The message that you should take away from this newsletter is 'welcome to 2010, it is going to be a rollercoaster'.
The big question for employment lawyers is whether or not the Equality Bill will be passed before the election (it is currently in the Lords) and if so, in what form. There are important issues (such as associative discrimination) that need to be made into UK law as the current law is incompatible with various EU Directives and decisions of the ECJ. However, the controversial provisions of the Equality Bill (including a subtle flirtation with positive discrimination and promotion of class-neutral recruitment) will no doubt meet with fierce resistance in some quarters of the Palace of Westminster. Most time consuming for our clients will be the expansion of existing equalities requirements for all emanations of the state (relevant to our public sector organisations); however, if the Bill is passed it will mean a lot of work for everyone as a significant number of policies and procedures will need to be amended or employers will risk being sued under the new law.
If the UK retirement age is not abolished within the next two years I will be amazed. We have an aging population and a massive budget and state pension deficit (as well as a significant private pension deficit thanks to index linked pensions losing out in the stock market crash and the Iceland economic situation). If life expectancies continue to rise and the situation is to be remedied then the UK worker will have to work harder for longer in order to close the gap. Ironically, if we are all working to 75 by 2030, the Government may have found an ingenious way of solving the problem as if we all drop dead at our desks they won't have to pay our state pensions. With the repeal of the state retirement age will come a complete overhaul in the law governing retirement so watch this space.
If you have five minutes please read the case of Khan (referred to below). It makes horrifying reading as Mr. Khan's barrister actually asks the panel at the Employment Tribunal whether any of them are Jewish and if so to identify themselves and step down immediately. What was the reason for this application? Purely because the Claimant was Muslim. One of the panel was, in fact, Jewish and quite rightly refused to step down. Now I undertake a fair amount of tribunal and EAT advocacy and I have seen some strange things over the years but if my opponent made such an application to some of the Judges I know I would expect an enormous row followed by a complaint to the Bar Council. I would be amazed if that had not taken place and was not recorded in the rather sanitised version of proceedings that appears in the judgment.
Have a wonderful 2010 and let us hope that the recession is finally behind us and we can all look forward to more care free times.
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 0151 239 1000, freephone 08000 320974 or by e-mail to email@example.com.
This month's news:
1. What to expect in 2010
Time off for training or study
In April 2010 the right to request time off work will be extended to cover training and study. The procedure is similar to a request for flexible working. Employees can make a written request to ask for time off to undertake external training or study and should indicate how this will improve their personal performance and benefit the employer's business. Employers must take the request seriously and give careful consideration to whether the request can be granted. Employers who refuse requests will have to have a good business reason for doing so. The employee has the right to appeal against a decision to refuse a request.
Significantly, employees are not entitled to be paid for the time spent undertaking training or study and employers are not obliged to pay or contribute towards training costs.
Probably the biggest change which may (subject to the general election) come into effect in 2010 is the Equality Act which is scheduled for implementation in October 2010. This is intended to consolidate all existing equality legislation into one Act. Proposed changes include the requirement for employers with over 250 employees to publish information concerning pay differences between men and women. Other proposed changes include:
The Work and Pensions Committee has also recommended a wider definition of disability so that protection extends to everyone who has or has had an impairment without requiring the effects of that impairment to be substantial or long-term.
Consultation continues and the eminent employment barrister John Bowers QC has pointed out that as the draft legislation stands the Act "could make it unlawful for a church to require a priest or minister to be male, celibate and unmarried, or not in a civil partnership".
Potential abolition of the default retirement age
We have reported in previous editions about plans to increase the default retirement age to 68, 70 or even 75 but it seems that the latest thinking is that it should be removed altogether. This is what Age Concern argued for in the well-known Heyday case on the simple basis that, no matter how it is dressed up a default retirement age is, more or less by definition, age discriminatory. According to reports on 25 January this approach is now supported by the Equality Commission.
"Fit notes" in place of sick notes
In April the Social Security (Medical Evidence) and Statutory Sick Pay (Medical Evidence) Amendment Regulations will replace sick notes with fit notes. These will allow doctors to record whether a patient is fit or not fit for work and whether someone "may be fit for some work now".
Paternity leave and pay
Paternity leave and pay are due to be extended in April but the changes will not take effect until 3 April 2011. Qualifying employees can benefit from up to 26 weeks' additional paternity leave provided that the mother returns to work at or before the end of her ordinary maternity leave period (i.e. the first 26 weeks of leave). Of course, there is no requirement that mother and father should work for the same employer.
The total statutory payment avaialbel for both parents is still a combined total of 39 weeks but the intention is to give parents more flexibility to split childcare responsilbilities.
The main changes for 2010 reflect the Retail Prices Index decrease of 1.4 per cent from September 2008 to September 2009. The fixed link to the RPI at a particular time of year can have unintended consequences as demonstrated by this month's announcement that the rate to December 2009 increased by 2.4 per cent. In any event, the changes are as follows:
As a result of the one off change made in October 2009 the limit on weekly pay for calculating redundancy payments and the unfair dismissal basic award remains at £380 and will do so until at least February 2011.
