UK: HR Bytes - October 2011

Last Updated: 6 November 2011
Article by Kemp Little’s Employment Pratice Group

Welcome!

The seasons may change, but employment law continues to get lots of column inches, with the Government announcing more proposals for reforms. It is early days, but if implemented in their current form the changes should be welcomed by employers.

Less happily, the challenging economic climate continues to make the headlines too with BAE Systems Plc. announcing on 27 September that it will cut 3000 jobs in the UK and end a century of aircraft manufacture. This comes against the backdrop of increasing unemployment reaching a jobless rate of 8.1% - a near 15 year high. These are testing times for employers as tough times can mean taking some very difficult decisions.

Looking forward on a more positive note, do make sure you check out our Future of Work seminar – details below.

What's new this month?

Legal Developments

  • To what extent can a tribunal take post-employment conduct into account when awarding aggravated damages?
  • Did an employer act unfairly when, after failed negotiations to change terms of employment, it offered re-employment on new terms which were less advantageous?
  • Should a reference be given when there are outstanding allegations against an ex-employee?
  • Dismissal of employee for "relatively mild" comments on Facebook was unfair

Other news

  • George Osborne announces employment law reforms
  • The Government's Red Tape Challenge
  • A recent survey shows employers' response to abolition of statutory retirement procedure
  • Tax update

What's coming up

  • The Future of Work - is your HR function ready? 4 November 2011- read more
  • HR Forum: Redundancies - lessons learned from the recession - 30 November 2011 - read more

Legal developments

To what extent can a tribunal take post-employment conduct into account when awarding aggravated damages?

In Bungay and another v Saini and others UKEAT/0331/10, the EAT considered the joint and several liability of company directors for discrimination compensation and the extent to which a tribunal could take post-employment conduct into account when awarding aggravated damages.

It was decided that the board members were jointly and severally liable with the company for both discrimination compensation and aggravated damages, given the manner in which they had contributed to the damage the employees had suffered. This included post-employment conduct in the form of malicious complaints to the police.

The imposition of joint and several liability has particularly important consequences for individual respondents in cases such as this one, where the corporate respondent goes into in insolvent liquidation, as they may find themselves personally responsible for large compensation awards.

The decision also makes clear that inappropriate post-employment conduct can result in an aggravated damages award being made to a claimant. Post-employment conduct can extend not only to the respondent's conduct of its defence but to other behaviour. However, the EAT's decision in this case suggests that the post-employment conduct itself must not only be of sufficient severity (high-handed, malicious, insulting or oppressive) to merit an aggravated damages award but must also be sufficiently connected to the discriminatory conduct forming the substance of the claim.

Did an employer act unfairly when, after failed negotiations to change terms of employment, it offered re-employment on new terms which were less advantageous?

In Slade v TNT (UK) the employer was seeking to remove a bonus entitlement from some of its employees. During the course of negotiations with the employees it had offered to buy out the bonus. When this offer was not accepted, the employer dismissed them and offered them employment on new terms. It was claimed that this was unfair, as the offer of re-employment did not include the buy-out payment.

The EAT decided, however, that a dismissal in these circumstances was not necessarily unfair – the correct question was whether the employer's decision was reasonable taking account of the advantages to the business and the effect on the employees.

Should a reference be given when there are outstanding allegations against an ex-employee?

In Jackson v Liverpool City Council [2011] EWCA Civ 1068, the Court of Appeal has held that a former employer had not been in breach of its duty of care when it provided a reference which referred to allegations made against the former employee but made it clear that they had not been investigated. The employer was not negligent as the reference was true, accurate and fair.

Employers are often faced with this issue, and it is very useful to have clear guidance from the Court of Appeal. Given that the employee in this case ended up out of work for a year, it is easy to see how the High Court (whose decision the Court of Appeal overturned) had felt that the reference was not fair. However, where employees leave in circumstances where there are questions over their performance or conduct, the appropriate course will usually be for the ex-employer to disclose such issues in a reference but make clear that they have not been investigated and that no assumptions can be made.

Dismissal of employee for "relatively mild" comments on Facebook was unfair

Whitham v Club 24 Ltd t/a Ventura concerned an employee who had posted comments about her workplace on Facebook. Her employer dismissed her on the grounds that her comments might have damaged its relationship with one of its key clients.

An Employment Tribunal found that her dismissal was unfair. There was nothing to suggest that "relatively mild" comments by a relatively junior employee which did not refer to the client would damage the employer's relationship with the client. The employer had also failed to take into account the employee's exemplary employment record and mitigating circumstances.

This case highlights the inherent risks for employees of having Facebook friends who are also colleagues, given that Mrs Whitham's Facebook colleagues later became "informers". From the employer's perspective, the case illustrates that they will not always be able to rely on the assertion that their reputation may be damaged by such remarks, but that they should make some attempt to assess the risk of harm.

Other News

George Osborne announces employment law reforms

Chancellor George Osborne has announced two important changes, intended to reduce the number of employment tribunal claims and boost the economy.

First, the qualifying period for unfair dismissal will be increased from one to two years with effect from 1 April 2012.

Second, fees will be introduced for tribunal claims. Consultation will take place in November 2011 but from the information currently available, it appears the following fee structure will apply:

  • upfront fee of £250 when lodging ET1;
  • further fee of £1,000 payable by Claimant when the hearing is listed;
  • higher fees if the claim is for over £30,000;
  • fee to be refunded if Claimant wins, and forfeited if they lose;
  • fees to be waived for those with no money.

