UK: Employment Law In 2009 - Top Three Trends

Last Updated: 7 January 2009
Article by Catriona J. Aldridge

2009 promises to be a challenging and interesting year, not least in the area of employment law. With 2008 over, what better time to consider three issues which, in our view, will feature prominently in the employment law landscape over the course of 2009? Against the credit crunch background, it is more important than ever for employers to stay one step ahead of the game!

No 1 - The Growing "Age" Factor

Age Discrimination has now been with us for two years, having become law on 1 October 2006. In year one the predicted deluge of claims never materialised. Figures recently released by the Tribunal Service however show that claims rose from 962 in 2006 to 2,940 in 2007 and this trend is expected to continue.

There are a number of reasons why employees will increasingly consider raising age discrimination claims:

First and foremost, it can take a while for employees to become aware of new rights. In 2008, various age discrimination cases attracted publicity and media coverage, which suggests that it is likely that age discrimination will increasingly form part of the public consiousness. For example, Selina Scott's recent settlement of her age discrimination claim against Channel 5 has featured prominently in the headlines and there has also been much focus on the Advocate General's decision to reject Heyday's challenge to the default retirement age of 65 earlier in the year.

Age discrimination is permeating the younger as well as the older employee's consiousness. Recently 500 claims have been brought as a result of a pay dispute at the Ministry of Justice and the Courts Service. The union-backed claims have been brought by younger employees alleging that a pay system introduced last year is age discriminatory as it can take employees more than ten years to reach the top of the pay scales.

Recent reports have suggested that unemployment could reach as many as 3 million in 2009 as employers look to save costs and slim down their workforce. For employers, this increases the risk of claims, in general, as redundant staff may be more inclined to litigate if they see little prospect of a quick return to work. In respect of age discrimination, the "40 plus" brigade may perceive themselves as being at greater risk of redundancy if they are in more senior and therefore more expensive roles. The so-called "stale, pale male" in his forties or fifties who may otherwise have been devoid of a discrimination claim, may now focus on age discrimination if it appears that his selection for redundancy has been in any way linked to age or length of service.

It is not only redundancy selection that employers need to address to be age compliant. Employers whose enhanced redundancy schemes do not reflect the permissible variants of the statutory redundancy scheme may be faced with multi party claims, on the basis that different age groups receive different levels of payment, partly based on age. Already, some redundant employees who are receiving a relatively smaller slice of the cake are crying foul. Whilst age discrimination can be justified, the first few decisions suggest that employers and Tribunals have had difficulty applying the two-pronged justification defence in this new area of the law (see McCulloch v Imperial Chemical Industries and Galt v National Starch and Chemical Ltd). The identification of legitimate aims has been relatively straightforward; the particular difficulties arise in assessing whether the formulae used for payments are proportionate when assessing the impact upon the range of employees of different ages and lengths of service. Tribunals require evidence to support a conclusion of proportionality, which in turn requires careful analysis from employers when formulating the schemes.

The message appears clear. No matter an employee's age or personal circumstances employers must pay greater attention to the issue of age equality or run the risk of becoming a statistic in the fastest growing area of Tribunal litigation in 2009.

No 2 - Managing Employees In A Downturn

In considering the year ahead it is impossible to ignore the current economic climate. All employers will have to consider the difficulties of managing employees in a downturn. Employee morale will be hit as pay rises are cut back and bonuses are not forthcoming. Inevitably employers will have to take a much more creative approach to incentivising staff since they may not have the means to do this through their traditional reward package. One way of doing this may be to focus on staff development and training and investing in your key people, particularly when they may have more time to work on this.

For employers considering redundancy, the management time and risks involved should be considered. Employees challenging a redundancy selection process often point to a discrepancy between the way they have been scored during the redundancy process and their last performance appraisal. Employers should therefore carry out a robust appraisal and interim appraisal process, allowing them to refer to objective evidence to justify any dismissals. Redundancy aside, managing performance should be a key issue for all employers in 2009 as they try to get the best out of their employees.

The costs of redundancy go further than compensating those selected. Redundancy is an emotive issue so employers should prepare for the fact that remaining employees may suffer 'survivor syndrome'. The best way to combat this is communication, which should be timely and thorough. This, together with treating employees in a respectful manner, will maintain trust between surviving employees and the employer. Line managers should be seen as a vital link between senior management and employees to ensure this trust remains. Adequate training will be vital to assist line managers in dealing with this role.

No 3 - Internal Dispute Resolution

Internal dispute resolution is likely to be a hot topic for the next year. Employment Tribunal claims are costly and take up a disproportionate amount of management time. 2009 will be a year for focusing on business rather than disgruntled former employees. As belts are tightened, minimising and ideally preventing the scope for tribunal claims will be more vital than ever.

In addition to this, the Employment Act, which will come into force on 6 April 2009, will abolish the formulaic statutory grievance and disciplinary procedures. Instead, a new ACAS Code of Practice will govern grievance and disciplinary procedures. The Code will not be compulsory, although Tribunals will have regard to the Code in assessing whether a dismissal is unfair, and, significantly, will have a right to increase the award made to a successful claimant in the event that an employer has unreasonably failed to follow it.

The foreword to the Code states that "Employers and employees should always seek to resolve disciplinary and grievance issues in the workplace." It also emphasises how important a quiet word can be. Policies to ensure good communication with employees will help to prevent disputes before they become grievances or disciplinary issues.

The Code continues this theme of good communication, by referring to mediation and highlighting the importance of independent third parties in resolving disputes. These may be within the employer's organisation as well as external mediators. Mediation if deployed sensibly and skilfully can provide numerous benefits when compared with the alternative of litigation, including:

  • lower costs than litigation;
  • less management time required;
  • early intervention; and
  • it may help to identify the issues if a claim is later made.

Research indicates that when used effectively, mediation can result in successful outcomes around 80% of the time. Employers may wish to consider mediation training for HR staff and sourcing external mediators, as well as referring to mediation in grievance and harassment policies. Employees and, where appropriate, their union representatives should be involved in the development of any new rules and procedures.

Key Messages For 2009

Ensure that redundancy selection criteria do not discriminate against older (or younger) employees

Consider carefully both components needed to demonstrate objective justification for implementing an enhanced redundancy scheme which does not reflect the statutory scheme (legitimate aims and, crucially, proportionality).

Ensure you implement an objective appraisal system which is carried out on a regular basis

Be empathetic with employees who are going through or have survived a redundancy process

Consider using mediation as a cheaper (and less stressful) method of resolving disputes

Catriona Aldridge
Dundas & Wilson LLP

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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