Brachers - Nice Work (Winter 2010)

Winter 2010

Nice Work

Keeping you up-to-date on HR and employment news

Welcome to the Winter 2010 Edition of Nice Work It’s been a difficult start to the year as a result of the weather conditions but I think we are all united in hoping that 2010 is a more prosperous year for all businesses.

Have you made your New Year Resolutions?

The New Year is a good time to make a few promises to ourselves…. renew the gym membership, dust off the trainers and go easy on the chocolate! But some promises are easier than others to keep and this is where we can look to the workplace.

Looking back, the period of 2008-2009 saw a slight drop in the total number of claims accepted at employment tribunals in the UK to 151,000. Out of these claims, certain areas of employment litigation received more attention than others. In particular unfair dismissal claims increased by 29% compared to the previous year, breach of contract claims increased by 31% and claims for failing to inform and consult in redundancy increased 2.5 times compared to the 2007-2008 period. Here is a look at a few reminders and key principles in these areas to help you make your workplace New Year resolutions:

With the Equality Bill expecting to receive Royal Assent in Spring 2010, discrimination is extremely topical.

We have two in-depth articles on associative discrimination and stigma damages. We also highlight recent developments in relation to holiday pay and advise what you can do if a client asks you to remove one of your employees from servicing their contract. Finally we highlight some New Year resolutions and provide our normal HR roundup detailing what is on the horizon for 2010. We hope that you enjoy this edition. Any feedback would be gratefully received as we aim to keep the publication of interest and of direct relevance to you.

Joanna Worby

Inside this issue Have you made your New Year Resolution?

Page 1

Holiday Fever

Page 3

Who do your employees ‘associate’ with?

Page 4

Stigma Damages

Page 6

Get your employee out of here!

Page 7

Training Sessions

Page 7

HR News

Page 8

What’s On The Horizon For 2010?

Continued overpage ➤

www.brachers.co.uk 01622 690691

1

➤ Continued from previous page

Unfair Dismissal The key change of 2009 was the introduction of the new ACAS Code of Practice in April. This introduced new dismissal and grievance procedures.

As the new dismissal procedures are less onerous than their predecessor many employers have opted to make changes to their disciplinary and dismissal procedures and to bring them in line with the ACAS Code of Practice.

If you have not already done this it should be added to the top of your list of New Year resolutions!

The next reminder, as obvious as it may sound, is to ensure that when following dismissal procedures you follow the correct procedure. It is alarmingly easy to miss a step in the procedure especially when you are embroiled in a complicated disciplinary / dismissal / grievance process. Carefully check to ensure that each stage of your disciplinary procedure has been followed and that the requirements set out in the ACAS Code of Practice are met. Always keep a detailed paper trail to provide evidence that a full and fair dismissal procedure was carried out.

Breach of Contract Breach of contract claims can arise from any number of contractual issues but in particular relating to payments that an employee has not received which they had believed to be contractual.

One key example is bonus payments.

Many employers have discretionary bonus clauses in their contracts of employment. Whilst this may not have raised problems in the past whilst a business was strong, as a result of the economic crisis the payment of discretionary bonuses have been less forthcoming. This can cause upset to employees who have in the past received a bonus each year as a matter of custom and practice. This can often lead to a claim for breach of contract on the basis that the discretionary right to a bonus has transformed to an express right to an annual bonus.

To avoid this sort of problem, now is a good time to review your contracts of 2

employment and bonus policies to ensure there are no ambiguous clauses or contractual rights that may leave you open to potential claims for breach of contract. If you operate a discretionary bonus scheme but pay bonuses annually as a matter of course you should consider making this an express right in the contract of employment linked to a clear bonus policy in order to avoid any uncertainty.

Failure to Inform and Consult in Redundancy Employers are obliged to inform and collectively consult with employees where they “propose to dismiss as redundant 20 or more employees at one establishment within a period of 90 days or less”. Failure to carry out the correct collective consultation can lead to financial penalties.

The obligations to inform and consult are clearly set out in legislation.

However, it is possible to be caught out by the rule when making changes to contracts of employment. When seeking to change a contract of employment it is necessary to have the express permission of the employee.

However an employee may refuse to agree to the proposed changes. In these circumstances an employer must decide whether to allow the employee to continue under the terms of the old contract or dismiss the employee and immediately re-offer them employment under the new contract.

