People law in brief - March 2011

Focuspoint

The budget was published on 23 March 2011 and it contained a number of announcements that will affect People Managers and employment law.  The government envisages that this budget will be a plan for growth which it states will remove barriers to growth by reducing red tape, particularly for small businesses.  Many of the measures set out have already been announced, which has lead to some commentators calling it a “no change budget”.  It did however contain a few surprises, including not bringing into force the dual discrimination provisions contained in the Equality Act 2010, repealing regulations extending the right to request flexible working to parents of children under 18 and making a promise to consult on the removal of the provisions in the Equality Act which require an employer to take reasonable steps to protect employees from third party harassment.

Dual Discrimination

As drafted, the Equality Act 2010 would have brought in provisions for an employee to be able to bring claims for discrimination on the basis of two protected characteristics.  For example, employees would be able to bring claims on the basis of being an older woman in circumstances where they would not have been discriminated against if they had been either older or a woman.  This provision will not now come into law. 

Removing the Extension of Flexible Working

You may remember that in January’s People Law in Brief we brought your attention to the fact that the government had drafted the Flexible Working (Eligibility, Complaints and Remedies) (Amendment) Regulations 2010 which would have the effect of extending the right to request flexible working to parents of children under 18 years of age.  The right currently extends to parents of children under 17 years of age.  After a rethink by the government, it was confirmed in the budget that this extension would be an “unhelpful complication” for employers.  The government have, however, stressed their commitment to extending the right to request flexible working to all employees in due course.

Third Party Harassment

In another possible change to the scope of the Equality Act, the government announced that they will begin a process of consultation about removing what it describes as an “unworkable requirement” on employers to take reasonable steps to prevent harassment of their employees by third parties.  At present, Section 40 of the Equality Act is drafted to make employers liable for repeated acts of harassment against their employees by third parties.  The government will now consult on the removal of this section of the Act. 

The budget also announced a general moratorium for start up businesses and employers with fewer than ten employees, exempting those companies from compliance with new domestic regulations.  This moratorium will last for three years and builds on the government’s “one in, one out” rule whereby a regulation can only be brought into effect if another one is removed.  This together with the introduction of “sunset clauses” into new regulations, enabling legislation to be reviewed and unworkable regulations repealed underlines the government’s commitment to reduce regulation where possible.

Another piece of regulation that is not now going to come into effect is the extension of the right for employees to request time off to train in companies of fewer than 250 employees. 

In the budget the government also reminded us that they are looking to reform the Employment Tribunal system.  This is already subject to public consultation which includes the possibility of introducing Tribunal fees and increasing the qualifying period for Unfair Dismissal from one to two years.

Predictably, the budget received a mixed response, with the CBI welcoming the removal of regulation and the TUC complaining that the budget did nothing to reverse the effects of the spending cuts.  Interestingly, the Chartered Institute of Personnel and Development (“CIPD”) expressed concerns about the moratorium on all new employment regulation for small firms, considering that there is a risk that it will create a two tier labour market with the potential that this could have a perverse disincentive for growth amongst firms considering employing the extra staff member that would bring them into the “regulated tier” of the labour market. 

As always, we welcome feedback from People Law in Brief readers and we encourage you to contact us with your thoughts on these developments and what impact they may have on your business. 

Briefcase news

Employment Appeal Tribunal (“EAT”) and Court of Appeal

In a busy month for the Employment Appeal Tribunal (“EAT”) and Court of Appeal there have been a number of cases which shed more light on the law in relation to employee status, disability discrimination and Some Other Substantial Reason (“SOSR”) dismissals.

In the case of Knight v BCCP, the EAT decided to reaffirm the position that without a mutual obligation to accept and offer work, there can be no employment relationship.  The Claimant was a taxi driver engaged by a taxi firm for just over six weeks.  He did not receive any holiday pay, sick pay or overtime, and whilst he worked under the taxi firm’s control to a degree, he only received pay for the occasions he actually worked.  The Employment Tribunal found that the Claimant was under no obligation to accept work and the taxi firm was under no obligation to offer work and therefore it held that the Claimant was not an employee.  This decicsion was upheld by the EAT.  This is unsurprising in light of the case of X v Mid Sussex Citizens Advice Bureau and Another, which was reported in last month’s People Law in Brief.  In this case, it was found that in the particular circumstances of the case, the Claimant, who was a volunteer for the CAB, was not under the necessary obligation to accept work needed to make her an employee.

