CLB Employment Solutionsprotecting your business
April 2010

This month we have seen a major shake up in the law of equal opportunities with the passing of the Equality Act 2010. Details of the Act itself are provided below and I have touched on the pros and cons of the Act preciously so I won't bore you with another tirade; it's here now so we're going to have to get on with it. I will say, however, that I support the amalgamation of the wide range of discrimination laws and the homogenisation of the legal tests for discrimination. However, in my opinion the pay auditing provision is misguided in the extreme in such an economic climate.

Once we have been informed how the pay auditing provisions are to be enforced and how the process will work we will be writing to and then visiting all our clients who are affected by the changes. If anyone has any questions on the practical effect of the new Act then please don't hesitate to contact us for some advice. I sincerely hope that private business will not see the type of equal pay litigation that the public sector has endured over the past decade, however, there are private law firms in the UK (a special mention goes to Stefan Cross at this point) who may well be licking their lips at the prospect of having a crack at the huge number of businesses that this legislation will force to open their payrolls.

The cost to the public sector of equal pay claims, that is (indirectly) you and me and everyone else, is estimated to be approaching £4 billion. I strongly advise anyone who is unsure of their obligations under the new Equality Act to contact us as soon as possible.

One piece of legislation that has been an unbridled success is the National Minimum Wage Act 1998. Although there were obvious reservations from small businesses due to wage roll concerns, the consequences have been to raise the standard of living for hundreds of thousands of people and also to free up liquidity in the high street by giving low paid workers more money in their pockets to spend. Ironically, many of the businesses that resisted the legislation may have profited from it indirectly.

The least justified industrial action of all time (BA aside) has taken place in Denmark. Workers of Carlsberg, take a bow; you have struck a significant blow in the fight to be drunk at work with the full support and approval of your employer. I fail to see how any rational employer could not support such a policy. Well, maybe not.

We'll keep you up to date with any important developments between newsletters on our blog and if you have enquiries about the items featured or require any further information then don't hesitate to contact us on 08000 320 974 or by e-mail to

Will Burrows

This month's news:

1. Minimum wage 2010

2. Equality Act 2010

3. Holidays and sickness

4. Paternity leave - new entitlement

5. Right to request time off for training

6. Liability of employers for acts of their staff

7. Recommendations for improving employment tribunals

8. Employing workers from outside the EU

9. and finally...

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March 2010
February 2010
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1. Minimum wage 2010

The Chancellor of the Exchequer announced in his Budget speech on 24 March that "the headline rate of the National Minimum Wage will rise by 2.2 per cent to £5.93 in October 2010".

More detail was provided after the speech. The new rates in force from 1 October 2010 are to be:

  • £5.93 per hour for low paid workers aged 21 and over (a 2.2% increase on the current £5.80 rate);
  • £4.92 per hour for 18-20 year olds (a 1.9% increase on the current £4.83 rate); and
  • £3.64 per hour for 16-17 year olds (a 2% increase on the current £3.57 rate).

It is worth noting that with effect from 1 October 2010 those aged 21 qualify for the full adult rate of NMW. Currently, and until then, the adult rate is payable only to those aged 22 or more.

There is an interesting legal point. On the face of it, continuing to have lower rates of NMW for younger people is unlawful age discrimination contrary to EU law (Directive 2000/78/EC). However, the UK government would no doubt argue, if challenged, that the discrimination is permissible on the basis that advantage can be taken of the exemption in article 6 of the EC Directive. This applies where discrimination is:

"justified by a legitimate aim, including legitimate employment policy, labour market and vocational training objectives, and if the means of achieving that aim are appropriate and necessary".

The 2010 Budget report also states that "in October 2010, the NMW will have risen by over 22 per cent in real terms since the Government introduced it in 1999...Estimated using Retail Prices Index (RPI) data from the Office for National Statistics and HM Treasury assumptions on how the series will evolve between February and October 2010".

