Employment Review - September 2009
We consider the very recent decision of the High Court in the Heyday case, being the challenge to the legitimacy of the default retirement age of 65.
We look at the decision of the Rolls-Royce case in the Court of Appeal on the lawfulness of using length of service in a redundancy selection matrix and also an important decision on the application of Regulation 4(9) of TUPE 2006 which allows employees to claim that they have been dismissed where they resign in the face of a substantial change to their working conditions to their material detriment on a TUPE transfer.
Finally, we refer to a couple of recent decisions on an employee’s entitlement to legal representation at internal disciplinary hearings.
David Potter
Increase in the National Minium Wage
National Minimum Wage and Tips
Maximum Week’s Pay
The Safeguarding Vulnerable Groups Act 2006
Right to request time off for training
Changes to paternity leave
Mandatory retirement age
Redundancy and age discrimination
TUPE - deemed dismissal where a substantial change to working conditions to the employee’s material detriment
Right to legal representation at internal disciplinary hearings
LEGISLATION UPDATE - OCTOBER 2009
Increase in the National Minium Wage
The National Minimum Wage has now been with us for 10 years. As of 1 October 2009 the National Minimum Wage is increasing as set out below.
16-17 year olds - £3.53 to £3.57
18-21 year olds - £4.77 to £4.83
22 years and older - £5.73 to £5.80
National Minimum Wage and Tips
From 1 October 2009 employers will be prevented from using service charges, tips and gratuities, processed through their payrolls, in assessing whether employees are receiving the National Minimum Wage. This was the Government’s response to public outcry that tips were not going to the right individuals. The Department for Business, Innovation and Skills is said to be working on a new Industry Code of Best Practice.
With effect from 1 October 2009 the maximum limit on a week’s pay will be increased from £350 to £380. The main motivation for this was to provide more support for individuals made redundant in the current economic climate but the increase in the limit will affect all compensation payments based on the week’s pay limit. Clearly the most common impact will be on entitlements to statutory redundancy payments but this is also used in calculating the basic award in the calculation of compensation for unfair dismissal.
This one off increase in October 2009 means that the usual annual up-rating of the limit which would take place in February 2010 will be suspended and therefore there should not be any further increase until February 2011.
The Safeguarding Vulnerable Groups Act 2006
The new Independent Safeguarding Authority scheme is launched on 12 October 2009. The Act provides the framework whose aim is to prevent those who pose a risk of harm to children or vulnerable adults from gaining access to them via their work or voluntary activities.
The three current barring lists will be replaced by two new lists, the “Children’s” and “Vulnerable Adults” lists and employers will be able to make checks on line. Employers who knowingly employ individuals on the barred lists could face criminal prosecution. Individuals may apply to become ISA-registered from 26 July 2010 but must register from November 2010.
FUTURE LEGISLATION
Right to request time off for training
In June 2008 as part of the Apprenticeships Bill the Government commenced a consultation on granting employees the right to request time off to undertake training.
That consultation closed on 10 September 2009 and it is proposed for this new law to come into force in 2010. Under the proposals employees may request time off to undertake relevant training once they have worked for 26 weeks or more.
The process of making and responding to such requests is anticipated to follow that currently used for requests for flexible working. It is not proposed that employees will have to pay for the training or for the time off. The employee will have to indicate, in the application for time off, how the training will improve business performance and productivity as well as the employee’s effectiveness.
Employers may refuse a request if one or more of identified permissible grounds exist. The employer will only have to consider one application for time off in any 12 month period and, further, agency workers are to be excluded from this right.
The Government had originally planned to introduce changes to additional paternity leave and pay in 2009 but it has now been confirmed that the aim is to bring this into force by April 2010 but it will only be effective for parents of children due on or after 3 April 2011.
Pursuant to the planned rules, mothers will be able to transfer some of their maternity leave entitlement to the father. Essentially, mothers with maternity leave outstanding in the second 6 months of the child’s life will be able to transfer up to 6 months of maternity leave to the father. It is proposed that parents will be required to “self-certify” by providing details of their eligibility to their employer. However, both employers and HMRC will be able to carry out further checks on entitlement if necessary.
The High Court has delivered its decision in the case of R (on the application of Age UK) v Secretary Of State For Business, Innovation & Skills Commission popularly known as the Heyday Case.
In the final stage of a three-year legal battle the High Court has ruled that the default retirement age (DRA) of 65, was not unlawful when introduced by the government back in 2006.
The ruling means the Heyday case brought by charities Age Concern and Help the Aged has been dismissed, meaning that it should still be legal for UK employers to require workers to retire at the age of 65.
