employment law news - September 2010 - print version
Court of Appeal ruling may provide retirement guidance for
employers post DRA
Following our article in last month's Employment law
news(http://www.bllaw.co.uk/services_for_businesses/employment/news_and
_updates/employment_law_news_august_10/default_retirement_age.aspx)
on the Government's intention to phase out the Default Retirement
Age (DRA), a key age discrimination case involving partners (not
employees) in a law firm has been decided by the Court of Appeal,
giving helpful guidance as to what might be considered "objective
justification" in compulsory retirement cases. The existing
statutory retirement procedures do not apply to partnerships and
therefore Mr Seldon brought a claim of direct age discrimination
when he was retired aged 65.
The Court of Appeal held that it could be a legitimate aim to
produce a happy workplace by allowing people to "retire with
dignity" rather than confront and dismiss them for poor performance
after the age of 65. It could also be a legitimate aim to ensure
jobs and promotion prospects for younger employees and for
workforce planning purposes. These aims were consistent with the
UK's aims when it introduced the DRA exception to age
discrimination. The case also held that once it was established
that a compulsory retirement age was justified, it will normally
also be justified when applied to a particular individual. However,
permission is being sought to appeal to the Supreme Court and it is
important to note that the case involved a compulsory retirement
age that had been agreed in a partnership deed between partners of
equal bargaining power, as distinct from a company employee.
With the removal of the DRA and the statutory retirement
procedures, the options for employers wanting to dismiss employees
over 65 are essentially:
- operate a compulsory contractual retirement age, but since it
would be direct age discrimination this would have to be
"objectively justified" – that is, be a proportionate means of
achieving a legitimate aim. Employers would also need to follow a
fair procedure and have a potentially fair reason for unfair
dismissal purposes, eg "some other substantial reason" (SOSR)
- retire employees on a case by case basis, but again this would
have to be both individually "objectively justified" to avoid age
discrimination, and also be with a fair procedure and for a
potentially fair reason (SOSR). The Government's consultation
(http://www.bis.gov.uk/assets/biscore/employment-matters/docs/p/10-1047-default-retirement-age-consultation.pdf)
clearly envisages that "retirement" will no longer be one of the
potentially fair reasons for dismissal
- simply dismiss for one of the other potentially fair reasons
(capability, conduct, redundancy, illegality) under the usual
dismissal procedures
Employers now have a huge, but not unexpected, challenge in
their approach to workplace practices and the management of older
workers. It is not anticipated that there will be any significant
changes to the substantive proposals, and so early preparation will
be crucial in deciding which approach to take.
TUPE: ETO reason need not affect whole workforce
Employees from the Portman Building Society (PBS) transferred to
Nationwide Building Society (NBS) under the Transfer of
Undertakings (Protection of Employment) Regulations 2006 (TUPE). A
group of the managers from PBS resigned, arguing a breach of
contract by NBS because their job roles and responsibilities were
downgraded when they moved to NBS, and their bonuses were
significantly less. They claimed they had been constructively
dismissed or dismissed under TUPE because of a substantial
detrimental change to their working conditions, and that it was
automatically unfair.
The Employment Tribunal agreed that NBS was in fundamental
breach of contract which entitled the employees to resign, and that
the detrimental change to their working conditions also amounted to
a dismissal under TUPE. A dismissal connected to a transfer, as
this was, is automatically unfair unless it is for an "economic,
technical or organisational reason entailing changes in the
workforce" (known as an ETO reason). For this there needs to be a
change in job functions or numbers of the workforce
(standardisation of pay does not count). As the NBS product range
was so limited compared with PBS, there was a change in the
managers' job functions and so the dismissals were for an ETO
reason. However, whilst this made the dismissals potentially fair,
the ET held they were procedurally unfair because there had not
been the proper consultation required under the TUPE
regulations.
On appeal the Employment Appeal Tribunal (EAT) agreed that there
was an ETO reason. It rejected the managers' argument that an ETO
reason had to entail changes in the whole workforce. Changes in a
section of the workforce are enough.
Interestingly the EAT did not accept the ET's decision about
procedural fairness. Lack of consultation under the TUPE
regulations had not been raised as a claim by the employees and so
could not be used as a reason by the ET. Nor could the employees
have brought such a claim, because under TUPE it is employee
representatives who must bring the claim. Therefore the case was
sent back to the ET to decide the issue of procedural fairness.
Consultation on right to request time off for training
It's less than six months old but is it here to stay? The
Coalition Government has announced a consultation on the statutory
right to request time off for training (http://www.bllaw.co.uk/pdf/Microsoft%20Word%20-%20EMP_02%2010_client%20Guide_CIS_Time_for_training%20doc%20.12259150_1.pdf)
which has been in force since 6 April 2010 for organisations with
250 or more employees. The right was due to extend to all employers
from April 2011. However that, and indeed the right itself, is
being called into question by the consultation, which is looking at
whether it should be repealed, kept as it is, or extended to all
employers as originally planned. The right has been criticised for
various reasons including the costs of carrying out the request
procedure.
