Early Bird Annual Update Ipswich

THE BIG ANNUAL UPDATE OUR ROUND UP OF DEVELOPMENTS FOR 2009

Stephen Anderson Associate, Birketts LLP solicitor, mediator and collaborative practitioner

Jolyon Berry Key legislative changes of 2008/2009 Contracts of employment, to include: employee status and the effective date of termination The sick pay/holiday pay debate Constructive and unfair dismissal Ben Conway Discrimination, to include: age, race, sexual orientation and equal pay Lisa Hayward TUPE Looking Ahead/The Equality Bill

Supreme Court (House of Lords) Court of Appeal (CA) EAT ET High/ County Court ECJ Binding Advocate General (Influential)

KEY LEGISLATIVE CHANGES OF 2008/2009

KEY LEGISLATIVE CHANGES OF 2008/2009: Disciplinary and grievance procedures (6 April 2009) – Repeal of the Statutory Dispute Resolution Regulations. Introduction of the new statutory ACAS Code of Practice and accompanying guidance. Immigration rules (November 2008 & March 2009) – Bringing into force provisions relating to skilled migrants filling gap in UK labour market (Tier 2), those travelling temporarily to the UK primarily for non-economic reasons (Tier 5) and certain students (Tier 4).

KEY LEGISLATIVE CHANGES OF 2008/2009: Flexible working (6 April 2009) – Extending the right to request flexible working to parents of children aged 16 or under. Working Time - Statutory annual leave increased from 24 days to 28 days (1 April 2009). Average weekly working time limits for doctors in training reduced to 48 hours (1 August 2009).

Employee Status (1) Shareholders & Directors Can a shareholder also be an employee? Yes, a person who is a shareholder and director of a company can also be an employee of that company… Secretary of State for Business Enterprise and Regulatory Reform v Neufeld and Howe [2009] CA A controlling shareholder and director of an insolvent company was held to be an employee and therefore entitled to claim unpaid debts such as pay, notice pay and holiday pay. Nesbitt and Nesbitt v Secretary of state for trade and Industry [2007] EAT The fact that a claimant is a majority shareholder and a director of the employer should not lead a tribunal to conclude that the claimant is not an employee, unless the contract between the company and the “employee” was a sham.

Employee Status (2) What makes someone an employee? The Court of Appeal gave guidance…. Surrounding circumstances Board minutes Payment method Capacity in which the person does the work Genuine contract, or a ‘sham’?

Effective Date of Termination (1) Gisda Cyf v Barratt [2009] CA The Effective Date of Termination (EDT) is the date on which the employee has actual knowledge of the dismissal, here, the date the employee read the letter from her employer informing her that she had been dismissed. Employers should take care how they inform employees that they have been dismissed. There may be difficulties in proving when an employee had knowledge of the dismissal where normal post is relied on to inform them, consider ‘special delivery’ or hand delivery.

THE SICK PAY/HOLIDAY PAY DEBATE

The Sick Pay/Holiday Pay Debate (1) Stringer and Others v HMRC Workers continue to be entitled to four weeks’ minimum annual leave while on sick leave. What does this mean? Employees on long term sick leave must be allowed to take their holiday while on sick leave, carry it forward or be paid for it in lieu on termination. Issues? WTR expressly provide that 4 weeks of annual leave cannot be carried forward. Is the carrying forward of the other 1.6 weeks is discretionary?

The Sick Pay/Holiday Pay Debate(2) Pereda v Madrid Movilidad SA [2009] ECJ Where a worker does not wish to take annual leave during a period of sick leave, annual leave must be granted to him or her for a different period. What does this mean? There is a risk that tribunals will reinterpret the Working Time Regulations to give effect to European law. Public sector employers bound by the decision. Workers who fall ill during their annual leave may be able to insist on having their leave reclassified as sick leave and their annual leave ‘reinstated’ to be taken at a different time. Practical Advice Review handbook terms re sickness and holiday Consider policy under which staff only get SSP if sick when on holiday (regardless of sick pay at "normal times") and then only if supported by verifiable medical notes to cover entire period.

Health Questionnaires Does an applicant owe a duty of care to a potential employer when answering a health screening questionnaire? Yes – Cheltenham BC v Laird [2009] HC Cheltenham BC brought claim against its ex-managing executive for almost £1 million for not disclosing her history of mental/stress problems. Finding – an applicant does owe a duty of reasonable care when answering questions but the claim failed due to insufficiently precise questions. e.g: Do you normally enjoy good health? Do you have either a physical /mental impairment? Have any of your near relatives suffered from mental trouble? BUT – unusual case and beware of the Disability Discrimination Act. Also note Government’s proposals for change.

