Employment Issues
The laws relating to employment continue to evolve and develop month by month and this Bulletin has been written to help you to be aware of recent changes.

If you need to discuss anything further, or would like any clarification or help in deciding, please contact us.
Our invaluable summary covers:
Recent changes in the level of the national minimum wage

From 1 October 2001 the basic national minimum wage (NMW) rate increased from £3.70 to £4.10 per hour (for workers aged 22 and over) and the rate for 18-21 year olds increased from £3.20 to £3.50. This is the first time that both rates have changed at the same date. It has been suggested that next year’s change may be a more modest increase of 10p per hour.

The position facing directors of family companies is now far clearer than previously. In outline, if a director has an employment contract, then the Inland Revenue would expect the NMW to be paid but if there is no such contract then there is no obligation for it to be paid.

Entitlement to paid annual leave under the working time regulations

The working time regulations say that a worker must be employed for 13 continuous weeks before there is any entitlement to paid annual leave (presently an entitlement of four weeks including bank holidays, pro-rated for the length of the working week). The European Court of Justice has decided that this requirement is wrong however and from 25 October 2001 the law has been amended to remove the 13 weeks so that there will no longer be any minimum employment period before holiday rights start to accrue. The effect of this is that short-term workers will no longer be excluded from paid holiday rights. Probably the most significant impact will be on seasonal workers such as those in agriculture and tourism.

An amendment to the rules on unpaid parental leave

Until now the right to unpaid parental leave (a maximum of 13 weeks up to a child’s fifth birthday) has only been available for parents of children born, or adopted, after 15 December 1999. It has been announced that this right will shortly be extended to all parents with children under the age of five (that is it will be extended to cover children born before 15 December 1999 and under five years old on that date).

In addition the maximum of 13 weeks has been increased to 18 weeks for parents of disabled children and these can be taken up to the child’s 18th birthday.

Changes to employment tribunal cost rulings

After many months of discussion and consultation some changes have been made which should strengthen the position of employers in employment tribunal hearings. A tribunal can require an applicant to pay a deposit of £500 at the time of a pre-hearing review. There has always been the possibility of charging £150 but it is expected that the new amount may act as a major disincentive to vexatious or frivolous claims.

The costs rules have also been amended so that the maximum costs award can now be as much as £10,000 (previously this was a maximum of £500). There is of course still the problem that the employer may have practical difficulty recovering any costs awarded against the ex-employee and tribunal hearings invariably tend to lead to significant direct and indirect costs. A further change is that tribunals are now able to simply strike out claims, without a full hearing, where they are not thought to have any real prospect of success.

There have also been suggestions that a fee may be charged in order to bring a case forward to a tribunal (possibly an initial £50) but this may never be introduced.

The maximum compensation that can be awarded by an employment tribunal for unfair dismissal has been increased from £50,000 to £51,700 (there is no limit to the possible compensation where discrimination has occurred).

Avoiding the risk of a discrimination claim

A code of practice has been published to help employers avoid allegations of racial discrimination whilst also ensuring they do not risk illegally offering employment to someone who, for example, may not be legally entitled to work in the UK. As the law provides for fines of up to £5,000 for employing such a person, and the responsibility is on the employer to ensure entitlement to work, employers need to take some care. It is known as the ‘Code of practice for all employers on the avoidance of race discrimination in recruitment practice while seeking to prevent illegal working’ (www.ind.homeoffice.gov.uk).

ACAS arbitration schemes

An ACAS scheme for arbitration in straightforward unfair dismissal cases has been introduced for England and Wales. The intention is to offer an opportunity to resolve unfair dismissal claims without spending too much money (which is the almost universal experience when claims go to a tribunal). Both parties would voluntarily agree to use arbitration and thereby waive certain rights they would have at a tribunal. The hearings are private and are intended to be relatively fast and low cost. The arbitrator is appointed by ACAS and the hearing can be held anywhere (for example in the workplace). Decisions will be based on principles of fairness and good conduct including inevitably any relevant ACAS Code of Practice. The scheme does not allow any appeal against the arbitrator’s decision.

