compensation and the deduction of redundancy payments - which has wider implications for employers who label dismissals as 'redundancies'.
The government has recently issued a consultation paper on smoking in public places and workplaces as part of the Health Improvement and Protection Bill.
Employees who have more than one year's continuous service and have responsibility for a child under the age of five are entitled to 13 weeks' unpaid parental leave to take care of the child. The rules governing when and how much parental leave may be taken and what notice must be provided by an employee are set out in the Maternity and Parental Leave etc Regulations 1999 (the Regulations).
When can an 'international' employee bring unfair dismissal proceedings in an English employment tri
In today's increasingly global workplace many employees' roles will involve an overseas dimension. This could take a variety of forms, for example travelling and working abroad for short periods throughout the year, being seconded abroad on single or successive assignments, being permanently based overseas but reporting into a UK base, and so on.
The Equal Pay Act 1970 (EPA) seeks to avoid direct and indirect sex discrimination in relation to employees' contractual entitlements by implying into a woman's contract an equality clause. This clause ensures that where she is engaged to perform the same type of work as a male comparator, or work that is not the same but has been rated as equivalent or of equal value, the terms of her contract become as favourable as his corresponding contractual terms. The implied term cannot, however, give the woman more favourable terms and will, in any event, not operate if the employer can demonstrate that the difference in terms is genuinely due to a material factor other than sex.
In March this year, almost four years after its initial consultation exercise, the government issued for consultation draft regulations that amend the current Transfer of Undertakings (Protection of Employment) Regulations 1981 (TUPE 1981). The consultation closed in June. It was originally intended that these amending regulations, the Transfer of Undertakings (Protection of Employment) Regulations 2005 (TUPE 2005), would come into effect on 1 October 2005. However, the DTI has recently announced that TUPE 2005 will now come into effect in April 2006.
It is the Government's intention that, from 6 April 2006, employers with more than 150 employees will have a statutory obligation to consult with prospective and active members of occupational and personal pension schemes, and their representatives, before making certain specified changes to future pension arrangements. A consultation document on the draft Occupational and Personal Pension Scheme (Consultation by Employers) Regulations 2006 has just been issued.