CONSTRUCTIVE AND UNFAIR DISMISSAL

Constructive and Unfair Dismissal (1) R (G) v The Governors of X School and Y City Council [2009] HC In limited situations an employee may have the right to legal representation during an internal disciplinary hearing. The statutory right will still be sufficient in the majority of cases. The serious nature of the allegations and the consequences of their being proved were persuasive in this case. Employers should carefully consider a request for legal representation if a disciplinary hearing requires the employer to refer the matter to another body that does not have the safeguard of the individual being represented.

Constructive and Unfair Dismissal (2) Kulkarni v Milton Keynes Hospital NHS Foundation Trust [2009] CA The Court of Appeal held that a doctor was contractually entitled to be represented at an internal disciplinary hearing by a lawyer instructed by the Medical Protection Society. The Court of Appeal held that an express term of his contract did entitle him to be represented at an internal disciplinary hearing by a lawyer instructed by the Medical Protection Society. They arrived at this decision by construing the relevant section of the MHPS. The Court of Appeal also suggested that had it been required to do so, it would have held that Article 6 of the ECHR was applied and that in circumstances such as this case (where the employee was facing what was in effect a criminal charge), it implied a right to legal representation in internal proceedings.

Discrimination (1) AGE DISCRIMINATION: Rolls Royce plc v Unite Use of length of service in redundancy selection can be lawful in some circumstances. It should still be a “proportionate means of achieving a legitimate aim”. It should not be the sole criterion, but could be useful in a “tiebreak” situation.

Discrimination (2) AGE DISCRIMINATION Heyday ECJ judgement delivered. ECJ found – a national rule which permits employers to dismiss employees aged 65 or over for retirement can, in principle, be justified as a “legitimate aim” and the means of achieving that aim are “appropriate and necessary”. The case returned to the High Court (July 2009) to decide whether the UK compulsory retirement age of 65 is, in fact, justified. The High Court has decided the designated retirement age of 65 is not unlawful.

Discrimination (3) DISABILITY DISCRIMINATION Coleman v EBR Attridge Law LLP and another [2008] ET Tribunal held that DDA covers associative discrimination i.e. discrimination on the grounds of someone else’s disability. Direct discrimination referred to as being “against a disabled person”. Harassment referred as relating “to the disabled person’s disability”. Tribunal read the words “or a person associated with a disabled person” into the DDA to implement the Equal Treatment Framework Directive. NB. Government’s proposals in the Equality Bill.

Discrimination (4) DISABILITY DISCRIMINATION Child Support Agency (Dudley) v Truman [2008] EAT Disability related discrimination comparator test changed in Malcolm case. For disability related discrimination, compare claimant to "others to whom that reason did not apply" i.e. people who do not have the disability. Confirmed the Malcolm principle applies to the employment field. Claims for disability related discrimination now hard to bring. Emphasis now on reasonable adjustments. NB Government’s proposals for change.

Discrimination (5) RACE DISCRIMINATION Leeds City Council v Woodhouse [2009] EAT Employers can be liable for discriminatory actions by their employees against third parties who they do not employ. This may be relevant to clients or end-users in tri-partite arrangements, such as outsourcing or agency work. Avoid through the use of clear policies, training and effective line management. NB Government’s proposals in the Equality Bill.

Discrimination (6) RELIGIOUS BELIEF DISCRIMINATION Nicholson v Grainger plc [2009] ET Beliefs about climate change can be “beliefs” for the purposes of the Employment Equality (Religion or Belief) Regulations 2003. The belief would have to go beyond a “mere opinion” and give rise to a moral order similar to most religions.

Discrimination (7) SEXUAL ORIENTATION DISCRIMINATION English v Thomas Sanderson Ltd [2008] CA Banter can constitute harassment on the grounds of sexual orientation even if the victim is neither gay nor genuinely perceived to be gay.

Equal Pay Coventry City Council v Nicholls [2009] EAT Where there is a group of employees that is predominantly male, and another that is predominantly female, there will need to be genuine material factors, not related to sex , if they are paid different amounts. McAvoy and others v South Tyneside [2009] EAT A male claimant can pursue a “piggyback” equal pay claim by comparing himself to a woman engaged on like work, work rated as equivalent or work of equal value where that woman has succeeded in an equal pay claim with a higher paid male comparator.

