employment law 'top ten' of 2011
What should 2011 be remembered for in the eyes of employers and
HR professionals? Although it has been a year of Government
consultations and widespread debate about future reform,
developments in the day-to-day employment law world have continued
apace. So, with the festive season upon us, and back by popular
demand, here is our top ten list of the most important cases and
legislation from 2011 affecting employers and HR professionals.
This year's favourites are brought to you complete with clichés,
inspired by TV's 'The Apprentice', where one finalist was asked to
describe himself without using any clichés. He replied, "I'm
exactly what it says on the tin".
ten - not off the hook for negligent comment
Kicking off at number ten is the university
lecturer who successfully sued his former employers from six years
earlier for a negligent comment made to his current employers.
Having left Swindon College with a glowing reference, years later
Mr McKie took up a post at Bath University that involved
liaising with the College. A new HR manager at the College wrote to
the University saying that the College would not allow him on site
because of previous problems with him. Mr McKie was dismissed by
the University after only a few weeks' service and therefore sued
the College. The comments were held to be unfounded and the College
was liable for his losses. Despite not being part of a reference,
it was "blindingly obvious" that the comments would have an impact
on Mr McKie's employment and the College still owed him a duty of
care six years later. Comment in haste, repent at leisure.
nine - mini-trials nipped in the bud
At number nine is the Supreme Court's decision
that a teaching assistant was not entitled to be represented by a
lawyer at an internal disciplinary hearing, overturning a ruling by
the Court of Appeal. Employers had previously been left with the
small but niggling doubt that one day lawyers would be the norm in
disciplinary hearings. Though there is no such right in domestic
law, the argument goes that if it is a "determination of civil
rights", the European Convention on Human Rights gives a right to
legal representation. The Supreme Court found that the disciplinary
hearing for kissing a boy was not a determination of his civil
rights because it would not have a 'substantial influence' on the
decision of the regulatory body as to whether he was barred from
working with children (effectively ending his career). Whilst that
conclusion is highly questionable (and one judge disagreed), the
Lords sought to avoid opening the floodgates of turning public
sector disciplinary hearings into litigation, and, in so doing,
have probably reassured private sector employers as well.
eight - call a PILON a PILON
Number eight provides a salutary reminder to
get the wording of a termination letter right. An employee was
dismissed as redundant with four days' notice and, according
to her termination letter, an 'ex gratia payment' equivalent to
three months' salary. Not satisfied with this, the employee claimed
damages for her three month notice period. To the employer it may
have seemed obvious that she had already received pay in lieu of
notice, but the Employment Appeal Tribunal (EAT) ruled that calling
the payment 'ex gratia' was the employer's undoing. 'Ex gratia'
does not convey the idea of a payment the employee is already
entitled to – in fact it conveys the opposite. The employee was
awarded damages as well. The moral of the tale: make sure you
understand what a termination payment is for and what to call it,
not least because of the potentially significant implications for
tax and post-termination restrictions.
seven - a bribe in the hand or ten years in the can?
The Bribery Act 2010 at number seven was not
one to be swept under the carpet. So is corporate hospitality dead?
Thankfully not: Ministry of Justice Guidance confirms that the
intention is not to criminalise bona fide hospitality. However,
directors can be imprisoned if an offence was committed with their
consent or connivance, and the potential fine for a commercial
organisation failing to prevent persons associated with it from
committing a bribery offence is unlimited. The defence that an
organisation had 'adequate procedures' to prevent bribery requires
compliance with specific principles in the Guidance. Employers soon
realised that a one-size-fits-all anti-bribery policy will not do,
and that all aspects of the business, not just employee compliance,
have to be reviewed. The first individual convicted under the Act
was sentenced to three years in prison (six years with other
offences); it is only a matter of time before the business
community also experiences the teeth of this new Act.
six - self employed: what you see is what you get
For those organisations that engage workers on a 'self-employed'
basis, number six may have been the case of the
year. The Supreme Court held that a group of car valets, who had
signed contracts confirming they were self-employed contractors,
were in fact employees. Interestingly, in 2004 HMRC had accepted
(with some reservations) that the valets were self-employed, and
the decision highlights that being self-employed for tax purposes
does not determine status under Employment law. Although the
contracts provided that the valets were not obliged to work, and
could send substitutes, the Supreme Court smelt a rat. It found
that this did not reflect the expectations of the parties. Even if
there was no 'sham' or intention to lead HMRC down the garden path,
the Court could look beyond the written terms. It gave short shrift
to 'armies of lawyers' who seek to prevent employment status by
inserting clauses that bear no resemblance to the real
relationship.
