UK: Employment Bulletin - April 2014

Last Updated: 9 April 2014
Article by Eilidh Wiseman

EARLY CONCILIATION

In an attempt to reduce the number of disputes which proceed to tribunal, claimants will be obliged to contact Acas before raising a tribunal claim, when the new early conciliation (EC) scheme comes into force. Although the new scheme will be optional for claimants from 6 April 2014, it will become mandatory from 6 May 2014. In this month's bulletin we discuss the impact of the new scheme for employers.

What has changed?

Under the current procedure, Acas contact the employer after a tribunal claim has been submitted by the claimant to the tribunal. In addition to this service, in the last few years Acas has expanded its resources to offer a Pre-Claim Conciliation service (PCC) where parties can ask for help to resolve a dispute through a voluntary pre-litigation stage. Acas report that 50% of PCC referrals result in a COT3 and 75% do not result in tribunal proceedings. Acas hope that the new EC process will result in 25% fewer tribunal claims.

When early conciliation applies

The vast majority of employment claims will be covered by EC, for example unfair dismissal, discrimination, unlawful deductions and redundancy pay. The list of exceptions covers a limited number of (fairly obscure) claims such as an application by the Secretary of State to prohibit a person from running an Employment Agency or an appeal against the assessment of a training levy.

How will the process work?

The EC process is set out below.

  • A new early conciliation form (EC Form) should be completed by a claimant with some basic details about: the claimant; whom the conciliator should contact at the employer; and the claim. Acas deliberately chose to keep the form very brief and easy to complete. In fact an employee can call Acas directly and complete the form over the phone, or complete it online. An individual does not have to produce a detailed narrative of the history of the dispute or set out the legal basis of their claim in the same way they are required to do in an ET1 (employment tribunal application).
  • Submitting the EC Form will pause the time limit for lodging a claim. Most time limits in the tribunal are for three months.
  • After the EC Form is received by Acas, an Early Conciliation Support Officer will contact the claimant. They will normally make a few attempts to make contact. If the claimant wishes to conciliate, an Acas conciliator will then become involved who will make contact with the claimant and prospective respondent.
  • Where both parties wish to conciliate, the conciliator will have a period of one month (plus an additional fortnight, if agreed) to try to achieve settlement between the parties. The conciliator will not advise the claimant on the merits of their case, and their role is effectively to mediate the dispute, although they can suggest options, making it a slightly different process to the most widely used form of mediation in the UK - facilitative mediation. It will be interesting to see how the process will work in practice when the EC Form does not require the individuals to state the full extent of their case: a conciliator could be trying to settle a claim on the basis of a limited picture of the circumstances. The discussions between the parties will be confidential and without prejudice, and accordingly cannot be relied upon in subsequent proceedings, if the negotiations fail to bring about a settlement.
  • Helpfully an employer can also contact Acas to request early conciliation although this will not stop the clock from a time limit perspective. This may be useful to consider as a more cost effective alternative to paying for mediation. Take for example a situation where an employee is threatening legal proceedings and internal grievance or disciplinary proceedings have become protracted: an employer may find it useful to approach Acas directly in those circumstances and ask for early conciliation.
  • If settlement is agreed, the tribunal proceedings can be avoided.
  • If settlement does not appear possible or conciliation fails, the conciliator will issue an early conciliation certificate to the parties. Acas will give the claimant a reference number, which must be included on their ET1 Claim Form in order for their tribunal claim to be accepted by the tribunal.
  • The "clock" on the time limit for bringing a claim will start again, unless the time limit would have expired during the conciliation period, in which case, the claimant has an extra month from the date of the certificate to lodge their claim.

What this means for employers

Early conciliation should probably to be welcomed (at least in part) by employers. The scheme has few drawbacks for respondents, apart from extending the time limit. The onus is on the claimant to comply with the process. The respondent is under no obligation to agree to early conciliation, and will not suffer any consequences from the tribunal if they refuse to engage in conciliation. An employer will not, for instance, suffer any automatic costs penalty as a result of not engaging in conciliation discussions.