However Mr. Justice Blake in summing up the case indicated that were it not for the overnment’s earlier decision to bring forward a planned review of default retirement from 2011 to early 2010, “the position might have been different”.
In a decision handed down on the 25th September, Mr. Justice Blake noted there was now a “compelling” case for setting the age higher than 65 and further in his judgment stated: “I cannot presently see how 65 could remain as a DRA after the review.”
Future developments
It seems likely in the face of the High Court’s comments that the government’s review in 2010 will mark further changes to DRA provisions.
In the meantime the Equality and Human Rights Commission (”the EHRC”) has announced that it will continue to push the government to abolish the DRA using the Equality Bill, which is soon to be debated in the House of Lords, rather than wait until a review of the policy next year. The Bill will resume in the House of Commons in the autumn and will move to the House of Lords in the New Year, where it is expected to receive Royal Assent in April.
Where do employers go from here?
Hundreds of retirement-related employment tribunal cases, which have been on hold awaiting the outcome of this legal challenge, can now move forward. However the EHRC maintains that tribunals will have to take into account the judge’s observations on the legality of a DRA of 65 in 2009 when considering these cases. Given the Judge’s comments, employers should take legal advice regarding their future policy on retirement in the period leading up to the planned review of the DRA.
Redundancy and age discrimination
Court of Appeal finds that length of service criterion in redundancy matrix was lawful.
Rolls-Royce plc v Unite the Union - We have previously reported this decision when it went to the High Court. Since then, the decision was appealed to the Court of Appeal and we now have that Court’s decision.
The facts were that Rolls-Royce had a collective agreement with Unite which contained an agreed method of selection in a redundancy exercise and length of service was described as a “deciding factor” where employees otherwise scored equally under other aspects of the selection matrix. Rolls-Royce was concerned that use of the length of service criteria might constitute unlawful indirect discrimination under the Employment Equality (Age) Regulations 2006.
The Court of Appeal decided that although use of length of service was indirectly discriminatory, it was justified as being a proportionate means of achieving a legitimate aim. The legitimate aim was identified as a reward of loyalty and the overall desirability of achieving a stable workforce in the context of a fair process for redundancy selection. It was found to be proportionate because length of service was only one of many criteria in the selection matrix and was consistent with the over arching concept of fairness and young employees accepted it.
The Court also indicated that it would have found that length of service was capable of constituting a “benefit” based on length of service within Regulation 32 of the Age Regulations which would have also made it lawful.
Should you use length of service?
Whilst the Rolls-Royce decision would appear to be helpful to any employer using length if service in a selection matrix, it was a decision made on its own facts where the employer had a collective agreement agreed with the Union prior to the implementation of the Age Regulations. Using length of service is clearly indirectly discriminatory and, therefore, open to challenge and it will be for each employer to justify its use of length of service or how it says it should constitute a “benefit” within Regulation 32. Further, if it is to be used, it should only be one of a number of other criteria within the selection matrix.
The safer option is clearly not to use length of service and most employers are alive to the need not to include selection criteria that are potentially challengeable as discriminatory. The difficulty in practice is finding selection criteria that are sufficiently objective such that the marks that are awarded can be justified. One of the benefits of “last in first out” was that it was objective in the sense that it was easy to identify length of service.
TUPE - deemed dismissal where a substantial change to working conditions to the employee’s material detriment
In Tapere v South London & Maudsley NHS Trust the Employment Appeal Tribunal had to consider the operation of Regulation 4(9) of TUPE 2006. Regulation 4(9) was introduced in the 2006 Regulations and often comes up for consideration when considering the impact of a TUPE transfer.
TUPE 2006 now provides that a dismissal will be automatically unfair if the reason for dismissal is either:-
1. The transfer itself;
2. A reason connected with the transfer that is not an economic, technical or organisational reason entailing changes in the workforce.
Whilst this obviously applies to actual dismissals, TUPE 2006 deems there to be a dismissal where the employee resigns in response to:-
1. An employer’s repudiatory breach, i.e. where the employee claims constructive dismissal (Regulation 4(11); or
2. A substantial change to the employee’s working conditions to their material detriment (Regulation 4(9).
One of the practical issues on a TUPE transfer is that often there is no change to the contractual terms and conditions of employment other than a change in the place where the employee is expected to work.
In the Tapere case, the employee, as a result of a TUPE transfer, was asked to move her place of work from Camberwell to Bethlem Hospital in Beckenham. The case involved a detailed analysis of the meaning and effect of the mobility clause within the employee’s contract but what is more interesting is the Court’s comments on the impact of Regulation 4(9). The Court said that the question of whether there had been a substantial change in working conditions was a question of fact to be determined by reference to the nature as well as the degree of change.
