UK: UK Employment Law Update

Parental leave changes come into force today

The Maternity and Parental Leave (Amendment) Regulations come into force today, 10th January 2002, implementing two changes to the right to (unpaid) parental leave.

The first change applies only to parents of disabled children and increases the total leave available from 13 to 18 weeks.

The second change is to extend the entitlement to 13 weeks’ parental leave to parents of all children under five as at 15th December 1999. (Prior to this change, only parents of children born or adopted after 15th December 1999 were entitled to parental leave.) These parents have until 31st March 2005 to take their leave entitlement.

Employees are only entitled to take parental leave if they have one year's continuous service with the employer. However, with regard to the parents of children under five as at 15th December 1999, even if these parents do not have a year's service with their current employer they will still be entitled to parental leave if they accrued one year's service for another employer at any time between 15 December 1998 and 9th January 2002. The employee must give notice to the employer of this service period and the employer is entitled to require reasonable evidence of such service.

Employers will need to update their parental leave policies to reflect this change.

Consultation on changes to discrimination laws

The Government has announced the start of its consultation on implementing the EU Race Directive (requiring states to prohibit race discrimination by 2003) and the EU Framework Directive (which requires member states to introduce legislation prohibiting discrimination on grounds of sexual orientation and religion or belief by 2003, and disability and age by 2006). The UK already has laws covering race and disability discrimination, which will require some amendment, while completely new legislation will be needed to cover discrimination on grounds of sexual orientation, age and religion/beliefs. Consultation closes at the end of March 2002 and draft regulations on race, sexual orientation and religion/belief will then be produced in the second half of 2002. The required changes to the disability legislation are likely to be made in 2004 and age discrimination laws will be introduced in 2006.

A new bill on disability discrimination proposing some preliminary changes has also been introduced in the House of Lords. The main employment provisions of the Disability Discrimination (Amendment) Bill are:

• HIV will be deemed to amount to a disability from the date of diagnosis, while cancer will be deemed to be a disability from the date at which it is diagnosed as being likely to require substantial treatment;
• the small employer exemption will be removed;
• tribunals will be able to order re-instatement and re-engagement;
• the Disability Discrimination Act will be extended to prevent all incorporated or unincorporated associations with over 25 members from discriminating against members (or prospective members);
• the Act will be extended to the police, fire brigade and prison officers;
• the Act will be extended to certain public and quasi-public bodies and duties to promote equal opportunities for disabled persons will be imposed on specific bodies.

Equal Pay

The Kingsmill report was published on 5th December, recommending a raft of measures on equal pay. These included a proposed measure to enable a woman to request that her employer confirm whether she is receiving pay equal to that of a named male colleague carrying out work she believes to be of equal value. The Government has already indicated that it intends to provide for an equal pay questionnaire procedure similar to that used in other discrimination claims (this is contained in the Employment Bill). The Kingsmill report also suggested that companies should report on pay and recruitment in their annual reports and carry out pay audits. The Government appears to support these initiatives, but they will remain voluntary for the time being. The Equal Opportunities Commission is currently preparing an equal pay audit model for employers to use.

A Dignity at Work Bill was introduced in the House of Lords on 3rd December 2001. It provides that all employees and contract workers will have an implied contractual right to dignity at work. It prohibits harassment, bullying and any conduct which causes the employee "to be alarmed or distressed", including:

• behaviour on more than one occasion which is offensive or abusive;
• unjustified criticism on more than one occasion;
• punishment imposed without reasonable justification; or,
• changes in the duties or responsibilities of the employee to the employee's detriment without reasonable justification.

• the employer has in force a "Dignity at Work Policy" and has taken reasonable steps to enforce it;
  
• the acts complained of are repudiated by the person in charge of the policy within 3 days of complaint ("repudiated" is not defined, but it is stated to include a repudiation in writing to the employee and to any other employees who witnessed or knew of the act complained of); and,
  
• the employer takes all steps reasonably necessary to remedy any loss suffered by the complainant.