And, since the service is free and available to employers there could be scope for employers to benefit from the service. The Acas website cites independent research which has found that "the average cost to an employer of resolving a case through Pre Claim Conciliation (a current similar service) is just £475, with employers spending on average one day on a claim, compared to an average of £3700 and four days for an Employment Tribunal."

Respondents may choose to wait and see whether a potential claimant is willing to pay their tribunal issue fee (£160 or £250, depending on the type of claim). In other words, many employers will want to see whether claimants are prepared to pay the issue fee before they take the threat of a Tribunal claim seriously.

Where an employer does engage in conciliation, they should be aware that an Acas conciliator has the right to promote the reinstatement or re-engagement of any dismissed employee on terms which appear to the conciliator to be equitable.

Larger employers with centralised monitoring processes for tribunal claims may wish to introduce a procedure to manage the initial contact from Acas, and the need to raise awareness of the new scheme to ensure that Acas conciliators are referred to the appropriate people in the business with authority to conciliate (e.g. HR).

Challenges could arise if a manager is contacted by Acas but he/she refuses to engage with the process because they want to avoid the issue. Similarly, an individual manager could settle the claim with Acas without referring the issue to senior management or HR. These scenarios are probably unlikely in the bulk of cases but the introduction of a standard notification process should be helpful.

Potential issues?

As with any new legislation there is likely to be satellite litigation concerning some of the more contentious aspects of the process, particularly around time limits. The scope of the extension may be expected to generate litigation.

Ultimately though, early conciliation, coupled with the tribunal fee regime brought into force last summer, will (whether this was the Government's intention or not) make it more difficult for unrepresented claimants to bring claims against their (former) employer. It will no longer be the case that a potential claimant can simply fill in an ET1 Claim Form online, lodge it for free, and wait to see how the respondent deals with the situation.

CASES

Post - Employment Victimisation

Jessemey v Rowstock Ltd and Another

Does the Equality Act 2010 cover post-employment victimisation? This was the question for the Court of Appeal (CoA) after the EAT ruled that the Equality Act 2010 did not cover a claim for victimisation after his employer provided an employment agency with a poor reference.

Mr Jessemey was dismissed after his employer, Rowestock announced that it would no longer employ men over the age of 65. Following the dismissal he raised a claim for unfair dismissal and age discrimination. Rowestock subsequently gave a reference to an employment agency which was not complimentary. Mr Jessemey raised a further claim for victimisation under section 108 of the Equality Act 2010.

After both the tribunal and EAT ruled that the Equality Act 2010 did not extend to post employment victimisation, based on the technical drafting of the Act, Mr Jessemey appealed to the CoA where his case was heard alongside another appeal Onu v Akwiwu. In Onu the EAT had arrived at the opposite conclusion, ruling that post-employment victimisation was prohibited by the Equality Act 2010. The CoA upheld Mr Jessemey's appeal and ruled that post-employment victimisation must be covered by the Equality Act, despite the drafting error and relied on a European case which provides guidance on the construction of legislation designed to give effect to EU law.

The decision comes as no surprise and emphasises that employers need to be live to the legal risks arising from providing unsatisfactory references which can include but are no means confined to whistleblowing detriment claims.

Discrimination claim successful despite illegal contract

Wijesundera v Heathrow 3PL Logistics Ltd & Anor

Employees cannot normally bring tribunal claims based on an illegal contract of employment. Yet the courts have tended to view discrimination claims differently depending on the extent of the claimant's collusion with the illegal aspect of the contract and the extent of the illegality. It is by no means clear, however, when a tribunal will permit claims to proceed notwithstanding an element of illegality in the employment relationship itself.

Mrs Wijesundera, a Sri Lankan national, had been working in the UK for three years with a valid work permit before she was made redundant. She was offered, and accepted, another job despite the fact that she made it clear her permit would need to be transferred. During this time the employer's agent who interviewed her for the role sexually assaulted her and this continued after she started working there. When after three years of working she was dismissed she brought claims for sex discrimination and sexual harassment.

Despite being unsuccessful before the tribunal, because of her illegal contract, the EAT upheld her claims for sexual harassment and sex discrimination for the period during which she was an employee. In this case, the EAT stated that there was no reason why the issue of illegality should prevent Mrs Wijesundera from raising the claims in connection with the period during which she was employed.

