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The Employers Update - September 2010

Welcome to this month’s edition of Employ!

This month we take a glance at some of the key aspects of the Equality Act 2010 as well as the most recent Employment Tribunal statistics and the recent successful launch of The HR Exchange.

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


In This Edition:

» Equality Act 2010
» Record highs for Employment Tribunal claims!
» The HR Exchange!
» Sham redundancy and Age Discrimination
» Say What You Mean!
» Your Questions Answered

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Equality Act 2010 - What Every Employer Needs to Know!

On the 1st October 2010 the Equality Act 2010 becomes law – however a recent Order published by the government has now clarified which parts of the Equality Act are to come in to force and those which will not be present.

The primary function of the Equality Act is to harmonise the core provisions of 9 different pieces of discrimination legislation – rather than separate discrimination acts i.e. sex, race, there will be one act which protects “protected characteristics”. The principles will largely remain the same as before all though the defence of objective justification will now be applied to all protected characteristics.

However there are a few new areas being introduced (or now no longer being introduced at present) which all employers need to be aware of. So what do I need to know?


  • There will be a new concept of discrimination “arising from a disability” – effectively reversing the decision on Malcolm v Lewisham BC which obliterated the concept of disability related discrimination due to changes in who the comparator should be.
  • Discrimination by association and/or perception will be expressly prohibited across for all protected characteristics
  • Employers maybe liable for harassment by third parties in the workplace

Public Sector Equality Duty

  • this was intended to be replaced by a single unified duty but has now been temporarily suspended.

Positive Action

  • it was also intend that employers would for the first time be able to adopt positive action in the recruitment selection and promotion process (previously it was limited to job advertisements) but only in circumstances where the successful candidate is from a protected group which is at a disadvantage or under-represented within the organisation and where the successful candidate is as qualified as any other eligible applicant. This too has been suspended.

Pre Employment health questions

  •  pre-employment questions on a job applicants health (whether at interview or in a medical questionnaires) will be banned until the point at which a job offer is made. There are exceptions which apply where the health questions are to monitor diversity, to make special arrangements for interview/recruitment assessments, to take positive action, because a disability is a genuine occupation requirement or to establish whether the applicant will be able to carry out a function that is intrinsic to the work concerned (although take care on this latter exception!). This will come in to force!

Secrecy Clauses

  • such clauses will be unenforceable against an employee where there is a relevant pay disclosure (for example where an female asks a male comparator to establish if there is a difference in pay). This will come in to force.

Pay transparency

  • the government intended to have the power to require employers to publish information relating to differences in pay between male and female employees where the employer employs 250+ (private sector) or 150+ (public sector) employees. This will apply to the public sector from April 2011 but the provisions relating to the private sector have been suspended.

Record Highs for Employment Tribunal Claims!

There seems no end in sight to the trend of rising employment tribunal claims year on year. 2009-10 is no exception with a record high of claims accepted by the Employment Tribunal - 236,100 being a 56% increase on the previous year.

The number of unfair dismissal claims has risen yet again to a high of 57,400. Unlawful deduction of wages claims have more than doubled with redundancy pay claims also nearly doubling. All other claims are more or less static except for Working Time Directive claims which have tripled!

The highest award for unfair dismissal was £234,549 with the average award being £9,120. In relation to discrimination claims the highest awards were:

Race - £374,922
Sex - £422,366
Disability - £729,347
Age - £48,710

What do I need to know?

Although claims maybe rising there are some simple steps which can be taken to reduce your exposure:-

  • Ensure you have in place contracts of employment and a Staff Handbook which sets our your rules, policies and procedures .These are the foundation of any employment relationship.
  • Prevention is far cheaper than cure! Take pro-active legal advice on HR and Employment issues before they develop in to a dispute or to head them off!
  • Consider taking out Employer Protection Insurance which will insure you against the cost of defending claims as well as any Tribunal award or settlement – see Taylors Scheme here.

The HR Exchange!

Taylors, in association with its corporate partners, launched The HR Exchange on the 16th September 2010. Full details, including event handouts, can be located at the events archive section of The HR Exchange website.

What do I need to know?

Future events will occur quarterly with the next event schedule for 9th December 2010.

Sham Redundancy and Age Discrimination

A recent decision has highlighted the dangers of alleging a redundancy situation in circumstances where a team is effectively replaced by identical roles requiring the same skills and abilities but labelled as “higher quality”.

In the case of CIBC v Beck, Mr Beck aged 42 was Head of Marketing until he was dismissed on grounds of redundancy. A recruitment process was undertaken concurrently with the redundancy process to find a new Head of Marketing. The person specification referred to “seeking younger, entrepreneurial profile (not a headline rainmaker).