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2. Equality Act 2010

Amidst all the fuss about the forthcoming election, it is worth bearing in mind that Parliament completed the progress of the Equality Bill and it received Royal Assent on 8 April, thereby becoming the Equality Act 2010. Its main provisions are due to come into effect in October 2010. At least from a technical perspective it is probably true to say that the Equality Act is the most important piece of British legislation relating to employment law matters since the Employment Rights Act was passed almost 15 years ago in 1996.

On the "technical" side the Equality Act 2010 replaces the Equal Pay Act 1970, the Sex Discrimination Act 1975, the Race Relations Act 1976, the Disability Discrimination Act 1995, much of the Equality Act 2006, the Employment Equality (Religion or Belief) Regulations 2003, the Employment Equality (Sexual Orientation) Regulations 2003, the Employment Equality (Age) Regulations 2006, and the Equality Act (Sexual Orientation) Regulations 2007 (all as subsequently amended), plus other ancillary pieces of legislation.

The Act identifies certain "protected characteristics" which are:

  • age;
  • disability;
  • gender reassignment;
  • marriage and civil partnership;
  • pregnancy and maternity;
  • race;
  • religion or belief; and
  • sexual orientation

The protection largely mirrors that afforded by the prior legislation, save that the definition of disability has been widened so that a protected disability need no longer be an impairment which affects specified capacities, such as mobility. Gender reassignment now also covers those whose reassignment process is not being medically supervised.

As previously reported notable new employment related provisions in the Act are those which set the scene for regulations requiring employers to review gender pay differences within their organisations and to publish the results, those which make statutory provision for disability discrimination by association to be unlawful (for example in relation to a mother who cares for her disabled child) and those which give employment tribunals power when handing down judgments to make recommendations for the collective benefit of employees.

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3. Holidays and sickness

Two employment tribunals in Yorkshire, one in Leeds and the other in Sheffield, have recently come to decisions, heavily influenced by decisions of the Court of Justice of the European Communities (as the former European Court of Justice is now technically called), which employers and employees will find of particular interest. In each case, an employee effectively won new rights.

We reported in the blog in February the first of these tribunal cases, Shah v First West Yorkshire Ltd. Mr Shah had broken his ankle and took three months off work. He had booked his annual four weeks' holiday entitlement within that three month period. He wanted to reschedule his holiday for after the end of his sick leave but his employer refused. On the face of it the employer was entitled to refuse as the British Working Time Regulations provide that holiday may only be taken in the leave year in respect of which it is due and agreeing to the employee's request would have meant that his holiday would fall into the next leave year. Nevertheless the tribunal, taking note of the CJEC decision in Pereda v Madrid Movilidad SA in September 2009, held that if sickness and holiday coincide then the holiday can be carried forward to the next holiday year.

In the second case, Rawlings v The Direct Garage Door Company Ltd, an employee was on long term sick leave from 1 January 2004 (maybe earlier) until he resigned on 5 April 2006. The employer paid Mr Rawlings holiday pay for 2004 even though he had been absent throughout that year but, some might think understandably, refused to pay him anything for 2005 or 2006. He sued for unlawful deductions from wages and the case was stayed pending a decision of the CJEC in Stringer & ors v HMRC.

When the Stringer case was heard in January 2009, the CJEC ruled that a worker who is on long term sick leave is entitled to any paid statutory holiday which accrues during his sickness absence. In the same case the House of Lords ruled in June 2009 that an employee who is entitled to holiday pay which has not been paid can bring a claim under the unlawful deductions from wages provisions of the Employment Rights Act 1996 (ERA 1996 s.23(3)) instead of under the Working Time Regulations. The advantage of this is that a claim under ERA 1996 can cover deductions made more than three months previously provided that it is made within three months of the last deduction whereas a claim under the WTR can only be in respect of breaches within the three months before the claim is presented.