Recent developments in the laws on disability discrimination

Currently the impact on employment of the Disability Discrimination Act is that employers with more than 15 workers need to ensure that they treat job applicants and existing employees who are disabled no less favourably than other persons and, where appropriate, make reasonable adjustments to the workplace or working practices. This current number of 15 workers will be reduced at a future date. What many particularly small employers are unaware of is the effect of certain other non-employment related parts of the legislation.

Since 1996 it has been unlawful to treat disabled people less favourably than other customers for reasons related to their disabilities and from October 1999 businesses must also have made what are called reasonable adjustments such as providing extra help or making changes to the way in which they provide services. From 2004 businesses will also have to make reasonable adjustments to the physical features of their premises to overcome physical barriers to access.

The current law means that a business has to consider whether its services are accessible to the disabled and a business is generally expected to anticipate needs rather than wait until someone wants to actually use a service. If it is impossible or unreasonably difficult for disabled people to use the services, the business is required to:
  • Take reasonable steps to change practices (what the business does), policies (what the business intends to do) or procedures (how the business plans to go about it) or
  • Provide a reasonable alternative method of making services available to the disabled.

The business may also have to take reasonable steps to provide an auxiliary aid or service to assist or enable disabled people.

There is a telephone help-line about the Act that can be contacted on 0345-622-633. There is also a published Checklist of Good Practice to provide guidance.

An outline of a code of conduct for what is known as age discrimination (strictly known as age diversity in employment)

Although this is a non-statutory code of conduct, it is clear that employment tribunals are willing to take its provisions into account in deciding whether or not discrimination has taken place. The Code of Practice (which can be obtained by ringing 0845-60-222-60) suggests ways of avoiding claims. It points out that there are six main areas where employers should try to avoid discrimination. These are:

  • At Recruitment - Employers should recruit on the basis of the skills and abilities needed to do the job
  • On Selection - Select on merit by focusing on application form information about skills and abilities and on performance at interview
  • For Promotion - Base promotion on the ability, or demonstrated potential, to do the job
  • In Training and Development - Encourage all employees to take advantage of relevant training opportunities
  • For Redundancy - Base decisions on objective, job related criteria to ensure the skills needed to help the business are retained
  • On Retirement - Ensure that retirement schemes are fairly applied, taking individual and business needs into account.

A summary of the TUPE rules (on the transfer of an undertaking)

Where a business (or part of a business) is transferred to a new employer, existing employees automatically become employees of the new employer on the same terms and conditions (the only significant difference being to do with pension rights). Unsurprisingly, many buyers of businesses are not aware of this commitment. Employee representatives also have a right to be informed about the transfer and consulted about any measures which either the old or new employer expects to take concerning affected employees. On a number of occasions new employers have unexpectedly found themselves in front of an employment tribunal and have been required to pay compensation for unfair dismissal or for what the legislation calls detriment awards and/or information and consultation awards.

In the past there have also been real difficulties in deciding whether or not a transfer of an undertaking has taken place and there have been some conflicting cases concerning, for example, whether or not it is necessary for actual assets to be transferred. Given this confusion, the TUPE Regulations have recently been reviewed and proposals for change are presently under consultation. The changes are expected to include an explicit definition of what constitutes a transfer.

Consultation and notification where redundancies are being implemented

If an employer proposes to dismiss 20 or more employees by reason of redundancy within a 90 day period, there is a requirement to comply with certain statutory regulations including the requirement to inform and consult appropriate employee representatives and also to notify the Department of Trade and Industry.

Where fewer than 20 employees are likely to be affected there is no specific legal obligation to inform and consult employee representatives but there is a risk of an unfair dismissal claim if there is a failure to consult and inform the individual employees likely to be dismissed.

A new health and safety code for company directors

The Health and Safety Commission has issued a (draft) code to help directors manage the health and safety risks arising from the activities of their organisation (available from the HSE on 01787-881165). It suggests that directors need to review the following: the organisation’s health and safety performance; that the safety policy statement reflects current board priorities; that the management system provides for effective monitoring and reporting of health and safety performance; that directors are aware of any failures and of any investigations into these failures; that they address the health and safety implications of all decisions; and that they ensure that health and safety risk-management systems are in place and remain effective.

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Disclaimer - for information of users
This bulletin is published for the information of clients. It provides only an overview of the regulations in force at the date of publication, and no action should be taken without consulting the detailed legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this bulletin can be accepted by the authors or the firm.