Canter Levin & Berg Employment Solutions Canter Levin & Berg Employment Solutions
December 2011

Welcome to the December edition of the Canter Levin & Berg Employment Solutions newsletter.

Inevitably our last newsletter of 2011 focuses on the government announcements concerning employment law reform which I touched on in the last two newsletters. We cover each of the main areas of reform which have been proposed. Although the proposals have been described as "wide-ranging" and "designed to make dealing with employees easier for employers" I have my doubts. Over the last few days it has become clear that we are hardly in a position to start renegotiating European Treaty terms in any areas, let alone employment law. As Nicholas Sarkozy said today, there are now "two Europes" and UK interests are hardly likely to be at the forefront of the agenda of Eurozone members. Since European employment law pervades almost all aspects of national legislation and European case law is of direct application, the practical reality is that national reforms are necessarily limited in their effects.

There is also news on how to restrict holiday pay for long-term sickness absentees, TUPE and redundancy consutation and the "right to strike".

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It remains for me to thank all of you who have taken the time to read our newsletter in 2011 and particularly those who have joined us in the course of the year. I wish all of you peace, happiness and seasonal greetings and I look forward to bringing you news of all the important developments in employment law in 2012.

Martin Malone

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November 2011
October 2011
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This month's news:

1. good in parts: radical reforms of employment law

The top headline news this month has to be the mixed bag of employment law proposals announced as "the most radical reform to the employment law system for decades". And what a mixed bag it is - everything from tidying up the unintended consequences of statutory drafting to a root and branch review of employment tribunal procedure by way of revisiting some familiar old ideas. Opinion is, of course, divided as to how effective the proposals will be, not always along traditional employer/employee lines, but some at least seem welcome in all quarters - such as the introduction of a portable CRB check.

Many of the measures announced are aimed at reducing the numbers of cases going into the employment tribunal system, speeding up resolution of cases once they get there, and of course keeping costs down - for the government, rather than for employers or employees.

One of the biggest headline-grabbers has been the increase of the qualifying period for unfair dismissal protection from one year to two. The rationale for this seems to be that there is a perception in business that it will reduce the risk involved in recruitment. The government acknowledges that the change will not have as much impact as it originally thought, because many claims include both unfair dismissal and other claims where no qualifying period is required, such as discrimination. Following the change, which is due to come into force in 2012, employees who don't qualify for unfair dismissal protection will be more likely to make discrimination claims in the hope of finding a remedy - so there may not be that much of a reduction on the number of claims overall.

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2. alternative dispute resolution to be promoted

Other strategies to reduce the number of claims which get as far as a tribunal are less controversial, and, some might say, less pro-employer.

ACAS' current power to conciliate will revert to a duty, and all cases will be referred to voluntary early conciliation before employment tribunal proceedings are started, with an extension of a month to the time limit for bringing claims to allow for this. ACAS has a reasonable track record of success in such early conciliation, but the crunch will be whether they have the resources to cope with the level of work. The need to increase resources is recognised, with the government saying that the additional funding needed will be paid for from the savings made elsewhere. It has to be observed that referral to ACAS in past similar arrangements which operated until 2009 frequently amounted to little more than a few phone calls. Accordingly not too much should be expected from this initiative.

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3. protected conversations

I mentioned the concept of "protected conversations" briefly in our October 2011 newsletter and gave it a guarded welcome.

As now presented in the proposed government reforms it is confirmed as a completely new development, in which employers would be able to broach difficult topics and, perhaps, suggest an agreed parting of the ways, without anything said being admissible as evidence. Protection will not extend to anything discriminatory said in meetings - as is the case currently in "without prejudice" discussions.

At the moment, it is only possible to agree that a discussion should be "without prejudice", so that the details cannot be brought up in tribunal, where a dispute is already in existence and the discussion is to try and resolve it. The trouble is, often employers want to have this sort of conversation before a dispute crops up, in which case without prejudice protection doesn't apply, and there is a real risk that the conversation will be regarded as damaging trust and confidence and so give rise to a constructive dismissal claim.

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4. tribunal reform: fees and more

The government plans a "root and branch" reform of tribunal procedures to speed the process up and cut costs, including developing a rapid resolution system for simpler claims which may be decided on paper with no hearing at all. One problem will be to identify which claims are simple enough to be dealt with in this way. It is suggested that disputes about holiday pay would be suitable - but as recent case developments on the accrual of holiday pay for those on long-term sickness absence show - complex issues can arise in apparently minor areas. This will be another long term project; in the meantime, the government will be pressing on with some measures it considers will improve matters and don't need to await a full overhaul of the rules.

The first of these forthcoming changes, and one which has generated a lot of publicity, is the plan to require claimants to pay a fee to start tribunal proceedings, which they will get back only if they are successful in their claim. This will come into force in 2013, but the level of fee will not be set until after a consultation process has been carried out. Undoubtedly this will put some claimants off; however, it won't necessarily be just those claimants with weaker claims who are deterred. Some may have perfectly good claims but not the means to find, say £50 or even £25. The likely outcome could well be that claims continue to be brought using no win no fee "after the event" insurance but the number of claimants representing themselves (for which the tribunal system was supposed to be designed) will drop. Solicitors for claimants will undoubtedly offer to pay the fee on behalf of their clients and this can provide a further disincentive to settlement because they will want to hold out for the highest possible settlements in order to maximise the returns on their investments.