Taking note of the decisions in the Stringer case, the employment tribunal in Sheffield found in favour of Mr Rawlings. It held that he was entitled to just over £1,500, being holiday pay for 2005 and 2006 wrongfully deducted from wages.

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4. Paternity leave - new entitlement

On 18 March 2010 the House of Lords approved a raft of draft regulations pertaining to paternity and adoption leave and pay:

Mothers are currently entitled to 12 months' maternity leave. Under the new regulations fathers will be entitled to up to six months' additional paternity leave if the mother has returned to work (not to start until at least 20 weeks after the birth or adoption). To the extent that this additional paternity leave is taken during the mother?s 39 week maternity pay period it will be paid leave, paid at the same rate and in the same way as Statutory Maternity Pay (which has increased this month to £124.88 per week from the previous £123.06). Parents will be required to ?self certify? by providing details of their eligibility to their employer. Employers and HMRC will both be able to carry out further checks of entitlement if necessary.

The fundamental provisions are in regs 5 and 15 of the Additional Paternity Leave Regulations 2010. These specify that additional paternity leave will be for a maximum of 26 weeks and minimum of 2 weeks. It must not start until at least 20 weeks after the birth or placement for adoption and must end not later than 12 months after the birth or placement for adoption. It may only be taken in multiples of complete weeks.

The regulations came into force on 6 April 2010 but have effect only in relation to children whose expected week of birth (or matching for adoption) begins on or after 3 April 2011.

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5. Right to request time off for training

With effect from 6 April employees of more than 26 weeks' standing working for large businesses (250+ employees) have had the legal right to request time away from their core duties to undertake any training that will "help them to be more productive and effective at work, and that helps their employer to improve productivity and business performance".

The right does not include a right to pay during time off taken for training although the Government has said that it expects that many employers will be happy to pay. It will work in a way which is similar to that already in operation in relation to the right to request flexible working.

The right itself is provided for by the Apprenticeships, Skills, Children and Learning Act 2009 s.40. It has been criticised by at least one high level official of the Institute of Directors who is on record as saying that the "new right to request time off to undertake training is an unnecessary, poorly thought-through and damaging policy that will add to the regulatory burden borne by employers without delivering the envisaged benefits".

Details are set out in various sets of regulations which came into force from 6 April. Among other matters these set out the form of the request and make provision about the circumstances in which an employee may complain to an employment tribunal if the request is not properly considered. The maximum amount of compensation an employment tribunal may award where a complaint is successful is 8 weeks? pay. The amount of a "week's pay" for this purpose is capped at the same amount as applies from time to time for calculation of unfair dismissal basic award and statutory redundancy pay (currently £380).

The right is intended to be extended to employees of smaller businesses from April 2011.

Extensive information about the detailed procedures is available from the DirectGov website.

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6. Liability of employers for acts of their staff

Almost 10 years ago the House of Lords ruled that the traditional argument that an employer is not liable for acts of an employee if they are unauthorised acts is too simplistic. In the case in question (Lister & ors v Hesley Hall Ltd [2001] ICR 665) the owner of a residential school for maladjusted and vulnerable boys, near Doncaster, was held liable for acts of sex abuse against children committed by a housemaster employed by the school notwithstanding that, of course, the housemaster was not authorised to commit the acts in question.

A similar point, but with a new twist, arose in a recent case (Maga v The Trustees of the Birmingham Archdiocese of the Roman Catholic Church, Court of Appeal on 16 March 2010). Some 35 years ago a Roman Catholic priest, a Fr Clonan, sexually abused a boy. The boy concerned was not a Roman Catholic and did not attend Fr Clonan's church. The boy, now an adult, recently sued the Birmingham Archdiocese of the Roman Catholic Church. The Archdiocese agreed to accept without argument that the priest concerned should be regarded as its employee and special considerations meant that the normal time limits for bringing a case did not prevent a trial. The question of interest was whether the Archdiocese was liable for the wrongful actions of the priest. The High Court said not but this decision has been overruled by the Court of Appeal.