Any dismissal in accordance with the latter will count as a dismissal for the purposes of the collective consultation requirements. Therefore if you dismiss and immediately re-engage 20 or more employees within a period of 90 days or less, the obligations to inform and consult will be triggered but as

the dismissals will have already taken place it is unlikely that you will be able to comply with these obligations. This can potentially expose you to claims for failure to inform and consult.

2010 looks to be an uncertain year and for many businesses further changes will be necessary. We therefore recommend considering this potential pitfall before embarking on a contractual change process. Active planning of any change process to take into account risks and pitfalls will help you to avoid falling foul of the collective consultation regulations.

There are a whole host of other resolutions that you could make for the New Year but even if you don’t quite manage to renew your gym membership if at the very least you review your disciplinary policies and procedures, check your contractual bonus provisions and carefully plan any contractual change processes you should be onto a strong start for a productive and problem free 2010.

Richard Thompson

Nice Work Keeping you up-to-date on HR and employment news Winter 2010

Holiday Fever!

Question...

I am the manager at ABC Plc. One of our workers, Mr Jones, recently took a week’s statutory holiday. He went to Egypt and on his return, he said he had been ill with an upset tummy throughout his holiday period. He has asked to reschedule the holiday for a later date. Do I have to agree to this request? What steps, if any, should I take so I can deal with similar situations in the future?

Answer...

The legal position The recent decision of the European Court of Justice (ECJ) in Pereda v Madrid Movilidad SA made it clear that a worker who is incapacitated during a period of previously-scheduled statutory holiday should, as far as the Working Time Directive is concerned, have the right to reschedule the holiday for a later date. Moreover, if the worker remains sick until the end of the relevant leave year, the Directive requires him to be allowed to reschedule that holiday in the next leave year.

However, workers in Great Britain are not necessarily entitled to the “rights” that the Directive intends them to have. Private sector workers, such as Mr Jones in this case, derive their rights from the UK law as set out in the Working Time Regulations 1998 (WTR): they cannot bypass the WTR and bring a claim against their employer (ABC Plc) based solely on the Directive.

This is important, because the Pereda decision does not sit easily with the WTR, which do not appear to allow statutory holiday either to be rescheduled or carried over to the next leave year.

Courts and tribunals in the UK are obliged, if “possible”, to interpret the WTR in the light of the Pereda case, but it is questionable whether they will feel able to do so.

There is likely to be case law on this www.brachers.co.uk 01622 690691

point in the near future but, for the time being, employers’ obligations under the WTR with regard to sickness-affected holiday are unclear.

Options for the employer As it is unclear what your obligations are under the WTR, you have a choice as to whether to allow or refuse Mr Jones request.

• You could refuse and argue that the WTR do not currently allow this and wait to see how the law is later interpreted.

• You could refuse but on a technicality because he did not comply with your sickness absence procedure by failing to report the sickness when it happened

substituting sickness absence for paid holiday less attractive for the worker.

Where contractual sick pay is provided, there is no reason why the strategies that employers usually adopt to prevent abuse (such as obliging workers to report sickness to their manager on the first day, and requiring medical evidence for longer absences) should not continue to apply if sickness occurs during holiday.

Recording and monitoring sickness absence properly will help identify abuse of the system. Workers should be made fully aware that any such abuse could lead to disciplinary action.

Maria Passemard

• You could be generous and allow it to be rescheduled.

If you allow the leave to be resheduled but are concerned about this right being abused (for example, by workers who return from holiday in apparent good health, but claim to have been sick for some or all of their holiday) you could adopt a policy allowing the rescheduling of holiday in some circumstances, while taking steps to safeguard against abuse.

Abuse is more likely if employees are entitled to contractual as opposed to statutory sick pay where the three-day waiting period (during which no SSP is due), together with the low value of SSP, are likely to make the option of 3

Who do your employees ‘associate’ with?

A new ruling on the concept of ‘associative discrimination’ was handed down by the Employment Appeal Tribunal (EAT) in November 2009. This has further expanded the concept of discrimination and enables a claimant to bring a claim for disability discrimination, even if the claimant himself is not disabled.

The Law The Disability Discrimination Act 1995 (the DDA) prohibits discrimination against a disabled person and harassment relating to the disabled person’s disability.

A person directly discriminates against a disabled person if, on the grounds of the person’s disability, he treats that disabled person less favourably than he treats, or would treat, a person without that particular disability whose relevant circumstances, including abilities, are the same as, or not materially different from, those of the disabled person.

