Focus on Employment Law August 2006

Key Provisions
Scope

The majority of the new rules will apply to the broad definition of workers (including agency workers and independent contractors) and employees as well as certain self-employed individuals and partners.

What will be outlawed?

• Direct discrimination
This will occur where, on the grounds of A's age, B treats A less favourably than he treats or would treat other persons, with the comparison to be drawn between A and a
person in the same relevant circumstances.

This extends to less favourable treatment on the grounds of apparent age, for example believing that somebody is older than they
actually are.

Some examples:
sending a birthday card which pokes fun at getting older (and how many times
have we all seen that!)
withdrawal of access to benefits to employees of a certain age
failure to train or promote due to incorrect assumptions of being “over the hill”Unlike most other forms of discrimination, direct age discrimination can be justified and therefore lawful, if it can be shown that it amounts to a proportionate means of achieving a legitimate aim of the business.  This means that the treatment in question
must relate to a business need, which will then be weighed against the discriminatory impact. Some potential examples of justification would be training requirements
and the need for a reasonable period of employment before retirement.

• Indirect discrimination

This involves the application of a provision, criterion or practice applied equally to the same age group, but which puts persons of a particular age group at a disadvantage
and which cannot be justified, as above. An example would be specifying that candidates must have a minimum number of years experience.

• Victimisation

This prohibits less favourable treatment in retaliation against those who make or are involved in complaints of age discrimination, for example passing over for promotion a person who gave evidence in a former colleague’s age discrimination complaint.

• Harassment

This has its own stand-alone definition, namely unwanted conduct, on the grounds of age, which has the purpose or effect of violating a person’s dignity or creating an intimidating, hostile, degrading, humiliating or offensive environment for that person.  Employers can breathe a sigh of relief, as this does not mean that it is free reign for the highly over-sensitive to claim harassment on the basis of a seemingly innocuous remark.  Any such “degrading” treatment will only be regarded as meeting the definition if, considering the circumstances –including the perception of the individual - it should reasonably be considered as having that effect. An obvious example is an employee being subject to unwanted jokes and taunts about his or her age.
Practical Impact

If discrimination which is covered by the regulations relates to one of the following matters it will be potentially unlawful:-  of the key changes to be:-

The arrangements an employer makes for the purposes of determining to whom employment should be offered. Refusing to offer or deliberately failing to offer a person employment on the terms on which employment is offered. The terms afforded by an employer to a person in employment. The opportunities afforded in relation to promotion transfer training or the receipt of any other benefits.
Dismissing the person or subjecting him or her to any detriment. The following areas are likely to be particularly affected.

Recruitment and Promotion

Care must be taken to ensure that advertisements are not drafted in such away as to potentially evidence an intention to discriminate. Employers will also need to review carefully questions on application forms, job specifications and advertising literature and consider whether the way in which they target potential job applicants could be potentially discriminatory. Employers are well advised to conduct an audit of all aspects of their recruitment procedures before these regulations come into force. Particular attention should be paid to job specification criteria. Some examples of practices which may the new regulations would be as follows:-

A requirement for applicants to be recent graduates.
Rejecting a candidate “on paper” on the basis of being “overqualified” without testing any anticipated lack of motivation at interview.
Requiring applicants to have a minimum number of years experience at a certain level.
Employers must also ensure that ageist assumptions do not taint performance management processes such as reviews and appraisals and should review eligibility for promotion opportunities which may often
depend on age related criteria (for example having a certain number of years experience at a previous grade for promotion to a higher grade).

National Minimum Wage

A clear example of age discrimination in practice is the National Minimum Wage which

is set at different levels depending upon the age of the worker (currently £3.00 for those aged 16 and 17; £4.25 for those aged 18 to 21 and £5.05 for those aged 22 and over). However, a specific exemption is granted to permit different rates of remuneration

according to age where this relates to National Minimum Wage entitlement. It should be noted that these rules will not protect employers who, on an arbitrary basis, pay different rates above the National Minimum Wage to workers as according to their age.

Service Related Benefits

A further exemption to the application of the age discrimination rules exists in relation to the provision of benefits which are linked to an employee’s length of service. This is limited up to 5 years service, after which the use of length of service will require the employer to adduce a good business reason.

Retirement and Dismissal

It has been well publicised that the legislation shall establish a default retirement age of 65. Accordingly, employers will be required to justify retirement ages below this level. A potential minefield for employers will be the new procedural requirements which apply to retirement dismissals and which:-
Require employers to inform employees of their retirement dates at least 6 months in advance.
Allow employees to request working beyond 65 up to 3 months before retirement.
Remove the current upper age limit for unfair dismissal (Which is 65 or the employer’s normal retirement age which ever is the greater).
Remove the upper and lower age limits for statutory redundancy pay though thecurrent age banded system will remain in place.

Compulsorily retiring employees at age 65 or above will not amount to age discrimination but the penalties for noncompliance with the procedural requirements include a fixed monetary penalty and the potential for employees to claim that their dismissal was automatically unfair. The transitional provisions which cover retirements in the period 1 October 2006 to 1 April 2007 are complex and will also require detailed consideration.

The procedures are designed to
facilitate constructive dialogue between employees who wish to continue working beyond retirement. The procedure set out is akin to the statutory procedure applicable to applications for flexible working arrangements and whilst the employer is under a duty to properly consider the request it is not obliged to accept it and provided that the procedures are followed correctly an employee whose application to
work beyond retirement is turned down will have limited means of redress.

