UK: Employment Law Bulletin - March 2011

Last Updated: 4 July 2011


A few years ago, the DTI (as it was) announced all major employment law changes would be limited to April and October each year; to make it easier for employers to plan ahead. Next month is a big one for employment law changes; the biggest change being that 5th April 2011 is the last day on which you can serve six months' notice of intention to retire an employee. Try retiring an employee on or after 1st October 2011, if you haven't served the proper notice, and you're going to face problems with unfair dismissal and age discrimination claims. We address what you need to do in the first article in this month's bulletin.

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Compulsory retirement

It's finally here. Unless you serve a notice giving notice to retire an employee on or before 5th April 2011, you will probably find yourself at the wrong end of an age discrimination and unfair dismissal claim if you retire an employee. Any compulsory retirement will only be permitted after 1st October 2011 if it is "objectively justified", which is unlikely to be easy to achieve (note: some exceptions will remain for dismissals up until October 2012 if certain notice provisions have been followed – always provided the first notice of intention to retire is give on or before the crucial date of 5th April 2011).

If experience to date is anything to go by, tribunals are unlikely to be sympathetic to employers who cling to the old ways and think that they can continue to dismiss somebody just because they have reached a particular age.

Many employers are spending these last weeks reviewing their personnel files and issuing (the minimum) six months' notice of retirement to employees who will have reached 65 by 1st October 2011. Whether or not you do this, you need to think carefully about amending contracts of employment and making sure your company adjusts to the implications of having an older workforce – including more focused appraisals and performance management of all employees, not just those who reach a certain age.

Other changes on 6th April 2011

The other main changes taking place on 6th April 2011 are:

  • Positive Action: you will be able to positively discriminate in favour of employees or applicants with protected characteristics (women, ethnic minorities, etc) when appointing or promoting; provided the candidates are otherwise equally qualified and you are doing so in order to address an imbalance in the workforce.
  • Statutory Maternity, Paternity and Adoption Pay: this increases from £124.88 to £128.73 per week.
  • Statutory Sick Pay: this increases from £79.15 to £81.60 per week. Additional paternity leave: as well as the existing two weeks' paternity leave at the time of a baby's birth, a father will now be able to take up to 26 weeks' paternity leave once the mother has returned to work; provided the leave does not extend beyond the child's first birthday. The father can be paid up to any unexpired portion of the mother's statutory maternity pay.
  • Employer-supported childcare: new entrants to employer-supported childcare schemes will only receive tax relief at basic rates (existing members will continue to receive tax relief at higher rate).
  • Immigration: the number of people allowed to enter the UK under tier 2 of the points-based system will be limited to just over 20,000 a year. Employers will no longer receive a general allocation of tier 2 sponsorship certificates; you will have to apply on a case-by-case basis. Note that the government has announced it will no longer be extending the right to time off for training to small employers (with less than 250 employees) from this April.

The Royal wedding

We have been receiving enquiries about whether employers must give employees the day off to watch the marriage of Prince William with Kate Middleton on Friday, 29th April 2011.

The day has been declared a bank holiday. This does not necessarily mean that staff are allowed a day's holiday from work. It will depend on the wording of their contracts of employment. If their contracts expressly allow them to have bank holidays off, then that is conclusive. If their contracts do not, but just provide that they are allowed (say) 28 days paid holiday a year, then ultimately you as employer have the final say on what days your workforce are allowed to take.

Having said that, you are likely to find a higher absence rate than normal – much like World Cup days – if you refuse employees the chance to take the day off to watch the wedding. Think carefully about which staff are critical to have working on 29th April, and which are not. Be aware that it will be difficult to dismiss any staff for taking the day "sick" unless you can prove they were not telling the truth; which will not be easy. A Royal Wedding comes around once a generation; sometimes flexibility is part of the cost of doing business.

Pre-Pack administrations caught by TUPE

The Employment Appeal Tribunal has decided, in OTG Ltd v Barke, that pre-pack administrations are caught by the Transfer of Undertakings (Protection of Employment) Regulations 2006. This means that the rights of all employees from the insolvent company transfer to the new company, making it far more expensive (if not impossible) to rescue an ailing business and, ironically, undermining the whole purpose of the TUPE regulations which is to protect jobs. This is not the result of UK laws, or decisions of the courts which fail to recognise business needs, but is the implementation of an EU Directive which the UK courts can do little but follow.

Equal pay

Equal pay claims are costing local authorities hundreds of millions of pounds. Private sector businesses have suffered less from equal pay litigation, but statistics continue to show a very clear gender gap for pay, with a recent report claiming that women on average earn 16% less than men, widening to 27% less for women aged 40.

The High Court has recently held, in Ashby & others v Birmingham City Council, that employees are entitled to bring equal pay claims in the civil courts up to six years after their employment finishes; provided there is a good reason for not bringing employment tribunal claims within the "standard" six months after employment finishes. This decision will shock many employers, who may find themselves vulnerable to a dated equal pay claim against which they have little ability to defend themselves, relevant personnel having left and recollection for disparities in pay having long ago dimmed.

Redundancy selection after TUPE transfer

It is often necessary to make redundancies when buying a business, particular if there is overlap in the functions between the old and new businesses.

A practical problem can arise with scoring employees from the "new" business who have been acquired under the Transfer of Undertakings (Protection of Employment) Regulations 2006. The incoming employees are likely to be scored by somebody from the incoming business, as otherwise they can legitimately claim it is unfair for them to be scored by someone with no knowledge of them. The existing employees, by contrast, will be scored by someone from the existing business.

The Employment Appeal Tribunal has stated, in First Scottish Searching Services v McDine, that it is not necessary to have any moderating of the two sets of scores. As long as the employer goes about things reasonably and objectively, the lack of a system of moderation will not make any redundancy dismissals unfair. This decision is a welcome dose of common sense into the complicated and sometimes absurd world of TUPE.

Industrial action

We are warned we might face strikes and co-ordinated industrial action over coming months, due to the government's spending cuts. The laws governing strikes are often regarded as complicated, imposing strict requirements in terms of what must go onto ballot papers, who must be entitled to vote (and, similarly, prevented from voting), and what trade unions need to include in letters to the employer.

Traditionally, even the tiniest error by a trade union can result in an employer obtaining an injunction to stop the strike (or, more accurately, to delay the strike – since the union can simply repeat the ballot process and get it right second time around).

This month, the Court of Appeal has relaxed the approach to strike injunctions, stating that the rules have to be broadly followed but a pedantic, literal approach is inappropriate. This means that unions can get away with less rigorous procedures before calling a strike and employers will find it much harder to obtain injunctions to stop the strikes.

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.

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