Another important change which is relevant for employers is that with effect from 6 April 2010 the maximum amount which the Information Commissioner can impose as a monetary penalty under the Data Protection Act 1998 is increased to £500,000.
Legal costs in employment and other civil cases are also due for a significant shake up following the radical proposals set out by Lord Justice Jackson in his Civil Litigation Costs Review. Notable for employers is his suggestion that costs recoverable by lawyers under no win no fee agreements in employment cases should be limited to 25% of the value of the settlement or award. There is also a suggestion that the "no costs" regime which applies (with limited exceptions) in employment tribunal proceedings may be extended to other areas of law.
The tension and frequent confusion which results from different perceptions of whether workers are employed or self-employed from tax and employment law perspectives has kept the courts busy for many years. The latest foray into this problematic topic by the Court of Appeal is in the interesting and significant case of Autoclenz Limited -v- Belcher. In commencing the introduction to her judgment Lady Justice Smith stated "This appeal raises a difficult point in employment law" and she has set out in her judgment an informative and very helpful analysis of the long sequence of important judgments about the issue, from both the tax and employment law perspectives.
The factual background is that 20 valeters worked forn Autoclenz at their premises in Measham, Derbyshire. They claimed in the tribunal that they were workers or employees and should therefore be entitled to, for example, holiday pay. Autoclenz maintained that they were self-employed and therefore had no such entitlements. In the tribunal they were found to be employees. The Employment Appeal Tribunal disagreed but held that they were workers (as defined in section 230(3) of the Employment Rights Act 1996).
Lady Justice Smith began with the classic definition of a contract of employment in Ready Mixed Concrete (South East) Limited v Ministry of Pensions :
"A contract of service exists if these three conditions are fulfilled. (i) the servant agrees that, in consideration of a wage or other remuneration, he will provide his own work and skill in the performance of some service for his master. (ii) He agrees, expressly or impliedly, that in the performance of that service he will be subject to the other's control in a sufficient degree to make that other master. (iii) The other provisions of the contract are consistent with its being a contract of service".
In Protectacoat Firthglow Ltd v Szilagyi Lady Justice Smith herself identified that the necessary next step is to consider relevant documents:
"In a case involving a written contract, the tribunal will ordinarily regard the documents as the starting point and will ask itself what legal rights and obligations the written agreement creates. But it may then have to ask whether the parties ever realistically intended or envisaged that its terms, particularly the essential terms, would be carried out as written. By the essential terms, I mean those terms which are central to the nature of the relationship, namely mutuality of obligation: Carmichael v National Power  IRLR 43 and the obligation of personal performance of the work."
Employment lawyers are familiar with the "irreducible minimum of mutuality of obligation" which is a wordy way of saying that an essential characteristic of a contract of employment is that it requires the individual named person to carry out the work so that it is not possible for that person to choose to send someone in their place. This is what was again confirmed in Autoclenz to be the key requirement of a contract of employment. However, the importance of the decision is in making it very clear that, in doing so, it is necessary to look behind what the documents say about this and other matters and instead to look at the reality of the working arrangements in practice.
In 2004 the Inland Revenue conducted an investigation and declared that it was satisfied that the valeters were self-employed for the purpose of assessment for income tax under Schedule D. In 2007. No doubt wishing to reinforce the point Autoclenz issued all valeters with new contracts which included the following:
For the purpose of providing car valeting services to its client's garages, Autoclenz wishes to engage the services of car valeters FROM TIME TO TIME on a sub-contract basis.
Lady Justice Smith noted that this invitation to work (signed by all the valeters) allowed for the provision of suitable qualified substitutes. However, she also took the view that this did not reflect the true nature of the relationship between the parties. There was no real expectation that a valet would provide a substitute if they were unable to work, notwithstanding what the contract provided. The named valeters were integrated into the business and subject to its control, so they were employees.
Tribunals have always been alert to the existence of sham agreements, particularly those intended to reduce tax liabilities by indicating self-employment. However, the importance of this decision is that it makes clear that tribunals should be concerned to establish the true nature of the relationship in practice, not only at the start of the contract but also as it continues and to take into account any variations.
One of the more important employment law decisions in the Court of Appeal in 2009 was Secretary of State for Business Enterprise and Regulatory Reform -v- Neufeld and Howe. Mr Neufeld was the managing director of A & N Communications In Print Limited and was employed as part of the sales team. He held 90% of the shares in the Company and worked 60 hours a week. He made a loan of £20,000 to the Company and provided personal guarantees. The Company became insolvent in 2005 and he claimed redundancy, notice and holiday pay.
