UK: Employment In 2007 – The Year That Was

Last Updated: 13 December 2007
Article by Joanna Blackburn and James Libson

As is traditional at this time of year, we will recap on the employment law developments over this past year. Whereas we have not seen any revolutionary new legislation coming into force, there have nevertheless been some interesting developments in areas such as dispute resolution and age discrimination. We have also seen an overhaul of the Companies Act, the introduction of the smoking ban and an increase in the statutory holiday entitlement.

Dispute resolution procedures

To pretty much everyone's delight, the Gibbons review of the statutory disciplinary, dismissal and grievance procedures concluded that these confusing and complex procedures should be repealed. The Government's response to the consultation that followed is expected shortly. In the meantime, the Employment Bill has just been published and includes a repeal of the procedures as recommended, anticipated to take effect from April 2009. We will report in a future Briefing as soon as we have more information on what is proposed to replace the current procedures.

Age Discrimination

We have recently passed the anniversary of the Employment Equality (Age) Regulations and there have been two major developments. The first is the Heyday case. This is the challenge, backed by Age Concern, to the default retirement age in the Age Regulations. The case has been referred to the European Court of Justice (ECJ). The question is whether it is lawful to have an enforced retirement age, which can be used as a defence to age discrimination or unfair dismissal (subject to certain procedures), or whether this is in itself discriminatory on the grounds of age.

The Government says that the retirement age is objectively justified and therefore lawful. We are still awaiting a decision from the ECJ but it has, since the reference, given judgment in a similar case, Palacios de la Villa v Cortefiel Servicios. In this case, the ECJ upheld the retirement provisions in Spanish law. However, this does not mean that the result will be the same in the Heyday case and the outcome will ultimately turn on whether the Government can show that the retirement age of 65 is objectively justified. In the meantime, the President of the Employment Tribunals has given a direction that all cases that turn on the legality of the retirement provisions will be stayed pending the ECJ decision.

In the other high profile age discrimination case thus far, Bloxham v Freshfields, a change in a pension scheme, which caused a disadvantage to partners under a certain age, was held to be less favourable treatment on the grounds of age. However, the change was held to be objectively justified and proportionate. What this case showed was that in order to rely on objective justification as a defence to what would otherwise be age discrimination, an employer must show that it has properly considered all options and their likely effects and that no less discriminatory route could have been chosen. The hurdle is a relatively high one it is not enough to make assumptions, however reasonable, and documentary evidence will be required in most cases.

Companies Act 2006

The Companies Act 2006 has brought some major changes to UK company law (and some further provisions have yet to come into force). Some of these changes are relevant also to employment law, most notably those relating to directors' duties and liabilities, service agreements and compensation on termination of employment. Indeed, probably one of the most significant and controversial provisions of the 2006 Act is the codification of directors' duties, which replaces many existing common law and equitable rules. In addition, directors must now have regard to a statutory (nonexhaustive) list of factors in exercising their duty to promote the success of the company.

Smoking ban

For employers who previously provided smoking rooms or enclosed smoking shelters, the smoking ban, which came into force in July 2007, would have brought with it the need for some changes, not only to the premises but also to employers' smoking policies. For some, the ban may have provided an opportunity to drastically change any such policies to limit or prohibit smoking breaks.

Increase in holiday entitlement

The statutory minimum period of annual leave increased on 1 October from 20 to 24 days for a fulltime employee. For those employers who needed to revise their holiday allowance as a result, some complex pro rata calculations may have been necessary. A further increase to 28 days is scheduled for 1 April 2009.

Changes to maternity leave

Increases in the period for statutory maternity pay to 39 weeks, the removal of qualifying service for additional maternity leave, "keeping in touch" days and an increase in the period of notice required for an early return from maternity leave were all changes introduced last year. However, these changes only applied to women whose expected week of childbirth was after 1 April 2007 and so it is only more recently that the changes have started to have an effect.

Employment Team of the Year

Finally, and not strictly a legal development, 2007 was the year that our Employment Group won the prestigious Employment Team of the Year award at The Lawyer Awards. We aim to continue to provide you with an excellent and innovative service in the years to come.

This article is only intended as a general statement and no action should be taken in reliance on it without specific legal advice.

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