This was an unusual decision from the EAT. It relied on a wider principle of law from the case of Hall v Woolston Hall Leisure that reasons of illegality do not exclude the right to bring a claim of discrimination. The decision is contrary to a previous decision in Hounga v Allen where the CoA ruled that the actions complained about were inextricably linked to the illegal conduct (the lack of work permit). Hounga is under appeal to the Supreme Court so perhaps further guidance will be provided at that stage.

Harmonisation following a TUPE Transfer

Hazel & Anr v Manchester College

One of the most problematic aspects of TUPE is the narrow range of circumstances where employers can lawfully harmonise terms and conditions after a transfer. In the following case the CoA was asked to consider whether dismissals which took place during a harmonisation exercise some months after the transfer could amount to an ETO and thereby escape liability for automatic unfair dismissal.

Manchester College won a contract to provide services to the Prison Service, which resulted in a TUPE transfer of 1,500 employees. Following the transfer, the College performed an internal review, which recommended redundancies and a harmonisation exercise.

In June 2010, Mrs Hazel and Mrs Huggins were sent letters offering new terms of employment at a reduced rate of pay and an explanation that if they did not sign the new terms, they were at risk of redundancy. Both claimants refused and were dismissed and subsequently brought claims for unfair dismissal.

The Court stated that the primary issue to be determined was identifying the sole or principal reasons that the employer was considering which caused them to dismiss the employee. In this case the main consideration was not the cost saving redundancies, but the fact the claimants had failed to accept the new terms. In light of this, the dismissal was unfair.

The Court accepted that reinstatement of the claimants was a remedy available to the Court and both claimants were reinstated on their previous wage, which was frozen.

In this case the Court viewed the redundancy and harmonisation exercises as separate, however if they had been viewed as the same exercise, there may have been a more convincing argument for an ETO reason on the grounds that redundancies would effect change on the workforce. This distinction is important for employers to bear in mind faced with similar circumstances.

NEWS

Surrogate mothers not protected by European maternity rights

A recent decision from the European Court, the CJEU, has confirmed that intended mothers under a surrogacy arrangement are not entitled to maternity leave under EU law. Nor is it sex discrimination to refuse time off to intended mothers. Last year two separate cases on surrogacy were referred to Europe, which produced different opinions at the Advocate General stage. Their role is to issue a preliminary non-binding Opinion prior to the decision from the judges of the court. Following the conflicting Opinions from the respective Advocate Generals, the surrogacy cases were conjoined. Despite the negative result from the CJEU, we do at least have the benefit of certainty in relation to the maternity rights of surrogate mothers under EU law. However, the position is likely to change in the UK next year as part of the wider changes to family friendly rights. Employers should be aware that under the shared parental leave provisions which apply to babies due or born after 5 April 2015, the government has the option to extend protection to intended surrogates who apply for a parental order. In these circumstances intended surrogates will qualify for adoption leave and depending on eligibility, statutory adoption pay.

Government accepts recommendations of Low Pay Commission Report on National Minimum Wage

The government has agreed to introduce the recommended new rates for the National Minimum Wage (NMW) contained within the latest Low Pay Commission Report. The adult rate will increase by 3% (to £6.50 an hour) and the Youth Development and 16-17 year old rates will rise by 2% (to £5.13 and £3.79 an hour). The new rates will come into force on 1 October 2014 and for the first time in six years the increase will be higher than inflation, although the Report acknowledges that its real value has fallen because it has been unable to keep pace with the rate of inflation.

Women only shortlists and the role of headhunters

Business Secretary Vince Cable has asked the EHRC to provide guidance on the legality of women only shortlists for board appointments following a recent review. Diversity expert Charlotte Sweeney was asked by the government to review the Voluntary Code of Conduct for headhunting firms. The Sweeney report has highlighted that headhunters could play a key role in elevating more women into the boardroom but has warned that they must aim higher than the current minimum standards set out in the Code if they are to help their clients to achieve the 2015 target.

Click here to access the review, Women on Boards: Voluntary Code for Executive Search Firms – Taking the Next Step.

