Employment Law Update
| Published: 11th February 2008 11:30 |
February 11, 2008
In this edition
• To retire or not to retire - case law on the interpretation of the UK's default retirement age of 65;
• Discrimination by association - protection from discrimination for those connected with a disabled person;
• Decline of the annual pay rise - employers are departing from the arbitrary pay increase in favour of performance related pay;
• No unfair dismissal for agency worker - express contractual terms define the relationship unless they can be shown to be a sham;
• Employee can cherry pick terms under TUPE - employees can choose which contractual changes to observe following a TUPE transfer;
• Consultation required for closure - employers have an obligation to consult with employees about economic decisions affecting the workforce.
TO RETIRE OR NOT TO RETIRE?
The UK's anti-age discrimination legislation was introduced over 12 months ago via the Employment Equality (Age) Regulations, which allows employees to be retired at the age of 65 provided a set procedure is followed.
However, the Heyday group, an organisation affiliated to the charity Age Concern, is currently challenging the Government's default retirement age, claiming that it is inconsistent with the European Directive on age discrimination.
The case has been referred to the European Court of Justice (ECJ), although a ruling is not expected until 2009. Until a decision is reached, claims brought by employees are being put on hold pending the outcome.
Two conflicting tribunal decisions highlight the web of uncertainty surrounding the Age Regulations. In the first case, Seldon v. Clarkson Wright and Jakes, it was held that the law firm CWJ had not discriminated against senior partner Seldon by making him redundant when he reached the age of 65. CWJ successfully claimed that, although Seldon had been subjected to less favourable treatment, their decision could be justified on business grounds, such as workforce planning.
Conversely, in the second case, Hampton v. Ministry of Justice, the MoJ's argument that Hampton's compulsory retirement from his position of Recorder (a part-time Judge) could be objectively justified was rejected by the tribunal. In a similar argument used in the first case, the MoJ had stated that it was necessary to retire Recorders at 65 to create positions for fresh blood to enter the judiciary.
Although there will not be clear interpretation of the Regulations for employers until the ECJ's ruling on Heyday, it is hoped that the EAT will be able to provide some guidance on what amounts to objective justification.
DISCRIMINATION BY ASSOCIATION
The European Directive on Equal Treatment provides protection to employees "on grounds of religion or belief, disability, age or sexual orientation". In 2006, a tribunal referred the question to the European Court of Justice (ECJ) of whether the Directive provided protection not only to a disabled employee but also to those who have an association to the disabled, such as a carer or spouse (Coleman v. Attridge Law and Law).
In a preliminary ruling the Advocate General, whose opinion is normally followed by the ECJ, has recently held that the Directive prohibits direct discrimination and/or harassment by association, stating that "one way of undermining the dignity and autonomy of people who belong to a certain group is to target not them, but third persons who are closely associated with them and do not themselves belong to the group".
This means that carers will be protected against less favourable treatment or harassment due to their association with a disabled person. In addition, it is more than likely that the same principle will be extended to the other grounds referred to in the Directive, namely religion or belief, age or sexual orientation, meaning that protection is afforded to an employee who, for example, is married to someone of a particular religion.
Employers should take this ruling as a prompt to review equal opportunities/harassment and absence policies, and also openly discuss any requests for flexible working or time off with the employee to understand the reason behind it to avoid any potential claims of associative discrimination.
DECLINE OF ANNUAL PAY RISE
A recent CIPD survey, Reward Management, has established that many employers, particularly within manufacturing, production and private sector organisations, are no longer awarding employees with a traditional across-the-board or cost-of-living annual pay rise.
It seems that increases are instead being awarded based on the individual's contribution to the business, rewarding more handsomely those of high potential.
In addition, it has been widely reported that pay deals within the public sector have controversially moved from annual pay negotiations to settlements every three years. Teachers, police and nurses have all been subjected to such government pay deals, although negotiations have not gone smoothly with unions expressing concern that the longer-term settlements will, in fact, result in cuts to pay, particularly if there are future rises in inflation.
