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Oliver McCannn   


Employers Update - April 2011

Welcome to the April edition of Employ!

There have been a number of developments from the last Employ! edition, with the government guidance published for the Bribery Act 2010 (in force 1st July) and the draft guidance published for the Agency Worker Regulations (in force 1st October). In addition, a number of important cases have been decided.

Through Employ! we aim to keep you informed about key developments in HR and employment law, along with an indication as to what these developments actually mean for you.

As ever, keep submitting your HR questions. If you would like an informal discussion regarding any matter contained within this edition of Employ!, or indeed wish to find out more about Taylors’ services, please contact us.

Oliver McCann - Partner and Head of Employment
James Bellamy - Employment Solicitor

Tel: 0844 8000 263
Email: oliver.mccann@taylors.co.uk


In This Edition:

» Agency Worker Developments!
» Bribery Act 2010
» Unfair Selection!
» Homophobic Banter did not Constitute Harassment
» Notice of Dismissal – When does it Start?
» Your Questions

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Agency Worker Developments!

The Agency Worker Regulations come into force on 1st October 2011 and many have been awaiting publication of the government’s guidance, to try to understand the finer detail of some of the draft regulations.

The draft guidance was published at the beginning of April and, following consultation, will be finalised at the end of this month. A copy of the guidance can be accessed at this link.

What do I need to know?

If you use or supply agency workers, then you need to understand the important changes taking place from October 2011! The overriding theme is one of equal treatment for agency workers as if they were employed directly.

Key points:

  1. Agency workers will have day one rights – a right to equal treatment in terms of access to onsite facilities and information about vacancies.

  2. Agency Workers who accrue 12 weeks service with the same hirer in the same role will be entitled to equal treatment in relation to pay, working time and annual leave.

  3. The accrual of 12 weeks service is complicated with different situations resulting in the clock either being restarted, paused or continuing. Understanding these situations is important to understanding when the agency worker acquires rights.

  4. A temporary work agency (a supplier of agency workers) may include master/neutral vendors and intermediaries such as umbrella companies and person service companies. It does not cover managed service contracts where the contractor is responsible for the supervision of the workers and nor does the definition capture secondment or bank staff situations.

  5. Pay can include hourly rates, basic salary, fees, commission, overtime rates, shift allowances, holiday pay, bonuses based or attributable to quality or quantity of work and luncheon vouchers with a face value. It does not include company sick pay, pension payments (although agency workers will be covered under compulsory pension requirements from 2012), maternity or paternity leave payments, profit share schemes, long service awards, expenses or benefits in kind.

  6. The comparator test is what terms would ordinarily be applied if the worker had been recruited directly by the hirer.

  7. The agency worker can request information about compliance with obligations and which right it relates to will determine whose responsibility it is to respond. There are time limits to follow. A failure to respond can result in an Employment Tribunal drawing adverse inferences.

  8. Where there is a breach of the Agency Worker Regulations, liability for day one rights always rests with the hirer and in relation to week 12 rights initially with the agency (but the hirer may be jointly or fully liable if the agency can satisfy in whole or part the defence that it has obtained or took reasonable steps to get details of relevant information and it was reasonable to rely on any information supplied by the hirer).

In practice, the Agency Worker Regulations mean that there will have to be a close working relationship between the agency and the hirer with an exchange of information (and retention) between the parties so that each can assess the agency workers rights, if any, under the Agency Worker Regulations.

Note that any arrangement which is found to deliberately avoid the regulations where they would ordinarily “bite”, may result in an additional penalty, against either the agency or the hirer, of up to £5000.

Hirers of agency workers should be particularly aware that some suppliers of agency workers are attempting to use what is known as the “Swedish Derogation” – where the worker is permanently employed by the agency and the worker continues to be paid between breaks in assignments at a rate of pay at least 50% of on assignment basic pay and no less than the national minimum wage. Whilst this may be permissible under the exemption, it is critical that the hirer carries out proper due diligence to ensure that the arrangement would properly fall within the exemption, failing which both hirer and agency are exposed.

Bribery Act 2010

The government has now published its guidance in relation to the Bribery Act which means the Act will come into force on 1st July 2011.

What do I need to know?

In the January edition of Employ! we set out the key aspects flowing from the anticipated introduction of the Bribery Act 2010, details of which can be found here:- www.taylors.co.uk/employ/january2011.htm.

The guidance focuses on what “adequate procedures” are and what may be the basis of a defence against prosecution. Six guiding principles have been developed in relation to adequate procedures:

  • Proportionate procedures.
  • Top level commitment to the procedures.
  • Risk assessments to identify risky relationships or areas of exposure in procedures.
  • Carrying out due diligence on business relations.
  • Communication – ensuring all are aware of the procedures.
  • Ongoing monitoring and review.

The guidance can be accessed here: http://www.justice.gov.uk/guidance/docs/bribery-act-2010-guidance.pdf.

Unfair Selection!

A recent EAT decision has confirmed that favouring a woman on maternity leave in relation to redundancy scoring was both unfair and unlawful sex discrimination against the male comparator.