Changes to spent convictions

On 10 March 2014, a number of reforms to the Rehabilitation of Offenders Act 1974 (the 1974 Act) came into force in England and Wales, which altered the length of time before a conviction is spent. The changes are designed to provide more opportunities for those who have committed minor offences, to enable them to return to work. If a conviction has become spent it means that an employee is under no obligation to disclose the offence to their employer or prospective employer, and receives protection from dismissal. The changes to the system will affect employers who ask employees in application forms or at interview to disclose unspent convictions.

Under the 1974 Act certain offences become spent after a specified period of time, so for instance a short custodial sentence of less than 6 months previously became spent 7 years after the date of the conviction. Now under the new regime such an offence will become spent 2 years after the completion of the sentence. (Employers should also note that the 2014 changes not only include shorter periods, but also different start dates for measuring the period: the rehabilitation period now runs from completion of the sentence rather than the date of conviction.)

More serious custodial offences never become spent; for example, a conviction of 48 months or more will always need to be disclosed and this has not changed. In addition, many employers by virtue of their profession or because of the particular type of work carried out by the employee (working with children or vulnerable adults) will be exempt from the 1974 Act and can request details of previous convictions from the Disclosure and Barring Service. For more information on the changes in the rehabilitation periods click on the following link.

Scotland is retaining its current position and not implementing the amendments, meaning there are now different rehabilitation periods in Scotland and England. Businesses will normally have to consider the home address of the employee when considering the periods for spent convictions.

For more information on the different jurisdictions and rehabilitation periods, click here.

6TH APRIL - EMPLOYMENT LAW CHANGES

There are a number of changes which will take place on 6th of April, which are set out in the table below.

Employer Penalties

From 6 April, when an employer loses a claim, the tribunal will have powers to impose a financial penalty where there are any "aggravating features" present in the case. The tribunal will have the power to impose a penalty of between £100 - £5,000, (halved if paid within 21 days) which would be paid to a government fund and not to the claimant. It is likely that factors such as the size of the employer and the extent of the breach will be considered as features which could amount to "aggravating features."

Discrimination Questionnaires to be abolished

The statutory discrimination questionnaire process will be abolished and replaced with informal Acas guidance, "Asking and responding to questions of discrimination in the workplace". Currently employers must respond within 8 weeks to a statutory questionnaire, and if an employer either fails to respond or provides evasive answers then a tribunal can draw an adverse inference from this. The Acas guidance is quite lengthy and fairly detailed – there is a template for the questioner and a 6 step process which they recommend following for employees and a three step process for employers. The guidance states that the failure to respond may amount to "a contributory factor" in a tribunal's decision. As such we would still recommend that requests for pre-litigation information regarding discrimination are dealt with seriously.

Early conciliation

As mentioned above, the new Early Conciliation (EC) scheme from Acas will become operational from 6 April 2014 on a voluntary basis before it becomes mandatory from 6 May 2014. For more information on EC see this month's featured article.

Changes to rates and limits

As reported in last month's Bulletin there are a number of changes to statutory rates which will come into force from 6 April. Increases to the cap on a week's wage for redundancy purposes and the basic award in unfair dismissal cases, traditionally implemented in February, have been delayed to bring them into line with statutory rate increases in maternity and sick pay.

The rate of statutory maternity, paternity and adoption pay will increase from £136.78 to £138.18.

The rate of statutory sick pay will increase from £86.70 to £87.55.

The cap on a week's wage for redundancy purposes and the basic award in unfair dismissal cases will increase to £464 from the current rate of £450.

The maximum compensatory award for unfair dismissal will increase to £76,574 from the current maximum of £74,200.

Reclassification of some employment tribunal fees

When the fee regime was introduced in July 2013, we were surprised to see that equal pay claims were classified as Type A claims, attracting the lower fees of £160 followed by £250. The issue was also raised during the judicial review proceedings where UNISON challenged the introduction of tribunal fees. The government has now decided to reclassify many claims which were previously Type A as Type B. The following claims will now attract the higher Type B fees of £250 followed by £950. Sex equality in pension schemes, failure to inform or consult under TUPE, failure to allow compensatory rest under the Working Time Regulations 1998, and breach of the right to request time off for training.

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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