To encourage agreement to a pay deal of a more long-term nature, employers are offering additional benefits such as increased holidays, maternity/paternity entitlement or flexible working hours.
Charles Cotton, CIPD adviser for reward and employment conditions, warned that however an employer chooses to reward staff, any changes must be clearly communicated by line managers to avoid leaving employees feeling confused, demotivated and in the dark about what they need to do to achieve reward and recognition.
NO UNFAIR DISMISSAL FOR AGENCY WORKER
Employers and agency workers can breathe a sigh of relief following the Court of Appeal's (CA) recent decision in James v. Greenwich Council, which has finally put an end to the uncertainty surrounding the employment status of an agency worker.
James was temporarily employed by the Council, but when told that she was no longer required, she claimed that she had an implied contract of employment with them and brought a claim of unfair dismissal.
The CA agreed with the decision of the EAT in that, as there was no written contract of employment, James had no status as an employee, reiterating that express contractual terms should take precedence, unless these are shown to be a sham.
Many employers rely on the flexibility of temporary workers to support business at key periods, so a decision to the contrary may have severely reduced the number of such positions being available to agency staff due to fear of an employment relationship being implied.
However, a new bill for the equal treatment of agency workers has been proposed with MPs, together with agency workers from across the country, meeting early this month at the House of Lords to discuss why such protection is needed. It is, therefore, a case of watch this space for possible future legislative changes.
EMPLOYEES CAN CHERRY-PICK TERMS UNDER TUPE
The Transfer of Undertakings (Protection of Employment) Regulations (TUPE) has always been a matter of complexity and frustration for employers, particularly with regards to making changes to the terms and conditions of transferring employees. The amended Regulations of 2006 confirmed the principle that any attempted variation of a contract of employment is void (unless the change is due to an economical, technical or organisational reason), even if the employee has consented to it.
However, the Court of Appeal (CA) has recently considered if terms and conditions can be consensually varied if to the employee's benefit. In Power v. Regent Security Services Ltd, Power's contractual retirement age, with his agreement, was increased from 60 to 65 as a result of a TUPE transfer. However, the new employer sought to retire him at 60, arguing that the contractual retirement age was ineffective as it was entered into by reason of the transfer alone. The CA rejected this argument, emphasising that the incoming employer cannot later rely on TUPE to avoid being bound by any new terms that it agreed with the transferring employee. It also held that the employee has the right to choose between enforcing the original terms of their contract or the new, more beneficial amendment, meaning that employees can effectively "cherry-pick" the more favourable terms.
Obviously this creates even more uncertainty for the new employer, who may have to wait some time, when the particular subject actually becomes an issue, before establishing which term the employee has accepted - for example, redundancy payments, ill-health provision or normal retirement age.
In order to prevent "cherry-picking", when making contractual changes - some of which may be more advantageous than others - the incoming employer should ensure that agreements are carefully drafted so that the variations stand or fall as a package, meaning that if the employee challenges the less favourable changes they also lose the beneficial terms.
CONSULTATION REQUIRED FOR CLOSURE
The Trade Union and Labour Relations (Consolidation) Act (TULRCA) requires that employers considering making 20 or more positions redundant at a single site within a 90-day period hold consultations with the union or employee representatives in order to discuss possible ways of avoiding or reducing the redundancies before issuing notices of dismissal.
However, through case law, it was held that employers were not obliged to consult on the reasons behind the proposed redundancies, meaning a decision could be made to close a workplace prior to any consultation taking place.
The recent case of UK Coal Mining Ltd v. NUM has indicated a clear departure from this viewpoint, with the EAT stating that employers now have an obligation to consult with the workforce over economic decisions, including possible future closure. This decision is largely due to the introduction of the Information and Consultation Regulations (ICER) introduced in 1994.
Employers who fail to consult before firm decisions are taken which may lead to redundancies therefore face possible awards of up to 90 days' pay for each employee made redundant. This should serve as a reminder for employers to take consultation seriously.
©2008 hancocks solicitors|15 Wheeler Gate| Nottingham | NG1 2NA |
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