The High Court Judge came to his decision that the Archdiocese was not liable on the basis that Father Clonan "did not involve the claimant in the activities of the church itself ... and did not seek to engage with him on any religious level". The association between the boy and Fr Clonan was not part of evangelisation and had nothing to do with "draw[ing] the claimant into the activities of the Church".

The Court of Appeal has overruled the High Court's decision. The Court of Appeal expanded on the 2001 House of Lords' decision in Lister & ors v Hesley Hall Ltd (above) and ruled that there were "a number of factors, which, when taken together, ...render it fair and just to impose vicarious liability for the abuse on [Fr Clonan's] employer, the Archdiocese".

These factors included that

"...a priest has a special role, which involves trust and responsibility in a more general way even than a teacher, a doctor, or a nurse. He is, in a sense, never off duty; thus, he will normally be dressed in 'uniform' in public and not just when at his place of work. So, too, he has a degree of general moral authority which no other role enjoys... It was his employment as a priest by the Archdiocese which enabled him, indeed was intended to enable him, to hold himself out as having such a role and such authority."

Similar considerations will no doubt apply to others, especially those in the caring professions, although it is noteworthy that the Court of Appeal judge from whose judgment the above quotation is taken (Lord Neuberger) seems to suggest that teachers, doctors and nurses have less responsibility than a priest.

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7. Recommendations for improving employment tribunals

"Incorporate them within the county court procedure" I hear you say, in which case you would undoubtedly be correct!

However, the British Chambers of Commerce have taken a different approach in the recent report, Employment Regulation: up to the job?.

The report starts with a well written thumbnail history of employment law setting the scene. This starts with a passing reference to the Ordinance of Labourers of 1349, refers to the Masters and Servants Act of 1823 and continues through to the start of modern employment law in the 1960s and New Labour's approach from 1997 to the present.

However the main purpose of the report is to present "a number of ways that employment legislation and the Tribunal system can be rebalanced, resulting in reduced costs, less bureaucracy and improving the competitiveness of the UK economy". Amongst the more interesting suggestions are the following:

  • Any claimant who has not received professional advice would be obliged to go through their ET1 form with Acas before submitting their claim. The idea is that this would prevent claims with no real chance of success getting into the tribunal system at all, thus saving time and money for both the employer and the Tribunal Service.
  • A fast track conciliation system for employees claiming less than £3,000. This would be run by ACAS (the Advisory, Conciliation and Arbitration Service) and would be voluntary but with a sting in the tail - any employee not wishing to use the fast track system would have to explicitly opt out on their tribunal claim form and face a longer wait than if they used the fast track service. 29.2% of awards in unfair dismissal cases were under £3,000 in 2008/09 (22.1% of race discrimination claims and 16.7% of sex discrimination cases).
  • Employers should not have the same health and safety responsibilities towards remote workers and lone workers as they do towards office based staff.

As a quite separate matter from the BCC recommendations noted above, with effect from 6 April 2010 the Ministry of Justice has introduced a new "fast-track" scheme with the help of High Court Enforcement Officers to assist employees to recover monetary awards made by employment tribunals. Justice Minister Bridget Prentice says that "The Government is determined to ensure people are not denied access to justice by a small minority of unscrupulous individuals or companies who refuse to respect the award" (the "small minority" comment is interesting given that MoJ figures provided in May 2009 showed that 39% of people granted awards by tribunals had not been paid and only 53% were paid in full).

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8. Employing workers from outside the EU

The government has made significant changes to Tier 1 and Tier 2 of the points-based immigration system from 6 April 2010. It has accepted changes to Tier 1 recommended by the Migration Advisory Committee (MAC) and has set out details of how it will implement the MAC's recommended changes to Tier 2.

