UK: Employment Law Bulletin - April 2011

Last Updated: 1 July 2011

Welcome

As we reported last month, a number of significant employment law related changes came into force on 6th April 2011.

This month, there have been a number of important decisions from the Employment Appeal Tribunal ('EAT'). The EAT dealt with the issue of when employers can be liable for the discriminatory acts of an agency worker, and decided that in certain circumstances the employer could be liable – a real problem for businesses. In another case, the EAT decided that there was no obligation on employers to correct an employee's mistake about the time limit within which to lodge an ET1.

We should remind you that the government's consultation into tribunal reform ends this month.

Tribunal statistics

The Tribunals Service has published its quarterly statistics for the period 1st October 2010 to 31st December 2010. The statistics show a fall of 51% in the number of claims compared with the same quarter in 2009-10; falling back to the same level as in the third quarter of 2008-09. The number of claims received for age discrimination nearly tripled (from 1,100 to 2,900), with pregnancy and sex discrimination also rising – by 47% and 27% respectively.

Draft guidance for Agency Workers Regulations

The Department for Business, Innovation and Skills has published comprehensive draft guidance on the Agency Workers Regulations 2010 for employers and recruiters. The document is available for comments on the BIS website until 15th April 2011. The Regulations are due to come into force on 1st October 2011 and BIS will consider any feedback before finalising the guidance.

The Regulations give agency workers equal treatment to normal, permanent staff. This means giving an agency worker the same entitlements in basic working and employment conditions (e.g. conditions relating to pay, rest periods or annual leave) "as if" that worker had been recruited directly as an employee or worker to occupy the same role. However, genuinely 'temporary' agency workers, who work for less than 12 weeks, will be exempt. The 12 week period begins on 1st October 2011, so no agency workers will be able to claim these new rights before Christmas 2011.

It should be noted that equal treatment is not required in respect of all the terms and conditions that a worker would be subject to had s/he been recruited directly. Equal treatment covers basic working and employment conditions that are usually included in relevant direct employees' contracts of employment or in permanent employees' contracts as a matter of course. The principle has no effect in the case of terms and conditions that are not included in this way or in work environments in which there are no 'basic working and employment conditions'.

The Regulations will not change the employment status of agency workers.

Guidance on the Bribery Act

Guidance relating to the Bribery Act 2010 (which comes into force on 1st July 2011) has just been published. It explains procedures that commercial organisations can use to prevent bribery.

From July, it will become a criminal offence for commercial organisations (an organisation that 'carries on a business') to fail to prevent bribery. This will happen if one of your employees or contractors (A) bribes another person, intending to obtain or retain business for your business or to obtain or retain an advantage in the conduct of your business.

However, there is an important defence. If your business had adequate procedures in place designed to prevent people associated with it from engaging in such conduct, then you will not be guilty of any criminal offence. We suggest you review your businesses, carry out the relevant risk assessments and determine whether your procedures are adequate to prevent bribery. Where they are not, you should introduce appropriate anti-bribery procedures without delay. Please contact us if you would like further guidance.

Ignoring your disciplinary procedure

You could be forgiven for thinking that we are going to remind you of the importance of following your disciplinary procedure.

And of course, that's normally an important rule. But the Employment Appeal Tribunal, in a display of lateral thinking, has found a way of excusing an employer which failed to follow its own procedure. In Ezsias v North Glamorgan NHS Trust, a consultant surgeon claimed he had been unfairly dismissed. The real reason for the dismissal was that his behaviour had led to a breakdown of his relationships with colleagues at work, and they had expressed unwillingness to continue working with him. The NHS Trust did not follow its misconduct dismissal procedure, and the Employment Appeal Tribunal said this did not make the dismissal unfair because Mr Ezsias was not dismissed for his conduct, but because of the breakdown in relationships.

Don't be too heartened by this case; it was unusual. Normally, a failure to follow your own disciplinary procedure is likely – unless the breach is minor – to make a dismissal unfair even if the employee is plainly guilty of misconduct.

No duty to arrange ill-health retirement

As you know, employers are required to make 'reasonable adjustments' for disabled employees to facilitate a return to work and adjust for any disadvantages they suffer.

But there are limits. In Tameside Hospital NHS Foundation v Mylott, the Employment Appeal Tribunal said this duty does not require employers to facilitate an application for ill-health retirement. The duty to make reasonable adjustments is there to help employees back into work, not there to help them leave it.

The end of expert witness immunity

The Supreme Court has handed down a majority 5:2 decision in Jones v Kaney which means that expert witnesses are no longer immune from contract or negligence claims brought against them arising out of evidence they give in non-criminal cases. The main rationale for the immunity was that experts might be discouraged from giving their frank and honest opinions, if they went against their client's interests, if they could then be sued by their client. However, the majority of the Justices rejected this argument.

Legal fees in compromise agreements and tax

Historically, if an employee's legal fees following settlement of a claim after termination of employment are paid directly by the employer, they are exempt from tax.

However, from 6th April 2011, this changes as a result of new Regulations. Whilst almost certainly a drafting error, the effect of the new Regulations is that the employee's legal fees will only be tax deductible (assuming they are paid directly by the employer) if the payments are made under a Compromise Agreement under the Employment Rights Act 1996. This covers settlement of unfair dismissal claims, and some other (relatively uncommon) claims. But it does not cover discrimination claims – and accordingly this useful loophole has now disappeared for such settlements.

The contents of this brochure are intended as guidelines for clients and other readers. It is not a substitute for considered advice on specific issues. Consequently, we cannot accept any responsibility for this information or for any errors or omissions.

Thomas Eggar LLP is a limited liability partnership registered in England and Wales under registered number OC326278 whose registered office is at The Corn Exchange, Baffin's Lane, Chichester, West Sussex, PO19 1GE (VAT number 991259583). The word 'partner' refers to a member of the LLP, or an employee or consultant with equivalent standing and qualifications. A list of the members of the LLP is displayed at the above address, together with a list of those non-members who are designated as partners. Regulated by the Solicitors Regulation Authority. Lexcel and Investors in People accredited.

Thomas Eggar LLP is not authorised by the Financial Services Authority. However, we are included on the register maintained by the Financial Services Authority so that we can carry on insurance mediation activity which is broadly the advising on, selling and administering of insurance contracts. This part of our business, including arrangements for complaints and redress if something goes wrong, is regulated by the Solicitors Regulation Authority. The register can be accessed via the Financial Services Authority website. We can also provide certain further limited investment services to clients if those services are incidental to the professional services we have been engaged to provide as solicitors.

Thesis Asset Management plc, our associated financial services company, provides a comprehensive range of investment services and advice. Thesis is owned by members of Thomas Eggar LLP but is independent of and separate to it. No lawyer connected with Thomas Eggar LLP provides services through Thesis as a practicing lawyer regulated by the Solicitors Regulation Authority. Thesis is authorised and regulated by the Financial Services Authority. Thesis has its own framework of investor protection and professional indemnity cover but Thesis clients do not enjoy the statutory protection of solicitors' clients.

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