The consultation (http://www.bis.gov.uk/assets/biscore/further-education-skills/docs/t/10-1107-time-to-train-consultation.pdf)
is for a short period until 15 September 2010. It is part of a
review of all regulations by the Government to reduce the burden on
businesses.
Equality Act 2010 – client information sheet
The Equality and Human Rights Commission has now published
guidance (http://www.equalityhumanrights.com/advice-and-guidance/equality-act-guidance/equality-act-2010-guidance/)
on the Equality Act 2010, which is to come into force on 1 October
this year.
Although it is still not certain whether all of its provisions
will be brought into force by the Coalition Government, the
majority of employment-related ones will be. We have produced a
client information sheet (http://www.bllaw.co.uk/pdf/EMP_EqualityAct2010_0810_CIS.pdf)
on the changes under the Act, and what organisations should do and
think about in the run up to the Act's implementation.
Equal pay: Tribunal could not compare overall package of
terms
A recent Employment Appeal Tribunal (EAT) case considered
whether, in circumstances where women in fact received more than
their male counterparts for their normal working hours, they could
nevertheless bring an equal pay claim on the basis that the
percentage uplift they received for unsociable hours during their
normal working hours was less than that of men. The EAT confirmed
that that it is not correct to compare the overall package of terms
in equal pay cases and stressed that the Equal Pay Act 1970 (the
Act) is not a "fair wages" statute.
Women employed by the NHS contended that their pay had been less
favourable compared with the pay for jobs carried out predominantly
by men. In particular they received proportionately less money for
working their normal contractual hours at unsociable times. When
compared to equivalent male workers, their uplift was less. However
in general the female workers earned more. The Employment judge
considered that the uplift was part of basic pay (not being related
to overtime), and that when compared to the basic pay of the male
workers, the women's basic pay was not less favourable despite the
difference in the uplift.
The EAT agreed with the women that this was the wrong test. The
House of Lords had decided in 1988 that comparing the overall
package of benefits to determine whether a women is paid less
favourably is wrong. Rather the Act is concerned with "terms" and
each term which can be deemed a distinct provision and compared
with that of a man must be not less favourable. This is consistent
with European law and Parliament has not changed that position. In
this case the uplift was a distinct term which could be compared
and the ET would have to consider whether the uplift was less
favourable for the women, irrespective of the fact that they
actually earned more than the men.
New guidance published regarding how to lawfully recruit
refugees and asylum seekers
The UK Border Agency has published new guidance on the
pre-employment checks that should be carried out when employers
receive job applications from refugees and asylum seekers.
Employers should follow this guidance so as to adhere to current
immigration rules whilst at the same time reducing the risk of race
discrimination claims by giving adequate consideration to job
applications from refugees and asylum seekers.
The Guidance for employers on preventing illegal working: asylum
seekers and refugees (http://www.ukba.homeoffice.gov.uk/sitecontent/documents/employersandsponsors/preventingillegalworking/currentguidanceandcodes/guide-for-employers-asylum.pdf?view=Binary)
is available on the UK Border Agency Website. (http://www.ukba.homeoffice.gov.uk/sitecontent/documents/employersandsponsors/preventingillegalworking/)
For further information, please contact Michelle Lawlor on 0207
814 6906 or at michelle.lawlor@bllaw.co.uk
in our Employment team.
One in, one out rule for regulations
The Government has announced details of a new "one-in, one-out"
approach to regulations starting from 1 September 2010. Subject to
limited exceptions, ministers will not be able to introduce new
regulations with cost implications without identifying current
regulations with an equivalent cost which may be removed.
Regulations made in response to emergencies or to address systemic
financial risks will be excluded from the rule.
The rule initially applies to domestic legislation and, as many
employment rights emanate from EU law, it is not clear how much
impact this will have on employment laws to begin with. However the
Government has confirmed that it is reviewing specific areas of
burdensome regulations in the context of employment and health and
safety laws - of which the right to request time off for
training
http://www.bllaw.co.uk/services_for_businesses/employment/news_and_updates/employment_law_news_sep_10/request_time_off_for_training.aspx)
is one example. The Government has not yet confirmed its plans
regarding additional paternity leave, which is already in force for
employees with babies due on or after 3 April 2011 but which has
also been called into question, at least in its current form.
Employment law workshops: 23/24 November and 7 December
2010
Save the date! The Employment team will be holding employment
law workshops on the following dates:
- at our offices in Chandler's Ford on the afternoon of 23
November with a repeat session on the morning of 24 November
- at our offices in Oxford on the morning of 7 December.
Further details will follow in due course but please ensure you
put these dates in your diary for what promise to be informative
and stimulating events.
