The Employers Update - August 2010
Welcome to this month’s edition
of Employ!
This month we take a look at
potential changes to the Default
Retirement Age (DRA), minimum wage
increases and changes to TUPE
regulations as well as answering
your employment questions.
If you have any queries in relation
to the content of Employ, or any
employment issue, please call the
Employment Team on 0844 8000 263
or email
oliver.mccann@taylors.co.uk.
Oliver McCann - Partner and
Head of Employment
James Bellamy
- Employment Solicitor
Tel: 0844 8000 263
Email:
oliver.mccann@taylors.co.uk
|
|
|
The new coalition government has
confirmed the intention to scrap the Default
Retirement Age (“DRA”) which is currently
set at 65!
The DRA is the age set by the last
government where employers could lawfully
retire an individual so without liability
for unfair dismissal or age discrimination
but only where the Employer followed
statutory retirement procedures.
It is intended the DRA will cease completely
by 1 October 2011 and no new notices of
intended retirement may be issued after 6th
April 2011.
Any retirement dismissal after 1 October
2011 will have to be objectively justified.
What do I need to know?
- Retirement at 65 or above remains
currently lawful but not for long and
only in relation to notices issued
before 6th April 2011
- Transitional arrangements are likely
to apply to retirement dismissals
notified before 6th April 2011 and to
occur before 1st October 2011
- All retirement dismissals after 1st
October maybe subject to challenge by
the employee
- The new changes beg the question
whether it will ever be possible to
justify a retirement policy setting a
retirement age? There is likely to be
more emphasis on dismissals for
capability or poor performance so it
maybe worth reviewing those policies to
ensure they are clear and achieve your
objectives.
- The retirement procedures are likely
to be abolished unless, following the
consultation process, they are kept in a
revised format so that they must be used
in any purported retirement dismissal
where the employer believes it can
objectively justify the retirement
dismissal.
Following the announcement to abolish
the DRA it will become necessary for all
retirement dismissals after 1 October 2011
to be objectively justified. The burden is
on the employer right from the outset!
Accordingly a recent case on this very
issue appears more important than ever!
A law firm had a compulsory retirement age
of 65 for partners. A partner was retired in
accordance with the partnership deed. He
brought claims under the Employment Equality
(Age) Regulations 2006 alleging that
compulsory retirement at 65 was direct
discrimination.
At tribunal the retirement age was found to
be objectively justified on grounds that:
- it ensured that senior solicitors
are given the opportunity of partnership
- it facilitated partnership and
workforce planning; and
- it created a congenial and
supportive firm culture by limiting the
need to expel partners by way of
performance management.
On appeal the EAT approved the tribunals
findings but rejected the third ground above
on the basis it was a stereotypical
assumption as it assumed performance tails
off as you get older. There was no evidence
to substantiate this and so could no be a
legitimate aim.
At the Court of Appeal the claimant argued
that the decision by the ECJ in the Heyday
challenge established that legitimate aims
had to be of a social policy or public
interest nature, rather than individual to
the employer. This was rejected holding the
firms legitimate aim (some of which mirrored
the national social aims) as legitimate.
It also rejected the argument the firm could
have chosen a different retirement age to
achieve its legitimate aim. As long as it is
established it was proportionate to choose
65 then the fact it would be less
discriminatory to have chosen 66 cannot
render the provision unlawful. The Court
felt that the DRA of 65 set by the
government supported the choice of 65 as a
fair and proportionate cut off point.
What do I need to know?
- Retirement ages can be objectively
justified on succession and workforce
planning grounds
- Given the removal of the DRA,
objective justification will be
necessary
- Any future retirement policy will
have to be carefully considered,
reviewed and challenged to see if the
Company can sustain it in the future
with identification of the legitimate
aims of the company and research
evidence to back it up being crucial
- If there are legitimate aims for a
retirement policy then setting the
retirement age needs careful
consideration – despite the above case
supporting 65 as a retirement age, in
light of comments made in the Heyday
challenge to the DRA, it is apparent
that the Judge in that case supported an
ongoing review of a retirement age,
suggesting that if the government was to
set a DRA now it doubted 65 could be
justified.
NMW rates increase in October as follows:
- Adult rate - £5.80 to £5.93Rate -
£4.83 to £4.92
- Workers below 16-18 £3.57 to £3.64
- Apprentices employed under a
contract of apprenticeship – £2.50
A recent case has highlighted the
difficulties which arise from a TUPE
transfer of employees who carry out similar
work but at different rates of pay.
In this case the Claimants and their
comparator transferred from various
predecessors and became Customer Service
Managers in the transferor. At the time they
became employed by the transferor the
comparator was paid £10,000 more than the
two claimants but this arose from historical
contractual entitlements which were
preserved by TUPE. The comparator was also
entitled to pay rises until 2004 after which
his salary would be reviewed annually. In
2004 the transferor introduced a performance
related pay and bonus scheme for all
employees but provided red circling for
those who were overpaid. Despite the red
circling this was not applied to the
comparator and his salary continued to
increase. The claimants and the comparator
transferred to the transferee in 2008 which
sought to address pay anomalies. However the
claimants pursued Equal Pay claims.