Changes include new points criteria for both tiers, a simpler route for very highly skilled workers without Master's degrees, greater flexibility for short-term transfers by multinational companies and more protection against the use of such transfers to fill long-term vacancies that should go to resident workers.

In more detail, for Tier 1 (General) changes include one providing that UK equivalent Bachelor?s Degrees will attract 30 points under the qualifications section (currently only master's degrees or higher attract points). No points will be awarded for earnings below £25,000 (previously £16,000). Those who have earned over £150,000 p.a. (or overseas adjusted equivalent) will now be awarded 75 points for earnings, which is enough to qualify without any academic or other qualifications.

For Tier 2 (General) there will be a mandatory minimum of £20,000 in relation to prospective earnings unless qualifying via a shortage occupation or the transitional arrangements. A Master's degree will attract 15 points (increased from 10 points). The points thresholds for potential earnings will be raised from £17,000 to £20,000. The threshold for obtaining 20 points is raised to £28,000 and for obtaining 25 points it is raised to £32,000.

The Intra-Company Transfer route is to be split into three sub-categories, established staff, graduate trainees and skills transfers, with different rules attaching to each. A new status of ?Highly Trusted Sponsor? system will be implemented for Tier 2. The UK Border Agency is likely to work with HM Revenue and Customs in order to investigate potential abuses of the tax and immigration systems.

Bearing in mind that the immigration/employment rules are so complicated that even the Attorney General, Baroness Scotland, fell foul of them last summer (for which a penalty of £5,000 was imposed on her personally, even though she was famously reported to have taken the view that her breach of the law was comparable to failing to pay the congestion charge in central London), it is clearly essential you contact us for expert advice whenever it is proposed to employ workers from outside the EU, other than in the most straightforward of cases .

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9. and finally ...

Where's the free beer?

While UK industrial action has impacted on travel and industry, workers in Denmark have come out on strike after being told that they will no longer have limitless supplies of beer while at work.

Hundreds of workers at the Carlsberg factory in Copenhagen walked out when they were told that they could only have free beer when on lunch breaks. Previously, coolers filled with the employer's products were dotted around the factory and workers could help themselves at will.

The initial strike action spread from factory workers to truck drivers. Remarkably, the truck drivers are excluded from the lunch break restriction, not because they're driving, but because they're out on the road. However, they are permitted to take three bottles from the canteen to drink when on duty.

Initial suggestions that this story was a April Fool turned out to be incorrect: Jens Bekke, Carlsberg spokesman, has confirmed the industrial action. He was also keen to point out that Carlsberg trucks are fitted with ignition locks to prevent them from being used when the driver is intoxicated.

Where are the free chips?

According to a recent article in the Newmarket Weekly News, Ann Parker, assistant manager of Newmarket's Central Fish Bar, has won her claim for unfair dismissal after being sacked for giving away free chips.

The first Mrs Parr knew about the problem was when she received a letter calling her to a disciplinary hearing. She maintained that food was regularly given away to local business owners and that all the staff did it. On occasion, local businesses were paid in kind.

The tribunal took the view that although the dismissal was for a potentially fair reason, the employer had handled the matter incorrectly from a procedural perspective, hence the finding of unfair dismissal. By giving away the chips Mrs Parr had contributed towards her dismissal, as a result of which her award was reduced by 25%. Owner Phil Fotiou, is reported to have said:

"Basically I didn't follow procedure. This is a small family business and I didn't quite understand the law I had to follow. I should have given her a written warning then another warning....I have nothing to be ashamed of. It's hard enough to manage in a recession without food being given away."

Driving without due care and attention

Footage has emerged of a National Express bus driver reading a book while driving with his elbows on the steering wheel on a dual carriageway in Birmingham. The footage was taken by a passenger on the number 61 in Selly Oak on Monday 19 April. The driver has been suspended. In one of the safer predictions of the month, a spokesman for National Express said, with delightful contradiction, "It is not appropriate to predict the outcome but an incident of this type is likely to lead to a dismissal".

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