Further, “working conditions” could apply to physical conditions as well as contractual terms and conditions of employment. It also found that the question of whether the change was substantial or, to the employee’s material detriment, did not have to be looked at from an objective point of view.
It was necessary to consider the nature as well as the degree of the change and the character of the change to determine whether the change was substantial. In terms of whether this was to the employee’s material detriment this had to be more than trivial or fanciful but should be considered from the employee’s point of view. On the facts, the change in workplace meant potential disruption to the employee’s childcare arrangements and a longer or different journey which she did not want to undertake.
Managing the risk
Both transferors and transferees need to be alive to the potential impact of Regulation 4 (9) where there is a TUPE transfer either on an acquisition or change of contractor and where there is likely to be any change in working conditions which could be said to be to the material detriment of the employee. Consideration should be given to which party carries the risk of any liability for unfair dismissal should that employee resign and rely on Regulation 4(9). Where this is possible, the apportionment of risk should be dealt with in any contract dealing with the acquisition/sale of a business or within the outsourcing contract. Clearly where the risk should fall will be a question of bargaining position between the parties.
Right to legal representation at internal disciplinary hearings
Recent cases have shown that in limited situations an employee may have the right to legal representation at internal disciplinary hearings.
Legislation
Under s.10 Employment Relations Act 1999, the employee’s right to be accompanied at a disciplinary or grievance hearing is limited to a colleague or trade union official. Whilst employees often seek to be legally represented at these hearings, employers will often refuse such requests in order to keep proceedings informal and their own legal costs down.
Exceptions
In R (on the application of G) v The Governors of X School and another [2009] EWHC 504 a teacher argued that Article 6 of the European Convention of Human Rights (ECHR), the right to a fair trial, meant that he was entitled to legal representation at a disciplinary hearing where, if the allegations were upheld, his employer would be obliged under the Education Act 2002, to report him to the Secretary of State on the basis that he was unfit to work with children.
The High Court held that the gravity of allegations meant that he was entitled to legal epresentation at the disciplinary hearing and accepted G’s argument that because of the serious nature of the allegations of misconduct and the severity of the consequences, he was entitled to an “enhanced measure of procedural protection” as the right to appeal and/or claim for unfair dismissal did not provide an adequate remedy.
The case does not appear in isolation. More recently in Kulkarni v Milton Keynes Hospital Foundation Trust [2009] EWCA Civ 789 it was held that an NHSemployed doctor, originally suspended after a serious complaint was made against him, was contractually entitled to legal representation at an internal disciplinary hearing. The Court of Appeal suggested that Article 6 would be engaged when an employee faced circumstances that could result in them being deprived of the right to practise their profession.
Future Implications
In R v The Governors of X School and another the High Court expressly stated that this decision only related to the facts of this case and was not intended to have wider implications. In the vast majority of disciplinary hearings the statutory right to be accompanied will be sufficient where the outcome of the hearing does not necessitate a referral to another body to determine the individual’s ability to continue in their chosen career.
However the decision in R v The Governors of X School and another suggests that where public sector employees are faced with charges which threaten their continuing career, the provisions of Article 6 come into play which includes a right to legal representation in civil proceedings.
It also remains to be seen whether this decision should be applied to Private sector employees who may face dismissal for serious misconduct which could ultimately lead to their exclusion from their chosen area of work.
In any event employers who are dealing with issues of this nature should seek legal advice before undertaking any disciplinary process.
This update is only a summary of the law in force at the present time and is not exhaustive, nor does it contain definitive advice. Specialist advice should be sought from a member of the Freeth Cartwright Employment Team in relation to any queries that may arise.
David Potter
Cumberland Court,
80 Mount Street,
Nottingham NG1 6HH
Tel: 0115 936 9389
Fax: 0115 859 9617
david.potter@freethcartwright.co.uk
Joanne Kay
Floor 2, West Point,
Cardinal Square,
10 Nottingham Road,
Derby DE1 3QT
Tel: 0845 634 1724
Fax: 0115 859 9617
joanne.kay@freethcartwright.co.uk
Julian Middleton
One Colton Square,
Leicester LE1 1QH
Tel: 0116 248 1115
Fax: 0845 634 2595
julian.middleton@freethcartwright.co.uk
Pat Jones
St James Building,
61-95 Oxford Street,
Manchester M1 6FQ
Tel: 0845 634 2561
Fax: 0845 634 2541
pat.jones@freethcartwright.co.uk
Vanessa DiCuffa
3rd Floor, 75 Colmore Row
Birmingham B3 2AP
Tel: 0845 634 2584
Fax: 0845 634 2576
vanessa.dicuffa@freethcartwright.co.uk
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