UK: Round-up of Employment Law Developments: January/February 2003

Last Updated: 28 February 2003

There have been a number of employment law developments and news items in the last couple of months which may be of interest to employers, in addition to the increase in tribunal limits and developments in family friendly rights which we have covered in separate e-bulletins. A short summary of each of these developments follows - please contact us if you require further information on any of these topics.

  • Changes to Working Time Regulations - 6 April 2003
  • Delay to Employment Practices Data Protection Code
  • Delay to new statutory disciplinary and grievance procedures
  • Delay to basic disclosure of criminal records
  • Injury to feelings awards in discrimination cases
  • Failure to register employees with FSA is breach of contract
  • Call-up of reservists
  • TUPE news
  • New guidance and codes
  • DTI consultations

Changes to Working Time Regulations

Regulations amending the Working Time Regulations in relation to young workers and the calculation of the average working week have been approved by Parliament and come into force on 6 April 2003.

The new regulations provide additional rights for workers between minimum school leaving age and 18 as follows:

  • a young worker's time shall not exceed 8 hours a day or 40 hours a week (whether working for one or more employers);
  • the maximum 8-hour day/40-hour week shall not apply where the work is necessary to maintain continuity of (or respond to a surge in demand for) service or production, where the additional hours will not interfere with education or training and where there is no adult worker available to perform the work;
  • young workers are not permitted to work between either 10pm and 6am (the default position) or, if the contract of employment provides, between 11pm and 7am;
  • there are certain exceptions for particular sectors (including hospitals, agriculture, retail trading, postal/newspaper deliveries, catering businesses, hotels/pubs/restaurants/bars, bakeries, or in connection with cultural, artistic, sporting or advertising activities).

The Regulations also provide (in relation to all workers) that all overtime (whether or not guaranteed) is to be included in the calculation of average night working limits, and periods of paternity, adoption and parental leave are excluded from the calculation of average weekly working time (maternity leave is already excluded). Employers who may have workers already near the working time limits will need to review their position in the light of these changes to ensure compliance.

A recent case has confirmed that children under the compulsory school age are not covered by the Working Time Regulations (and therefore are not entitled to holiday pay).

Delay to Employment Practices Data Protection Code

The new Information Commissioner, Richard Thomas, has announced that a simplified, shorter version of Part 3 of the Employment Practices Code (which will cover the controversial area of monitoring of e-mail and Internet use) will be prepared for small businesses, so publication of this Part has been delayed as a result. The Commissioner was also reported as having said that he would look at Part 3 "with fresh eyes", but the latest information obtained from his office suggests that there will be few changes to the draft made available last summer. They now expect Part 3 to be published in March 2003 (with Part 4 delayed until later in the year, as consultations on this are ongoing).

Delay to new statutory disciplinary and grievance procedures

The Government originally intended to bring the new statutory disciplinary and grievance procedures (contained in the Employment Act 2002) into force later this year. It has now stated that consultation on regulations (setting out the detail of when the procedures will apply) will take place during summer 2003 and that the procedures are expected to come into effect in April 2004. The same delay applies to the changes to tribunal procedure contained in the Employment Act 2002.

Delay to basic disclosure of criminal records

The lowest level of criminal record check, the "basic disclosure", was due to become available this Spring. The Home Office has announced that this will be postponed until demand for the two higher levels of check has been fully met. Click here for further information on this level of check.

Injury to feelings awards in discrimination cases

Injury to feelings awards are frequently made in discrimination cases, but the approach as to the appropriate level of award has not been consistent. The Court of Appeal has now had to consider this issue in Vento v Chief Constable of West Yorkshire Police and has laid out some clear guidelines:

"i. The top band should normally be between £15,000 and £25,000. Sums in this range should be awarded in the most serious cases, such as where there has been a lengthy campaign of discriminatory harassment...

"ii. The middle band of between £5,000 and £15,000 should be used for serious cases which do not merit an award in the highest band.

"iii. Awards of between £500 and £5,000 are appropriate for less serious cases, such as where the act of discrimination is an isolated or one off occurrence. In general awards of less than £500 are to be avoided altogether, as they risk being regarded as so low as not to be a proper recognition of injury to feelings."

The Court also held that it was appropriate to have regard to the total amount of damages awarded (including any aggravated damages) and how this compared with the JSB Guidelines for damages in personal injury cases. A copy of the judgment is available here.

Failure to register employees with FSA is breach of contract

An unreported tribunal decision (French v Just Mortgage UK Ltd) has held that a firm of City mortgage brokers breached the employment contracts of two employees by failing to register them with the FSA.

The company had argued that the employees had not been advising on regulated products. However, the tribunal held that the employees' jobs were of a type normally permitting them to give such advice, that it was the employer's responsibility to register the employees, and that the failure to do so was a breach of the implied term of trust and respect. The employees had not waived the breach by failing to enquire about registration, as they were entitled to assume that the employer had taken care of it.

Call-up of reservists

Some employers are now facing the call-up of staff who are members of the Volunteer Reserve Forces.