The DDA does not expressly protect those associated with a disabled person i.e. carers or family members.

Facts Ms Coleman was a legal secretary at Attridge Law LLP and was the primary carer for her young disabled son. She alleged that she suffered unlawful discrimination by the firm on account of her son’s disability (‘discrimination by association’) and that she had to resign as a result. The treatment complained of was that she had not been allowed to return to her former post after maternity leave, that she was criticised for taking time off to look after her son, threatened with disciplinary proceedings for being late and was refused a flexible working request following her son’s operation.

Ms Coleman 4

brought proceedings in August 2005 against her former employer for unfair dismissal and associative disability discrimination, even though the DDA does not on its face apply to ‘associative discrimination’. Ms Coleman argued that the effect of the Equal Treatment Framework Directive in EU Law was such as to prohibit discrimination ‘on the grounds of disability’ (and such a broad definition would cover associative discrimination). She said it was open to the tribunal to construe the DDA accordingly (since members of the European Union must, “so far as is possible”, interpret national law so that it achieves the desired effect of the Directive; this is known as the principle of indirect effect).

The case was sent to the European Court of Justice (ECJ) in 2006 which agreed that the effect of the Directive was to cover associative discrimination. This case came back to the tribunal which, in November 2008 construed the DDA accordingly so that they could hear the claim. This decision was appealed and in November 2009 the EAT confirmed that wording should be added to the DDA to ensure that those associated with a disabled person can also receive protection under the DDA.

Nice Work Keeping you up-to-date on HR and employment news Winter 2010

The most obvious and immediate impact of this decision will be on those who care for a disabled person. Such individuals are already protected by virtue of them being able to make a request to work flexibly and the right to time off for family emergencies. However, they will now potentially have another alley to explore in terms of being able to make a claim under the DDA. It has been suggested by academics that a similar approach to the Employment Equality (Age) Regulations 2006 would enable carers of young and old alike to greater protection, irrespective of whether those for whom they care are disabled.

Could it be any clearer?

What’s changed?

The ECJ decided in July 2008 that the Directive does prohibit against ‘associative disability discrimination’. This meant that, since July 2008 everybody in the public sector could rely on this protection (since European Union Law is only applicable to public bodies). Those in the private sector had to wait until November of this year when the EAT made their ruling.

The EAT decided in November 2009 that additional wording should be read into the DDA to ensure that everybody is protected from direct disability discrimination and harassment on the grounds of their association with a disabled person. The protection extends to all those associated with a disabled person – this therefore includes not only carers but also possibly those who live with, or are related to a disabled person.

The president of the EAT observed that the what matters is that the putative victim has suffered adverse treatment on a prescribed ‘ground’, namely disability, and the fact that the disability is not his own is not of the essence. It is sufficient that disability is the reason for the treatment; the disability may be that of the claimant or some other person. Furthermore, there is no requirement to prove any “association” between the claimant and the disabled person.

Implications Associative discrimination is not a new concept in English law – it already exists on the grounds of race, religion or belief and sexual orientation. However, The Equality Bill proposes to extend the concept to age and sex discrimination so that it pervades all strands of discrimination law. www.brachers.co.uk 01622 690691

What the Equality Bill does not do is set out clear wording, as suggested by the president of the EAT in Coleman, stating clearly that associative discrimination will be covered by the Bill. The scope of the wording remains broad and it has been questioned as to why clear wording is not explicitly included in the Bill regarding associative discrimination.

Possibly the most important point in the article…

Of fundamental importance is that associative discrimination does not extend to the duty to make reasonable adjustments.

Therefore, an employer does not have to make reasonable adjustments within the workplace to help an employee who is associated with a disabled person. The protection only extends to direct discrimination and harassment of an employee who is associated with a disabled person.

Conclusion It is important not only to be aware of each employee’s circumstances, in so far as this is reasonable and possible, but also to consider whether their absences, sickness, stress etc may be related to the fact that they are caring for a disabled person. They should not be treated less favourably because of that under the new ruling in Coleman v Attridge Law. This demonstrates the importance of consultation and discussion with employees and listening to their reasons for being late or absent from work, for example. If it happens to be because they are caring for somebody with a disability, they may now have recourse under the DDA, provided it is still the disability itself which is the reason for the less favourable treatment.

Gemma Herrick 5

Stigma Damages Some of the football fanatics among us may recall the furore last year surrounding Kevin Keegan’s exit from Newcastle FC and the exorbitant amount of compensation he subsequently claimed - a cool £16.5 million.