TUPE (1) Oakland v Wellswood (Yorkshire) Limited [2009] CA TUPE 2006 – insolvency provisions. Reg 8(6) “ Relevant insolvency proceedings” – not with a view to liquidation of assets (“non-terminal”). Effect: certain financial liabilities do not transfer. Employees do. Reg 8(7) Transferor is subject to bankruptcy or analogous proceedings – with a view to liquidation of the assets (“terminal”). Effect: Employees do not transfer nor do the financial liabilities. BIS Guidance – sets out the SOS view on specific types of insolvency proceedings. Administration – according to BIS is non-terminal. Mr W transferred.

TUPE (2) Gutridge and Sodexo Ltd and another [2009] CA Employees were cleaners who transferred to Sodexo under TUPE in July 2001. Equal pay issues culminated in a claim in December 2006. The cleaners compared themselves to male maintenance assistants. Sodexo did not have any maintenance assistants. These comparators were employed by the transferor and they had not transferred with the cleaners in 2001.

TUPE (3) Gutridge and Sodexo Ltd and another –continued Sodexo argued that the claims were out of time as they had to be brought within six months of the transfer date. The CA held that: Claims for equal pay arrears accumulated during employment with the transferor could be brought against the transferee . The six month limit related to employment with the transferor ; and Could refer to arrears going back up to a max of six years from the date of claim. Transferees should be aware that they can be liable for inherited and compounded equal pay claims long after the date of a TUPE transfer.

Looking Ahead…(1) Changes which occurred with effect from 1 st October 2009 Employers prevented from including tips in the minimum wage. Increase in maximum weekly wage from £350 to £380 for unfair dismissal and redundancy (suspends order to uplift at usual time of February 2010) Increase in NMW to £5.80 an hour (adults), £4.83 (development rate) and £3.57 (16 and 17 year olds). Centralised vetting for people working with children and vulnerable adults

Looking Ahead…(2) LOOKING AHEAD TO 2010… Equal treatment for agency workers (date tbc but consultation closed on 31 July 2009). Equality Bill (Autumn 2010). Review of compulsory retirement age (date tbc).

Looking ahead …(3) AND BEYOND… Consultation launched on 21 July 2009 on proposals to tackle false self-employment in the construction industry. Consultation concluded on proposal to replace doctor’s “sick notes” with “fit notes”. Consultation on proposals for the specific public sector equality duties under the Equality Bill 2009 – closes 30 September 2009.

Equality Bill – The highlights (1) The Equality Bill’s two key aims : To harmonise discrimination law. To strengthen discrimination law to support progress on equality. Brings together existing discrimination law and makes some significant changes. Received its second reading on 11 May 2009, planned to receive Royal Assent in Spring 2010 and come into force Autumn 2010 on a phased basis.

Equality Bill – The highlights (2) Key changes of particular interest: A new public sector duty to consider ‘socio-economic disadvantage’ – public sectors employers will need to consider this when deciding how to deliver services. A new unified equality duty on the public sector – this brings together the three existing duties (race, disability and gender) and extends it to gender reassignment, age, sexual orientation and religion or belief. It will also cover the legal requirements on equal pay. Public bodies will need to tackle discrimination and promote equality on all the key diversity strands. Reporting of inequalities – the legislation creates a power for the Government to require public bodies (with 150 or more employees) to report significant inequalities in areas such as gender pay, ethnic minority employment and disability employment.

Equality Bill – The highlights (3) Equal pay transparency – the enforceability of “pay secrecy” clauses will be limited and a power will be created to enable regulations to be published requiring large employers (250 or more employees) to report on their gender pay gap. Harmonised definitions – the definitions of direct and indirect discrimination and concept of justification will be harmonised across all protected grounds and in the case of direct discrimination and harassment will cover “associative” and “perceptive” discrimination. Employers will be explicitly liable, in some circumstances, for harassment by third parties in the workplace. Recast the concept of disability-related discrimination – and in doing so sidestep the effects of Lewisham v Malcolm.

Equality Bill – The highlights (4) Extending positive action – allowing employers to take proportionate measures to overcome a perceived disadvantage or to meet specific needs based on a protected characteristic. Employers permitted (but not required) to take under-representation of particular groups into account when selecting between two equally-qualified candidates. Multiple discrimination – specific provision for claims of multiple discrimination based on a combination of no more than two protected characteristics. Pre-employment health questionnaires? – proposals to implement new provisions on the perceived problems experienced by job applicants with a history of health or disability issues when faced with a pre-employment health questionnaire. Watch this space…

Equality Bill – The highlights (5) Strengthen enforcement – this allows tribunals to make wider recommendations in discrimination cases, going beyond the individual involved. The Government is also exploring how cases can be brought on combined multiple grounds, e.g. age and gender, and allowing representative actions e.g. trade unions making cases on behalf of groups of people.

Early Bird Annual Update Ipswich

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