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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.

For further information on any of the issues covered in the above publication, you can contact a member of our Employment law team based in Southampton, Oxford and London or alternatively email us at employmentinfo@bllaw.co.uk.
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