Keegan claimed “stigma damages”, arising out of his “stigmatisation” brought about by Newcastle FC and his difficulty in obtaining employment again as a “top flight manager”.

brought a discrimination claim.

The case involved Mr Chagger who was employed by Abbey as a trading risk controller. Mr Chagger was

So When Are Stigma Damages Awarded?

A stigma award for personal loss of reputation is a loss which is normally excluded from compensation awarded for unfair dismissal but there is an exception to the rule. In the case of Malik v BCCI [1997] the claimant claimed that his former employer had “conducted itself in a manner calculated or likely to destroy or seriously damage the relationship of trust and confidence between them, causing him loss of reputation and employability.”

The House of Lords accepted the claimant’s arguments and held that the corrupt and fraudulent practices adopted by the bank had so tarnished the reputations of those who had worked there that their employability was adversely affected. The Lords were careful to point out that it will be rare for a claimant to recover such compensation and that to do so they must show dishonest and corrupt conduct on the part of their employer, rather than mere incompetence.

What About Discrimination Compensation?

In the recent case of Chagger v Abbey National plc and another [2009], the Court of Appeal held that where a dismissal is discriminatory, the dismissing employer may be liable for “stigma” damages where potential employers are unwilling to take on that employee because he or she has 6

subsequently selected for redundancy from a pool which included himself and one other employee, a white female. Mr Chagger issued tribunal proceedings for racial discrimination, unfair dismissal and breach of contract.

At first instance the tribunal held that he should not receive compensation for any “stigma” he had endured in the job market because the bank should not be liable for the actions of third party employers.

The Court of Appeal however held that an employer who is responsible for a discriminatory dismissal should be held liable for the employee’s financial loss suffered because of the stigma associated with bringing a discrimination claim.

The Court explained that stigma damages will not necessarily come under a separate head of loss but will usually be one of the factors to be taken into account when a tribunal assesses how long the claimant will be without a job (i.e. when assessing the

claimant’s future loss).

However, in this case where there was substantial evidence that the claimant had tried to mitigate his losses (by seeking other jobs) and such attempts had failed, it was determined that In such circumstances, the employment tribunal may make an award in one of 2 ways: (1) a payment representing the period during which the stigma operates or (2) a lump sum, similar to a “Smith v Manchester” award in personal injury cases.

The Court of Appeal noted the following, in explaining its decision:• Employees can find it extremely difficult to prove that they have been victimised by third party employers because of the fact they have brought discrimination claims.

• Tribunals should only compensate for stigma loss where the employee can adduce evidence they have been severely prejudiced in the job market due to their having brought proceedings.

Summary/Learning Points The facts of the Chagger case are topical as the dismissal was by reason of redundancy. In this difficult economic climate, therefore, there is the potential for employees to claim that their dismissal (whether for redundancy or another reason) was discriminatory.

Employers should ensure their dismissal procedures are fair and objective or they may risk a heavy bill in the tribunal which could include an award for stigma damages, provided the claimant employee can show that their potential employers knew about their dismissal.

Ellie Brown

Nice Work Keeping you up-to-date on HR and employment news Winter 2010

Launch of

Get your employee out of here!

What do you do if you supply a worker to a third party and they demand that he does not continue to work on their contract. If you are unlucky both you and your employee could find yourself entangled in a claim for unfair dismissal due to decisions made by the third party that are beyond your control.

In Henderson –v- CST Limited [2009] UK EAT/0209/09/SM the EAT stated that if an employer had done everything that they reasonably could to avoid or mitigate the injustice brought about by the stance of the third party client – most obviously by getting them to change their mind and if that were not possible, to find alternative work for the employee - then a failure resulting in the dismissal of the employee would be, for the purposes of the statute, substantively fair.

Therefore as an employer, you cannot simply dismiss an employee at the behest of the third party, you must consider the injustice that would be caused to your employee and act reasonably to attempt to avoid or mitigate that injustice.

What is reasonable will depend upon individual facts but the longer an employee’s length of service the more that may well be expected.

Brachers Training On 4 March 2010, at the Kent HR conference, we will be launching Brachers Training. Many of you will have attended our sessions in the past so what is different?

We appreciate how valuable training is to our clients and the need for some structure as you plan individual development within your teams.