There has also been clarification from the EAT in relation to the legal position of SOSR dismissals this month.  The recent case of Eszias v North Glamorgan NHS Trust is authority for the proposition that where a dismissal is primarily because of a breakdown in trust and confidence caused by the employee’s conduct, an employer is not required to follow a disciplinary procedure prior to dismissal in the same way that it would do if the employee was being dismissed for misconduct.

The Claimant was a Consultant Surgeon who had claimed automatic Unfair Dismissal because of a protected disclosure (whistleblowing).  An investigation found that the Claimant’s conduct had lead to a breakdown of the relationship between the parties that meant that many of the Claimant’s colleagues would not be happy to work with him again.  The Tribunal found that the Claimant’s alleged protected disclosure was not made in good faith and that the dismissal was not due to the disclosure but rather due to the breakdown in trust and confidence caused by the employee.  The employer was not therefore bound by the ACAS Code of Practice or its own disciplinary procedures. 

This is a helpful reminder of when SOSR can be used by employers as a fair reason for dismissal in a situation where the relationship between the parties has broken down.  It should not however be relied on to justify a dismissal without detailed legal advice as it is very difficult to prove that the employment relationship has broken down to such an extent that an SOSR dismissal would apply.  SOSR is therefore usually used as a fallback position in the Employment Tribunal if the Tribunal do not agree with another fair reason put forward by the employer for an employee’s dismissal.

In the further EAT case of Tameside Hospital NHS Foundation Trust v Mylott, it was found that the Employment Tribunal had incorrectly awarded aggravated damages and had wrongly concluded that a failure to look into the possibility of the Claimant taking ill health retirement had been a failure to make a reasonable adjustment. 

Whilst the EAT upheld much of the Tribunal’s findings, it decided that a finding of malice against a manager which would allow an award of aggravated damages against an employer was a serious finding which should not be made lightly and which should be fully supported.  The EAT thought that the Tribunal’s findings were not sufficiently justified in relation to this and therefore it reduced the Claimant’s compensation by £6,000.

In a similar decision to the Court of Appeal case of O’Hanlon v Commissioners for HM Revenue and Customs which found that it would only rarely be a reasonable adjustment to give higher sick pay to a disabled employee, the recent case of Mylottalso concluded that the duty to make reasonable adjustments does not extend to enabling a disabled employee who is no longer able to work to leave employment on more favourable terms.  Reasonable adjustments are steps which make it possible for the employee to remain in employment, and do not extend to, in effect, providing compensation for being unable to do so.

It is a helpful example of the EAT following a sensible decision of the Court of Appeal which provides more understanding about an employer's duty to provide reasonable adjustments to facilitate the work of disabled employees.

Stop the press - The Two-tier workforce Code has been withdrawn with immediate effect.

Eric Pickles, the Secretary of State for Local Government and Communities, has very recently announced that the Code of Practice on Workforce Matters in Local Authority Service Contracts - colloquially known as 'the two tier code' - is to be repealed with immediate effect.

The Code of Practice, which has been operative since 2003, dealt with the terms and conditions (including pensions) of new joiners, and sought to ensure that private contractors recruit new employees on the same terms and conditions as those that applied to other parts of their workforce whom they inherited in accordance with the TUPE Regulations following local authority outsourcing. The other guidance set out principles for procurement and the handling of workforce matters, including equalities and health and safety at each stage of the procurement process.
The abolition of the 2003 Code and associated guidance will not be applied retrospectively. Therefore, existing contracts and the employment terms that flow from them will not be affected by the repeal. The move was widely anticipated when, in December 2010, a Code of Practice on Workforce Matters in Public Sector Service Contracts 2005 was also repealed with immediate effect. The Government will now be consulting on whether any new guidance, such as a statement of good employment principles, should take the place of the repealed Code and guidance.

The abolition of the 2003 Code and associated guidance will not be applied retrospectively. Therefore, existing contracts and the employment terms that flow from them will not be affected by the repeal. The move was widely anticipated when, in December 2010, a Code of Practice on Workforce Matters in Public Sector Service Contracts 2005 was also repealed with immediate effect. The Government will now be consulting on whether any new guidance, such as a statement of good employment principles, should take the place of the repealed Code and guidance.

And Finally

This month, Taylor&Emmet's employment team has welcomed two new Legal Assistants expanding the team to five, making it one of the largest Employment Law Departments in South Yorkshire. Holly Wright and Becky Hutchinson have joined us to provide additional support to the team which has experienced a period of unprecedented growth in work over the last year or so.