The transferee had inherited the pay issues
from the transferor. It sought to defend the
claim on the basis that there was a genuine
material factor other than sex for the pay
disparity, namely the historical contractual
obligations to the comparator which were
TUPE protected. This was rejected, as there
was no contractual basis for the pay
increases after 2004. The Tribunal also
rejected an argument that an Equality Clause
had been frustrated by the TUPE transfer in
2008, holding that the Equality Clause had
operated prior to transfer to substitute the
comparators more favourable terms in to the
claimant’s contracts and these were
therefore preserved by TUPE on transfer.
What do I need to know?
- It is important to conduct an annual
review of pay and carry out a comparison
of those working in the same department,
at the same level or doing like for like
work in order to identify any pay
anomalies
- Identify the root cause of any pay
anomalies to see if there is a defence
and question whether that defence can be
maintained moving forwards or has become
historical
- Recognise that if you acquire a
business and TUPE applies then you
inherit the employees, “warts and all” -
thorough due diligence must be
undertaken to identify potential
anomalies which can give rise to Equal
Pay claims
The TUPE regulations aim to preserve the
terms and conditions of employment of all
those who are employed at the time of the
transfer. To achieve that objective the
regulations make void any changes to terms
and conditions where there is no economic,
technical or organisation reason entailing
changes in the workforce.The
regulations also state that an employee who
resigns in response to substantially and
materially detrimental changes in working
conditions as a dismissal.
A recent case has given some clarity to a
transfer situation where the effect of the
transfer is likely to result in changes to
terms and conditions. Employees were to be
subject to a transfer of their employment to
the Nationwide BS. Some of the transferring
employees were told that they would have to
take up downgraded positions along with
reduced bonus entitlements. They resigned in
response to these fundamental changes
alleging they had been automatically
unfairly dismissed.
What do I need to know?
Nationwide successfully defended the claim
for automatic unfair dismissal on the basis
that there was an ETO reason arising from
the fact that its product range was
different such that it could not enable the
transferring employees to operate at the
same function levels. It was however held
that there had been a constructive dismissal
as the regulation relating to material
detriment was engaged. The fairness of that
dismissal is to be determined having regard
to the individual and collective
consultation but this does not include
compliance with the information and
consultation obligations under the
Regulations where no complaint has been made
for a failure to comply with these
obligations. The case also clarified that it
to establish the ETO defence it was not
necessary for the ETO reasons to entail
changes to the workforce as a whole and
could be limited to the transferring
employees only.
1. I have an employee who was granted
emergency time off due to issues with
childcare. I granted her this, unpaid. She
indicated to me she expected this to be for
two days. She has now been absent for 1 week
with no other communication from her since
the initial discussion. What can we do?
There is a statutory right to emergency time
off to care for dependants which provides
that an employee is entitled to take a
reasonable amount of time off during the
employee’s working hours in order to take
action which is necessary either:
- to provide assistance on an occasion
when a dependant falls ill, gives birth
or is injured or assaulted;
- to make arrangements for the
provision of care for a dependant who is
ill or injured;
- in consequence of the death of a
dependant;
- because of the unexpected disruption
or termination of arrangements for the
care of a dependant;
- to deal with an incident, which
involves a child of the employee and
which occurs unexpectedly in a period
during which an educational
establishment, which the child attends,
is responsible for him or her.
Disruption to the Employer is irrelevant.
The employee’s obligation is to inform the
Employer as soon as reasonably practicable
for their absence and how long they expect
to be absent.
A recent case has confirmed that two
weeks advance notice of childcare issues
still fell amounted to an unexpected
disruption or termination in childcare.
Another case has suggested that one months
advance warning of childcare issues would
almost never fall within the statutory
right.
Likewise the period of absence may or not
be reasonable depending on the individuals
circumstances.
In relation to your employee we believe
she should have contacted you again on the
third day to give you an update. As such you
could consider disciplinary action but
before doing so you need to meet with the
employee on her return and find out the
reason for the absence, why it lasted more
than the two days intimated and why she
failed to give you an update.
An employee must not be dismissed or
suffer a detriment for exercising their
statutory right above so you must take care.
2. I have given former employees
references previously when asked but I have
recently been asked for a reference on
someone who I dismissed for gross
misconduct. Do I have to provide a reference
and if so what can I say or not say?
There is no legal requirement to provide a
reference for former employees unless you
work in the financial services industry or
there is an express provision within the
company’s contracts of employment. Despite
this, there is case law in which a judge
said that although no legal obligation
exists, there is a moral obligation to
provide one (Spring v Guardian Assurance plc
and others [1994] ICR 596, HL).
If you do intend to provide a reference it
is essential that you keep it factual and
remain objective. Be aware that a former
employee may obtain a copy and challenge the
content. The main legal risk is under
negligence (albeit claims could be issued
for disability discrimination or defamation)
where an employer will be liable if loss
results from the employer's failure to
exercise reasonable care in the preparation
of a reference. Accordingly:
- Keep it short
- stick to the facts, i.e. dates of
employment, position held, duties etc.
- Avoid referring to disciplinarians/
sickness records
- Do not give subjective opinion about
the former employee
Copyright 2006 - 2010 Taylors Solicitors
»
Print
» |