European Directive on Information and Consultation

There has been further progress on this draft Directive, discussed in the e-mail update dated 25th June 2001 (available on our website, www.herbertsmith.com). A joint text for the so-called "National Works Council" directive was finally agreed between the Council and the European Parliament on 17th December. It is expected to be adopted in January 2002. It contains four amendments to the text agreed by the Member States in June (see previous 25th June update). The principal change is in relation to the period of phasing-in. The directive will have to be implemented in the UK within 3 years of its adoption – i.e. by early 2005. At that point it will apply to businesses with 150 or more employees. Those with 100 or more employees will be covered from 2007 and those with 50 or more from 2008 (originally this was to be 2009). Businesses with fewer than 50 employees will not be affected. The European Parliament backed down on its suggestion that decisions taken in breach of the consultation requirements would be "suspended" until the consultation had taken place – the agreed text leaves it to member states to determine effective penalties and enforcement methods. The Government has indicated that it will consult widely about implementation in the UK once the final text is adopted.

Quoted companies – directors' remuneration

The Government's proposals concerning the remuneration of quoted company directors were previously highlighted in the e-mail update dated 19th October (available on our website). They have now been given form in the shape of draft regulations issued for consultation until 15th March 2002. The aim is to introduce legislation this parliamentary session to apply to companies' year ends on or after 31st December 2002. The draft regulations introduce a requirement for an annual shareholder ("advisory") vote on the directors' remuneration report and strengthen the disclosure requirements concerning directors' contracts and compensation payments.

A survey on the levels of compensation payments to directors published this month has highlighted the concern over pay-offs to directors where they, or their companies, have been performing badly. Institutional shareholders have announced that they are reviewing this issue and, given that the levels of compensation are largely set by the terms of the directors' service contracts, they may well start to put pressure on companies to change the terms on which they offer employment to directors. For example, it could become more common for service contracts to include provisions enabling the company to terminate on no or reduced compensation if the director or company has failed to meet specified performance targets. We have already advised on the drafting of such provisions for some clients.

Race code for public and quasi-public bodies

The Commission for Racial Equality has prepared a draft code of practice on the general and specific duties under the Race Relations (Amendment) Act 2000 for public consultation until 28th February 2002, to be submitted to parliament for approval by May 2002. There are also four non-statutory guides – for public authorities, schools, further and higher education, and on ethnic monitoring by public authorities. For further details on this issue, see our Briefing on the Race Relations (Amendment) Act 2000 dated April 2001 (available on our website).

Other news

• The Health and Safety Executive has published a report on the effects of teamworking on work related stress, suggesting factors employers should consider when devising teamworking to reduce stress (available on its website www.hse.gov.uk).
  
• The Information Commissioner has issued new guidance on the Data Protection Act 1998 (available on its website www.dataprotection.gov.uk).
  
• The Trades Union Congress has launched a new website on flexible working giving practical guidance on how to make it work (www.tuc.org.uk/changingtimes). It includes an eight stage guide for implementing flexible work, case studies and other links and is a useful resource if faced with a request for flexible hours.

Coming up

Over the next six months we are likely to see new law in the following areas:

• the final version of the Code of Practice on the Use of Personal Data in Employer/Employee Relationships written by the Information Commissioner (published in draft at the end of 2000) is likely to be published in stages beginning at the end of January 2002;
  
• new provisions concerning employment agencies – draft regulations were issued in February 2001 and are expected to be finalised in Spring 2002;
• new regulations prohibiting less favourable treatment of fixed term employees (when compared with permanent employees) – these must be implemented by July 2002 in accordance with EU law;
• changes to the Transfer of Undertakings (Protection of Employment) Regulations ("TUPE") – proposals were announced for consultation in September 2001; and
  
• changes to the working time regulations concerning young workers (aged 15 to 17) – these changes are to implement EU law and are already overdue.

"© Herbert Smith 2002

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