five - falling on harder times
In a worsening economic climate, number five
provides a glimmer of hope for recession-hit businesses that are
forced to consider reducing the wage bill. The EAT ruled that
dismissal of an employee for refusing to accept a pay cut may be
fair even if the business is not 'desperate' and a pay cut is not
the only way of saving it. Out of 88 employees, only one ultimately
refused to accept a 5% pay cut in order to avoid redundancies, and
he was dismissed (though he could have accepted re-engagement on
the new terms). The EAT did not determine whether his dismissal was
fair, but emphasised that the Tribunal has to look at whether the
employer is acting reasonably in dismissing, not whether the
employee is acting reasonably in refusing. The employee's
objections will be relevant, as will the employer's reasons for the
change and its manner of consultation. Consideration will be given
to the employer's size and resources; whether a pay cut has also
been imposed on managers; what alternatives were considered; and
the effect of the 'last man standing' on other employees who have
accepted the change.
four - all's fair in the world of agency workers
Number four is the very long-awaited
implementation of the Agency Workers Regulations 2010. It's not
only a seismic shift for temporary work agencies: it also impacts
significantly on end users of 'temps'. From day one, end users
(employers) must give temporary agency workers access to the same
facilities and amenities as their directly engaged staff, and
inform them of relevant permanent job vacancies. After the magic 12
weeks on assignment (with rules as to how this is worked out) the
agency worker must be afforded the same 'basic working and
employment conditions' as comparable, directly engaged staff, which
includes pay, holiday, breaks, and paid time off for ante-natal
appointments; but excludes company sick pay, occupational pensions
and redundancy pay, amongst others. End users and work agencies
alike can be liable for certain breaches. Moreover, compulsory
information about agency workers used in the employer's business
must now be disclosed to representatives in collective redundancy,
collective bargaining and TUPE transfer situations.
three - it's a woman's world
If any business is going to get it right in a redundancy scoring
process, surely a law firm should? This employer at number
three deserves some sympathy (even if it is a rival of
Blake Lapthorn) when it tried to ensure that a solicitor on
maternity leave during redundancy selection was not disadvantaged.
Was the employer home and dry when she was not made redundant? No:
the sex discrimination claim that came in was from her male
colleague instead. Mr De Belin claimed that giving this lady a
notional top score for clients paying bills faster (because she had
no clients at the time) was treating him less favourably on grounds
of his sex, since maternity leave is gender-specific. The employer,
caught between the devil and the deep blue sea, argued that special
treatment in connection with pregnancy or childbirth is lawful. The
EAT agreed there is special protection for a woman on maternity
leave, but held that this should go no further than is reasonably
necessary to prevent her being disadvantaged. It upheld the finding
of sex discrimination: this was an unfair advantage that was not
proportionate as the scores could have been assessed in a fairer
way. Mr De Belin claimed losses of £123,000. Hindsight is a
wonderful thing.
two - leave of absence (but what kind?)
At number two is a concoction of two more
conflicting EAT decisions, a dash of proposed amendments to UK
legislation, topped with a judgment from the Court of Justice of
the European Union (CJEU). It is none other than the still
unfinished business of holiday pay and sick leave. The EAT has held
that an employee on long term sick leave, who does not request to
take holiday during the holiday year or carry it over, will lose it
and not be entitled to payment for it when employment ends. Sounds
straightforward until you look at the other EAT decision this year
saying almost the opposite, which has now gone to the Court of
Appeal. Meanwhile, the Government finally mooted changes to the
Working Time Regulations 1998 in an attempt to clarify the mess,
including how long after the end of the holiday year carryover
should be allowed. As luck would have it, this was followed by a
CJEU decision indicating that the Government's plans should be
revisited, and, unsurprisingly, this has led to further delay. So
where are we now? We are still where we were. The optimist would
say there is light at the end of the tunnel; the pessimist wonders
if this will ever be resolved.
one - the arrival of a new age
Could 80 be the new 65? Our 2011 number one is
the removal of the Default Retirement Age (DRA), the biggest shift
in thinking for employers in recent years. Rome wasn't built in a
day, and perhaps only now is the full force of age discrimination
legislation being felt. At first it appeared the Government was
shrewdly preventing employers from retiring 65-year-olds before
April 2011. But this was giving too much credit: the initial
regulations were just badly drafted, and hastily rewritten. Most
employers lost no time in axing retirement ages; those that have
not will be waiting with bated breath for Mr Seldon's case in the
Supreme Court early in 2012. What has proved harder for many
employers is uncertainty in succession planning. Asking an older
worker when they plan to retire, unless objectively justified,
could amount to age discrimination. The questionable Government
proposal for 'protected conversations' (aimed largely at this type
of situation) falls at the first hurdle, because discriminatory
conversations will not be protected. The ongoing challenge is to
educate managers that a 65, 70 or 80 year-old must be treated the
same as everyone else: from appraisals to training and performance
management. Issues remain over removing insured benefits for the
over 65s, including potential breaches of contract and difficulties
for employers that self-insure. One thing is certain: alongside the
many reforms planned for 2012, all eyes will be on the first
post-DRA decisions in the appeal courts.