It transpired from the recruitment process that the Company in fact interviewed a range of candidates, with a preferred candidate being aged 50. Eventually a Head of Marketing was appointed who was 38 years of age. The Company argued that reference to “younger” meant less senior individual who would be less expensive than the Claimant.

It was held by both the Employment Tribunal and the EAT that there was no redundancy situation and as such the dismissal was unfair. The new role required the same skills as before. The Claimant also succeeded in a claim for age discrimination establishing that the only attribute he could not satisfy from the job specification was being “younger”.

What do I need to know?
In this current climate it is common for businesses to reorganise their organisational structure which can include potential redundancies.

Where however a redundancy is to be followed by the recruitment of another individual extreme care needs to be taken to ensure that the original position is truly redundant i.e. reduced requirement for employees to carry out work of a particular kind (s.139 ERA 1996). If the new position genuinely requires an employee with different skills, capabilities and experience then this may be sufficient to satisfy the redundancy definition. Consideration must be given to whether the new position constitutes a “suitable alternative” such that it must be offered to the redundant employee to avoid an unfair dismissal or whether it so distinct it would be appropriate to require the redundant employee to apply and be interviewed for the new role in order to assess suitability.

Say What You Mean!

An employee was held to have been unfairly dismissed because the allegations set out against her in the investigatory process and subsequent disciplinary invite letter were not correctly framed!

In this case the Claimant was a catering manager who worked for a catering company supplying services to a 6th Form College. She had responsibility to account for all takings taken from the students and sort the takings for banking. £3000 went missing. She was subsequently accused of incorrect stock procedures, discrepancies in the finances and a failure to follow accounting procedures relating to the “loss of £3000”. However the Employer admitted they suspected her of theft/dishonesty and indeed the disciplinary officer dismissed the Claimant as she believed on the balance of probabilities that the Claimant was guilty of theft of £3000.

The dismissal was held to be unfair because the Employer had failed to precisely set out their allegation of dishonesty against the Claimant, holding that it was a fundamental right that someone accused of dishonesty should have that point made to them. It found that the reason for dismissal differed to the actual allegations put to the Claimant even though the Claimant suspected she was being accused of theft.

What do I need to know?

  • It is critical to ensure that your allegations of misconduct are accurately set out in the disciplinary invite letter – in this case the Employer was guilty of trying to be too neutral in its allegations!
  • When setting out allegations in a disciplinary invite letter try to marry the allegations up with examples of gross misconduct offences set out in the Employee Handbook and enclose a copy of the disciplinary rules and procedures with the invite letter
  • Make sure your decision is based on the actual allegations put to the claimant – if you find yourself considering misconduct issues which have not been properly alleged against the employee then it maybe necessary to start the process again before a decision is made.

Your Questions Answered

1. I am giving notice to terminate a contract of employment. We have the right to make a payment in lieu of notice (PILON) and wish to exercise that right. When do I have to make the actual payment? I am intending on making it in the next months payroll which will be 3 weeks after the termination date?

It is critical that you make the employee aware that you are exercising your right to make a payment in lieu of notice by confirming that in the dismissal letter. The effective date of termination (“EDT”) will not be established until it has been brought to the employee’s attention.

There have been a number of cases on PILON clauses but none on when the payment actually has to be made. The EAT has previously stated that in establishing the EDT you must ask the question "What would a reasonable employee understand it to be from the words used". This would suggest that provided it is plainly clear in the termination letter that you are exercising the right to make a payment in lieu and you subsequently make that payment then the date of termination will be as stated in the letter. It matters not if the payment was made 3 weeks thereafter.

I would advise however that you inform the employee when the payment will be made so and seek his agreement that he is happy for that to occur. If no such objection arises then the EDT will be as stated.

Despite there being no case law, there is legal commentary which states that if a dispute arises on the EDT when payment is made after termination then the dismissal letter should clearly state what the EDT is.

2. I have recently taken on an 18 year old student at an agreed rate between her and her college of £97.01 per week. The needs of the business have changes and we no longer require her. Can I simply dismiss her bearing in mind she has less than 12 months service?

It sounds like this student maybe classed as an apprentice, particularly as she is earning less than the National Minimum Wage and there is a tri partite relationship between you, the student and the College. You need to fully explore her working status before taking any further action. Apprentices have greater protection from dismissal than normal employees with less than 12 months service. You may have to honour the contract for the duration of her studies/training or find an alternative employer who could continue with her apprenticeship. Nothing short of the business closing down will entitle you to dismiss an apprentice on redundancy grounds.

Copyright 2006 - 2010 Taylors Solicitors

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