So rather than run ad hoc sessions we plan to make training more accessible. We will: • publish a calendar of all planned training sessions for 2010 • publish a detailed list of all training and workshop sessions that we can offer together with detailed overviews, which can be purchased by organisations or groups and run at a location of your choice (or our training suite).

Please have a look at our website www.brachers.co.uk in March for further details.

As a minimum you should:

CIPD

a) be satisfied that an ultimatum is actually being given to you to remove this employee from the contract b) consider the injustice that would result to your employee if they were dismissed c) consider what steps if any you can take to attempt to change the third party’s decision d) consider whether you can offer alternative employment and/or reorganise your business so that the employee does not have to work for this client.

We are delighted to announce that Maria Passemard, partner, has joined the Mid Kent Branch of the CIPD as a committee member. We are really pleased to be working with the CIPD to strengthen our links with the Kent HR community.

We have agreed to present an Employment Update on 27 April ( 6pm for 6.30 pm - 8pm finish) at our premises at Medway house and there are lots of other exciting HR events to look forward to in the year ahead.

For more details of events please visit http://www.cipd.co.uk/branch/kent/events

Where an employer has “done their best without success” to avoid or mitigate any injustice caused by the stance of the third party the eventual decision to dismiss should be fair provided the ACAS code is followed. I am afraid it will be a matter of evidence and determination by the Tribunal as to whether any employer has or has not “done their best”.

Joanna Worby www.brachers.co.uk 01622 690691

7

Meet the Employment Team

What’s on the Horizon for 2010?

Joanna Worby Partner joannaworby@brachers.co.uk

Catherine Daw Partner

Drop In Annual Compensation Limit

catherinedaw@brachers.co.uk

The maximum compensatory award limit in a Tribunal drops from £66,200 to £65,300 from 1st February 2010.

Maria Passemard Partner

“Fit” Rather Than “Sick” Notes The new “fit notes” are expected to be introduced in Spring 2010. The new forms will hopefully provide greater information to employers on an employee’s medical condition as they give GPs the opportunity to state if the patient is fit for some work or for no work at all and to comment on whether adjustments (such as a phased return to work, altered hours, amended duties and/or workplace adaptations) would be beneficial. However, this is unlikely to negate the requirement to obtain a specialist medical report where the employer suspects that the employee’s condition may amount to a disability.

New Right to Request time off to Train The Apprenticeships, Skills, Children and Learning Act 2009 received Royal Assent on 12 November 2009, and the provisions relating to the new right to request unpaid time off work to undertake study or training will come into force on 6 April 2010 for employers with 250 or more employees.

The new “right to request” will be available to employees who have completed 6 months employment where they consider that the training will improve both their effectiveness at work and the performance of their employer’s business.

Whistleblowing: Regulators to be Informed of PIDA Claims The Department for Business, Innovation and Skills has clarified its proposals to give employment tribunals the power to pass on whistleblowing (Public Interest Disclosure Act 1998) allegations arising during claims to a prescribed regulator in claims arising on or after 6 April 2010.

Default Retirement Age Consultation The Government has brought forward its review of the default retirement age (DRA) from 2011 to 2010 and, in light of the High Court’s comments in the “Heyday” case there appears to be a strong likelihood that the Government will increase the DRA in the near future.

Normal Minimum Pension Age The normal minimum pension age (NMPA) is the earliest age at which a member of a UK registered pension scheme can ordinarily draw their pension. This is currently 50 and will increase to 55 on 6 April 2010.

8

mariapassemard@brachers.co.uk

Darren Stevens Partner darrenstevens@brachers.co.uk

Stephen Robson Solicitor stephenrobson@brachers.co.uk

Richard Thompson Solicitor richardthompson@brachers.co.uk

Gemma Herrick Solicitor gemmaherrick@brachers.co.uk

Angela Ruminski Trainee Solicitor angelaruminski@brachers.co.uk

Richard Powell Consultant Barrister

Nice Work

Editor Joanna Worby Somerfield House, 59 London Road, Maidstone, Kent ME16 8JH Telephone: 01622 690691 Fax: 01622 681430 --------------------Medway House, 81 London Road, Maidstone, Kent ME16 0DU Telephone: 01622 690691 Fax: 01622 695337

“Nice Work” is a summary of recent developments.

It should not be regarded as a substitute for legal advice.

The Employment Team will be pleased to provide further information and advice on specific facts.

This newsletter is printed on 75% recycled stock

Nice Work Keeping you up-to-date on HR and employment news Winter 2010