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5. compromise agreements - the law of unintended consequences

The government seemed to find it mildly surprising that over half the respondents to its consultation used compromise agreements often; most of those directly involved with employment law in practice would not. But there is a cost involved for employers every time one is used, especially since the decision in Hinton v University of East London CA (2005 EWCA, Civ 532) which had a big impact on drafting practice and then the advent of s.147 of the Equality Act 2010, which undoubtedly had unintended consequences, even though the government stoutly maintains that it is "fit for purpose".

Hinton made it clear that compromise agreements must identify each and every claim that is being settled - thus the tendency to include a long list of possible claims in agreements to make sure that nothing is missed out, or the need to spend a lot of time identifying all possible claims to ensure that all necessary "i"s are dotted and "t"s crossed - meaning that agreements are generally cumbersome, and sometimes expensive to draft. The government proposes to revisit this, potentially providing a standard set of wording to be used in most cases, with the scope to include add-ons in the minority of cases where something additional like a confidentiality clause is required. The intention is that such a standard agreement would cover all current and future employment claims, but would exclude claims for personal injury and in relation to accrued pension rights. If the new drafting and standard wording do what it says on the tin, this will cut the cost of entering into compromise agreements (or "settlement agreements" - as they are going to be renamed) all round.

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6. consultation on consultation

Two areas have been flagged for possible changes in the future. There are "calls for evidence" on both TUPE and redundancy consultation processes.

Under the current Regulations TUPE places an obligation on both the transferor and transferee to provide information to, and to consult with, the representatives of their respective employees who may be affected by the transfer.

This can include employees who are not part of the transfer, but who are affected by the transfer.

TUPE also has the effect of transferring trade union recognition agreements, as long as the transferring group of employees maintains a distinct identify from the rest of the transferee's business.

The transferor and transferee must inform and consult the recognised trade union. If there is no recognised trade union, the employees must be given the opportunity to elect their own representatives.

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7. holiday pay for long term sickness absentees

Two recent cases have shed some helpful light on the implications of the decision in Stringer and ors v HMRC which established that holiday pay continues to accrue while employees are on long term sick leave and are entitled to be paid for it.

First, in KHS AG v Schulte [2011] EUEJC C214/10 the European Court of Justice has confirmed that it is permissible for member states to impose a cut-off on the carry forward of unused holiday allowances for employees on long term sickness leave. In the particular German case the cut-off under the relevant collective agreement was 15 months, but the opinion of the Advocate General given in August suggests that on the same principle a cut-off period of 18 months (as recommended by the International Labour Organisation) would also be acceptable. This will no doubt be taken into account in the amendments needed to the Working Time Regulations to reflect the earlier decisions on accrual.

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8. vicarious liability extended to non-employees

Sometimes respondents in employment cases raise arguments in their defence which, although perfectly arguable in law, do not reflect particularly well on them. One of these is the defence, in a discrimination claim, that any other employee would have been treated just as badly. JGE v (1) The English Province of Our Lady of Charity (2) Trustees of Portsmouth RC Diocesan Trust [2011] is an example of another type of defence which some might think leaves a nasty taste in the mouth. It concerns the concept of vicarious liability - where an employer can be found liable for wrongs committed by its employees in the course of their employment. The case concerned allegations of sexual abuse of a young child by a Catholic priest. When the claimant sought to hold the Diocese in which the priest worked responsible for his actions, the counter argument was that he was not an employee of the church, and it therefore fell outside the scope of vicarious liability. Generally speaking, in the past, the clergy of both the Catholic church and the Church of England have not been regarded as employees, in that they do not have a contractual relationship with the relevant churches, although nonconformist ministers are generally employed under a contract of employment.

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9. a right to strike?

Technically, there is no such thing in British law as a right to strike. The right is not to suffer a detriment as a result of taking part in a strike, provided the strike has been properly called. So, contrary to anything Mr Clarkson of the jeans and jacket combo might say, provided that proper ballots are held and notices given, workers are perfectly entitled to withdraw their labour to further a dispute regarding terms or conditions of or affecting employment.

If a dispute arises, it's important to meet with representatives of your employees as soon as possible in order to try to resolve the situation. The initial meeting should be to define the cause of the dispute, to clarify who speaks for which side and to explore what options are available to resolve the conflict. For a dispute to be lawful it must be a 'trade dispute'. This means it must be a dispute between workers and their own employer and it must be wholly concerned about employment related matters, e.g. pay, working conditions, jobs, discipline etc. A trade union is legally responsible for organising industrial action and it is only legal if the trade union authorises or endorses the action. Authorisation must take place before the industrial action starts. A strike ballot should not take place until any agreed procedures have been completed and all other means of resolving the dispute have been looked at. Employers can take legal action against any trade union which calls for strike action before a secret ballot has taken place.

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