However, if the test for a fee-waiver is simply being on income support, then most ex-employees will automatically qualify for the waiver (but those still in a job will not). Note that the issue fee of £250 (and hearing fee of £1,000) is substantially greater than the small claims issue fee.

The Government's aim is to reduce the number of claims made to the Employment Tribunal, and boost the economy by encouraging employers to recruit more freely without the fear of claims. It remains to be seen whether the changes will achieve this aim.

Whilst increasing the qualifying service requirement for unfair dismissal claims to two years is intended to make it "less risky" for businesses to hire people we wonder if this will simply result in more discrimination or whistleblowing claims being brought where there is no service length requirement? If the fee proposals are introduced, this may reduce the number of claims, but will it also deter genuine claimants?

Red Tape Challenge

The Government opened a consultation period, beginning at the start of October, for employment legislation under its 'Red Tape Challenge' scheme, aimed at inviting the public to comment on how laws can be simplified. Last June, the business secretary Vince Cable pledged that he would curb "excessive regulation" to encourage economic growth and the Government has pursued a "one-in-one-out" approach to UK regulation.

The Red Tape Challenge provides a forum for businesses, individuals and organisations to submit their opinion on whether current laws should be improved, redesigned, maintained or scrapped.

The Red Tape Challenge has divided the employment-related regulations into the following four sections:

  • Compliance and Enforcement;
  • Letting People Go;
  • Managing Staff; and
  • Taking People On

The Government has also pledged to examine collective redundancy consultation periods, TUPE and compensation for discrimination awarded by employment tribunals.

The Red Tape Challenge consultation process will run until April 2013. Please click here to visit the website.

Survey shows employers' response to abolition of statutory retirement procedure

A survey of employers' attitudes to the abolition of the statutory retirement procedure suggests that the majority of employers are doing without a default retirement age. The survey of senior HR professionals in the UK reveals, among other things, that only three per cent of employers intend to retain a default retirement age, and 22 per cent believe they now have less capacity to take on younger employees.

Other findings include:

  • 46 per cent of employers felt that the phasing out of the default retirement age will have a negative impact on their business, making it harder to manage older employees out of the business;
  • 86 per cent of employers are letting employees over the age of 65 continue in the same role;
  • nearly half of employers are considering flexible working arrangements for over 65s;
  • nearly half of respondents who have changed how they discuss retirement with employees now wait for staff to bring up the issue, while a quarter now use their appraisal system;
  • 76 per cent of respondents have not given line managers any additional training on retirement conversations; and
  • only 11 per cent of employers recognise the potential benefit of retaining experienced employees more easily.

The Employment Equality (Repeal of Retirement Age Provisions) Regulations 2011 mean that any purported retirement dismissal notified since 6 April, if not objectively justified, amounts to age discrimination under S.13 of the Equality Act 2010. Transitional provisions mean that retirements notified before that date, but taking effect after it, may be lawful, but only if the employee reaches 65 by 1 October 2011.

Tax Update

Employers are reminded of the importance of monitoring the on-going developments that affect the scope and application of the disguised remuneration rules, to ensure that employee arrangements are properly structured to avoid tax charges under these rules. However, it is also important for employers to be aware of proposed changes to these rules and how that may impact their own tax and national insurance contribution obligations. For example, HMRC recently published draft regulations which proposed NIC rules that were very different to the applicable income tax rules – including a decision to impose Class 1 NICs on amounts that are charged to income tax on the remittance basis.

HMRC is seeking views on a possible change to the PAYE system to allow closely connected companies to be treated as a single entity for PAYE purposes. If these proposed "PAYE Pooling" arrangements are adopted, they could provide savings in both time and administration costs for employers by reducing the number of separate returns and payments required.

What's coming up

The Future of Work: is your HR fuction ready? – Friday 4 November 2011

  • Is your HR function ready for the workplace of the future?
  • How will technology change the way we work?
  • What will the next generation demand from their careers and employers?
  • Are today's employment laws fit for tomorrow's legal challenges?

With many staff being able to work as effectively away from the office as in it and collaborative working using various media becoming increasingly relevant, information security and understanding the latest technological advances are becoming increasingly important for employers. Businesses which retain a traditional approach to working and HR management and which don't build these issues and challenges into their planning today risk failing to attract tomorrow's talent and losing productivity and competitiveness in the future.

Together with our guest speakers, we hope to answer some of these questions and perhaps pose some others, to help you to think about the future of work, strategic and legal considerations and the impact of technological change.

Speakers

  • Mark Skilton – Global Director in Strategy, Global Infrastructure Services at CapGemini will discuss how technology is changing the way we work.
  • Matthew Thorogood and Christian Murray, HR Services Partners at PwC will talk about people management for the future and the results of PwC's global survey of 3,000 "millennials" from the US, China and the UK who have just joined the workforce, discovering their views and expectations of the future of work.
  • David Williams - Partner and Kathryn Dooks – Employment Associate at Kemp Little will then talk about the legal challenges for HR Managers and practitioners in the future.

Timings and to register

  • Friday 4 November 9.00 - 11.30 (registration and breakfast from 8.30)
  • Venue: The Hatton, Hatton Garden, London EC1N 8GB
  • To register click here

HR Forum: Redundancies - lessons learned from the recession - Wednesday 30 November 2011

As the prospect of a double dip recession is looking increasingly likely, now is the time to take stock of the lessons learned during the past few years when implementing redundancies and other cost saving measures. Focussing on a number of key themes, including collective consultation, changes to terms and conditions and flexible, part-time and home working, we will explore the risks taken and pitfalls encountered and consider how these can be avoided or minimised in the future.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Click to Login as an existing user or Register so you can print this article.

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