Act Now - be ready
This is a ground breaking piece of legislation which will affect young and old alike and have a significant impact on the work place. Employers must act now to review their recruitment policies and practices, application forms, redundancy policies, provision of benefits, promotion, equal opportunities policies, access to training and retirement.

How Can Kuits Help?
Contact Sally Bird or Fiona Chadwick for expert advice and assistance in this area, or to arrange an audit of your practices, policies and procedures for a fixed fee. We are offering on-site briefings for a fixed fee of only £250.00 plus VAT. The aim is to educate and train managers and those involved in recruitment and termination decisions on the main provisions of these Regulations and likely pitfalls. The briefings can be presented to up to 10 delegates and will last for 90 minutes.
If you are interested, please contact Sally Bird on 0161 832 3434 or by email to sallybird@kuits.com

Tales from the Tribunal

BNP member was not discriminated against on grounds of race

The Court of Appeal overturned the well publicised decision of the Employment Appeals Tribunal that an employee who was also an elected BNP councillor (who did not have sufficient service to claim unfair dismissal) was dismissed “on grounds of race”. It was not alleged that he had been racially abusive at work, however, the employer had dismissed the employee in response to bad publicity after complaints were raised by Unions on behalf of their Asian members who objected to working with him because of his openly held views. The employee was dismissed due to resultant concerns about health and safety, and this was found to have been on “racial grounds”. The Court of Appeal said that to allow his
case to succeed would be at odds with the purpose and intention of the Race Discrimination Act, and overturned the decision.

Businesses should heed TUPE consultation requirements

Under the Transfer of Undertakings (Protection of Employment) Regulations 2006, an employer is required to consult with employees who will be affected by a transfer (or acquisition) of a business in
which they work. An employer who fails to comply with this obligation will be liable to pay each affected employee up to 13 weeks pay. It should be noted that a weeks pay is calculated by reference to the employee’s salary and is not subject to a statutory cap of £290.00.

In a recent case the EAT held that the correct way to assess compensation for a failure to consult under TUPE is to award the maximum unless the employer can point to circumstances which would justify a
reduction. It is also worth noting that under TUPE 2006 both the seller and the purchaser are jointly and severally liable for a failure to inform and consult. This changes the position developed through case law under TUPE 1981 which meant that the purchaser was liable for the failure, even if it arose as a consequence of the seller’s default.

Rolled up Holiday payThe ECJ has added to rather than settled the long running debate on the legality of rolled up holiday pay by ruling that it is unlawful on the basis that it is incompatible with the Working Time Directive and that holiday pay should be paid for a specific period during which the worker actually takes leave. Previously, the UK Courts had found that it was lawful provided that it was a true addition to a workers hourly rate of pay, that the percentage of pay allocated to holiday entitlement was clear in a worker’s contract and if possible on the payslip and that records of holiday were kept and reasonable steps were taken to ensure that the worker actually took their holiday before the end of the leave year.However, the ECJ decision does not resolve the position once and for all as it also held that amounts paid to a worker under a rolled up holiday pay arrangement can be “set off” against the worker’s entitlement to paid leave provided it is a clear and transparent system. On that basis rolled up holiday
pay arrangements could be maintained by following the guidance set down by the UK courts. Employers who operate rolled up holiday pay systems must review this with their lawyers. However, the main problem with this approach is that if a worker takes leave early in the leave year, there may not be enough rolled up holiday pay accrued to set off against the specific period of leave taken. Therefore holiday requests under a rolled up arrangement are likely to become an administrative headache as employers will have to check whether the worker has accrued sufficient pay to cover the time they want off as well as maintaining accurate holiday records and ensuring that staff actually take leave, which in the case of businesses operating a casual or “bank” workforce could be extremely difficult, time consuming and expensive. Expired Disciplinary WarningsIn another important case, which deals with a point that regularly arises in day to day practice, it was held that an employer cannot rely on an expired disciplinary warning when considering dismissing an employee. The facts of the case were that an employee had been given a written warning which was held on his record for 12 months for failing to comply with a basic health and safety rule. Five months after the warning expired, an incident occurred as a result of which another employee died. The employee (along with 17 other colleagues) was found to have ignored the same rule that he had previously been warned for disregarding. He was dismissed but his colleagues were not on the basis that he had done the same thing again having been formally disciplined for it in the past. The employer concluded that he was incapable of following basic rules put in place for his safety and that of his colleagues. The Court however found that an expired warning cannot even be considered as one factor among many in deciding a sanction to be applied to an employee. The decision is unequivocal and could be described as somewhat surprising given the serious and tragic consequences in this particular case.

Legislation Update The Work and Families Act

Fiona Chadwick
Employment Lawyer

It is proposed that entitlement to Statutory Maternity Pay (SMP) and Statutory Adoption Pay (SAP) will be extended to 9 months for those due to have a baby or adopt a child after 1 April 2007 with a view to increasing entitlement to 12 months the following year.  In addition, the qualifying period of 6 months for entitlement to take Additional Maternity Leave (AML) will be removed.  Whilst the above reforms will undoubtedly cause concern for employers some of the following reforms to the current maternity and parental leave regime reflect common sense and will be welcome:

• a significant increase in the notification an employee must give when returning early from maternity leave from 28 days to 8 weeks.
• an employer will be permitted to have reasonable contact with the employee during the maternity leave period
• the introduction of “keeping in touch-days” which will enable employees on maternity leave or adoption leave to work a limited number of days without forfeiting their entitlement to SMP or SAP.