The employment law position in this situation is governed by statute, although there are still some areas of uncertainty. In brief, it is a criminal offence to try and prevent a reservist from complying with a call-up notice, although employers can apply for the notice to be deferred or revoked on the grounds that the loss of the employee would cause serious harm to the business which could not be prevented by financial assistance; such an application must be made within 7 days of the notice being served.

While the reservist is on service, the employer is not obliged to continue to pay salary or contributions to benefit schemes (the Ministry of Defence assumes these obligations up to a limit) and the employer can apply for payments to cover certain additional costs as a result of the call-up. It is unclear whether the reservist's contract is regarded as subsisting throughout the period of service (which will impact on the length of continuous service and entitlements to certain benefits) – employers should therefore consider agreeing this with the reservist in advance.

A "former employer" of a reservist (the reservist's last employer within the four-week period prior to the military service) must keep the job open for him/her until six months after the end of the employees' military service. If the employee does return, his continuity of service will be unbroken and there are restrictions on the employer's ability to dismiss the reservist for a period after his/her return. If the job no longer exists in its old form, the employer must offer the reservist the most favourable occupation and on the most favourable terms which are reasonable and practicable. This could require dismissing another employee with the same or shorter service than the reservist had prior to the military service, or an employee with longer service but whose employment is less permanent in character. It is therefore advisable to make clear to replacement staff that their employment may only be temporary.

TUPE news

Following a period of general consultation on amending the Transfer of Undertakings (Protection of Employment) Regulations ("TUPE") in 2001, the Government have just announced that they will be carrying out public consultation on draft revised regulations in the first half of 2003, with a view to the new provisions coming into effect in Spring 2004.

The draft Regulations are not yet available, but the DTI have stated that they will:

  • extend the scope of TUPE to cover more contracting-out situations involving labour-intensive services (such as office cleaning, catering, security guarding and refuse collection, but leaving unaffected the position in relation to "professional services" such as accountancy, consultancy and legal advice);
  • introduce a requirement on the transferor to notify the transferee of the employment liabilities that will be transferring;
  • clarify the circumstances in which employers can lawfully make transfer-related dismissals and negotiate transfer-related changes to terms and conditions of employment for "economic, technical or organisational" reasons;
  • introduce new flexibility into the Regulations' application in relation to the transfer of insolvent businesses;
  • postpone a decision on providing for occupational pension rights to transfer, to be considered separately as part of the general pensions review.

The DTI press release is available here.

The Government has also, finally, agreed the content of its Code of Practice on "two-tier" workforces employed by contractors to local authorities. Where a local authority transfers employees to a private or voluntary sector contractor under a servicing contract, the contractor will be required to agree that any new recruits are offered terms and conditions which are, overall, no less favourable than those of employees transferred from the authority, save in relation to pensions (where the obligation is to offer one of three "reasonable pension provision" options). This is more employee-friendly than the previous draft, which only required "broadly comparable" terms to be offered.

The Code will only apply in relation to contracts advertised after the issuing of statutory guidance, which should be in early March 2003. Similar arrangements are intended to apply to other Best Value authorities. Further details and a copy of the Code are available here.

Finally, where TUPE applies, the terms and conditions of relevant employees transfer to the new employer. The EAT in MITIE Management Services Ltd (previously Pitney Bowes Management Services Ltd) v French held that contractual benefits which it is not possible to replicate exactly post-transfer (eg because they are based on transferor's profits or shares) must be replaced by the transferee with a scheme "of substantial equivalence". It was hoped that the implications of this decision would be expanded on appeal, but the appeal has been settled at the last moment.

New guidance and codes

The DTI has published detailed guidance on the right to request flexible working including best practice forms for use when exercising the right. It has also announced the launch of an enhanced ACAS helpline service geared to give guidance on the new family-friendly rights– tel. 08457 47 47 47. The Equal Opportunities Commission has also produced some helpful practical advice, available here.

The Equal Opportunities Commission are consulting on a revised Code of Practice on Equal Pay, with responses sought by 21 February 2003. A copy of the consultation paper is available here.

The Government has issued an updated version of the (voluntary) Code of Practice on Age Diversity in the Workforce, available here.

DTI consultations

The Government has published its review of the Employment Relations Act 1999 for consultation until 22 May 2003. The Government have concluded that the Act is working well and does not require any wholesale changes. The review proposes a number of reforms to improve the efficiency and clarity of the law, including minor amendments to the statutory recognition procedure for unions and to other union-related provisions, plus clarification of the law on the "right to be accompanied" (to set out the circumstances where a companion is allowed to address disciplinary or grievance hearings). Further details can be found in the DTI press release and summary of the proposals.

The DTI has commenced consultation on proposals to change National Minimum Wage rules for output workers including homeworkers, replacing the "fair estimate agreement" system with a "fair piece rate". The consultation closes on 9 May 2003. A copy of the consultation document is available here.


The new family-friendly rights (changes to maternity leave, new paternity and adoption leave, and the right to request flexible working) come into force on 6 April 2003. Please contact your usual Herbert Smith contact if you would like assistance in auditing and updating your policies.

© Herbert Smith 2003

The content of this article does not constitute legal advice and should not be relied on as such. Specific advice should be sought about your specific circumstances.

For more information on this or other Herbert Smith publications, please email us.

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