Here, a male solicitor was selected for redundancy after he scored lower than his colleague who was on maternity leave. The female solicitor was given a maximum notional score for a criterion which measured performance in relation to bills paid which in part covered the female’s maternity leave period. The male scored lower on this criterion and, as a result, overall. Had the female scored any less than the notional maximum she would have been selected for redundancy.

Eversheds defended the claim by arguing that s2(2) of the Sex Discrimination Act 1975 stated that “no account shall be taken of special treatment afforded to women in connection with pregnancy or childbirth.”

What do I need to know?

S2(2) should be construed so as only to refer to treatment which is a proportionate means of achieving a legitimate aim of compensating a woman for the disadvantages occasioned by pregnancy or maternity leave. This does not extend to favouring such employees beyond what is reasonably necessary to compensate them for any disadvantage.

Where a pregnancy or maternity related benefit is disproportionate, a disadvantaged colleague may claim sex discrimination.

Importantly, it was held that there were other ways to deal with the situation on scoring arising from the employee’s absence due to maternity which were less discriminatory, such as measuring the female’s performance during the period of employment before she commenced maternity leave.

Employers need to carefully consider any redundancy selection criteria to determine whether any are potentially unfair or favourable to certain employees. Problems usually arise in relation to disabled employees with poor attendance or long periods of absence, pregnant employees, those on maternity leave and those with poor attendance due to childcare issues.

Homophobic Banter did not Constitute Harassment

Under the Employment Equality (Sexual Orientation) Regulations 2003, harassment was defined as “unwanted conduct on grounds of sexual orientation” which had the purpose or effect of “violating a person’s dignity of creating an intimidating, hostile, degrading, humiliating or offensive environment” for them. The Equality Act 2010 has now replaced these regulations but the harassment provisions are basically the same.

A recent case determined that an employee’s claim of harassment under the Act failed, a decision that was upheld by the EAT.

The employee, who was not gay, complained that he had been harassed contrary to the Regulations. He argued that his colleagues had subjected him to homophobic banter because he had attended boarding school and lived in Brighton. The banter included calling him names such as “faggot”. The Court of Appeal confirmed that the employee was covered by the Regulations, despite not being gay himself.

What do I need to know?

The employee’s claim for harassment ultimately failed because he himself had written a number of articles which were riddled with sexist and ageist innuendo, was very friendly with his alleged tormentors throughout the period in question and did not complain about their conduct previously. As a result, it was held that the alleged offensive behaviour did not, actually in the employee’s eyes, have the effect of creating an intimidating, hostile, degrading, humiliating or offensive environment as he alleged.

Courts must approach the issue of harassment and its “effect” objectively but keep in mind the subjective position of the employee alleging to be the victim. A major reason for the failure of this claim was purely the fact that the employee had himself demonstrated offensive behaviour and therefore the conduct directed at him could not have had the effect of violating his dignity or creating an intimidating, hostile, degrading, humiliating or offensive environment for him.

Notice of Dismissal – When does it Start?

A recent case has confirmed that notice of dismissal only commences to run the day after it is given.

What do I need to know?

An employee was given 3 months’ notice in writing to terminate his employment on 3rd November. The letter was emailed and read by the employee on the same day.

The employer believed the date of termination was 2nd February and so, when the employee lodged a claim with the Employment Tribunal on 2nd May, the employer alleged that the claim was out of time (nb. claims have a 3 month less one day rule and so the claim should, if the employer was right, have been lodged on 1st May).

The Tribunal held that the effective date of termination was 3rd February, with notice not starting to run until the day after it was served, ie. 4th November. Further, the fact that the employee was only paid until 2nd February did not bring forward the date of termination.

This is an important issue where a dismissal needs to be effected by a certain date for other reasons, e.g. perhaps to avoid additional benefits accruing, etc. The only way to circumvent the case law is to contractually stipulate that notice starts to run from the day it is actually served.

Your Questions Answered

Q. We have an employee who has been absent from work since mid January 2011. We have just received a further fit note signing the employee off work for a further 4 weeks. This employee has, however, two weeks holiday booked at the beginning of May. Do we pay her holiday pay or not?

A. Case law suggests that it is up to the employee to elect whether they wish to use their holiday leave during periods of sick absence. I would recommend that you contact the employee and ask her to clarify whether she wishes to treat such two week period as annual leave or sick leave – her decision will determine whether you pay sick pay or holiday pay!

Q. We recently acquired a business which was struggling. We understand that previous deals for the purchase of the business had fallen through and that the seller, in anticipation of those deals and at the request of the previous interested parties, had dismissed a number of employees. We have now received claims for unfair dismissal. Is this possible as we were not even a prospective purchaser at the time of the dismissals and had no input in or influence in relation to the dismissals?

A. I am afraid that where dismissals are made pre-transfer with the intention of improving the prospects of a sale, then such dismissals will be automatically unfair by reason of a transfer, notwithstanding the fact that the identity of the buyer is unknown. The dismissals should have been identified in pre-acquisition due diligence. You may have the benefit of an indemnity under the Purchase Agreement, which you could seek to enforce in relation to any liability. You may also be able to defend the claims if there was an economic, technical or organisation reason for the dismissals such as redundancy – liaise with the seller to find out more about the reasons for dismissal.

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