Mr Howe founded Track Records in 1979 and in 2004 transferred the business to a limited company. He was the sole director and held 100% of the Company's shares. Profits were invested into the business and he was paid a salary from which tax and NICs were deducted. In 2005 he personally borrowed £50,000 to invest in the Company and gave a guarantee to the landlord of the Company's premises. The Company became insolvent and Mr Howe claimed a redundancy payment The Court of Appeal decided that both were employees, despite the fact that they were director/controlling shareholder and controlling shareholder respectively. They were therefore entitled to the payments they were claiming. The Court stated that an individual's share capital invested in the company, loans to the company, personal guarantees and obligations were not ordinarily relevant to determining their employment status. In order to decide whether a shareholder is also an employee tribunals should first establish whether there is a contract of employment in place and if there is, whether this is in fact a genuine contract of employment, or a sham. If it is genuine then that is the guiding factor in determining employment status.
This approach has been confirmed in the recent Employment Appeal Tribunal decision in V Ashby -v- Monterry Designs Limited. Vicki Ashby held a 50% shareholding in the Company prior April 2007 when she sold the Company to Mr and Mrs Grant. She continued to work for the Company until she claimed constructive unfair dismissal. However, this was less than 12 months after she sold her shares and it was contended successfully in the employment tribunal that she did not have a contract of employment prior to April 2007 as a result of her shareholding and, accordingly, she did not have the requisite qualifying service of 12 months to present her complaint of unfair dismissal. The tribunal took the view that prior to April 2007 the necessary elements of a contract of employment including control, mutuality of obligation and personal performance were absent. It was noted that Ms Ashby had run the business prior to the sale, she was left to her own devices in terms of its day to day management and she had equal control with her fellow shareholder in making financial decisions. She also benefited from the payment received by her when the business was sold.
The Court of Appeal decision in Neufeld was handed down after the employment tribunal decision and before the decision of the Employment Appeal Tribunal. As a result of Neufeld, an individual's shareholding was irrelevant and exercise of control over the Company formed no more than "part of the backdrop" when considering whether the individual was an employee. Accordingly the employment tribunal decision was overturned.
The decisions in Ashby and Autoclenz reinforce the clear trend of establishing contracts of employment and corresponding employment rights in cases in which it might have been thought that no employment relationship existed. It is always important to remember that the tax treatment of individuals does not determine their employment status for employment law purposes. In most cases, the recent decisions confirm that the safest approach is to assume that an employment relationship exists. Given what appears to be the diminishing relevance of the "control test" combined with the irrelevance of a controlling interest in a business (alone or collectively with others) it can only be a matter of time before the courts are asked to determine whether partners in professional partnerships are employees and current indications suggest that they are.
Accidents will happen but employers are often left exposed to prosecution as a result of failing to take steps to provide a safe working environment with a view to minimising risk. It is vital for employers to be aware of the need to comply with health and safety regulations and to apply required procedures on a continuing basis.
The HSE has recently prosecuted AM Widdowson & Son Ltd after it was found to be storing large quantities of aerosol products without taking proper precautions. The Company pleaded guilty to breaching Regulation 6(2) of the Control of Major Accidents Hazards Regulations 1999 and section 2 of the Health and Safety at Work Act 1974 and was fined £5,000 plus costs of £4,900. The Company had stored liquefied petroleum gas without notifying the relevant authorities and without undertaking a risk assessment or implementing good industry practice. There was a real risk of a major fire which could have posed a threat to employees on site and those in the surrounding area.
Citytex UK Limited was fined £10,000 when part of its building in Tower Hamlets collapsed with 20 people inside. Construction work was being carried out at the premises but the Company's managing director had not created a construction phase plan. The Company was also ordered to pay £35,000 costs.
In Liverpool Centriforce Products Limited pleaded guilty after an employee lost four fingers in a guillotine. HSE inspector Martin Parren explained that the Company should have had a guard on the guilltine to prevent workers from reaching the blade. There should also have been an automatic power cut-off if the guard was opened. The Company was fined £2,500 plus £2,438 costs.
Meanwhile in Liverpool Crown Court arms manufacturer BAE Systems has been fined £198,000 for lack of supervision which led to the death of Lynda Wilkins at its Lancashire munitions plant. Ms Wilkins had been using lead styphnate, a highly volatile primary explosive used in detonators, which can be set off my static charges from the human body. The HSE investigation showed that BAE Systems had faled to ensure that its employees followed "clear and mandated procedures" and had created conditions in which dangerous work practices were allowed to develop. Judge Nigel Gilmour QC observed that the Company's failures had "literally explosive consequences".
Another area of growing concern is dog attacks. Earlier this month the Communications Workers Union reported that a postwoman has recovered £70,000 after she was left scarred for life following a vicious attack by a German Shepherd dog when she was delivering post to a farm in February 2007. According to NHS records dog attacks have increased by over 40 per cent in the last four years and many of these injuries have been inflicted on postal staff in the course of making deliveries. The problem has been compounded by the fad for owning "status dogs" and Liverpool City Council is taking a lead by issuing control orders, commonly referred to as "dog ASBOs" to owners of dogs which are perceived to be a threat before attacks have taken place.
Is a pregnant worker automatically entitled to a risk assessment in the absence of evidence that the work involves a health and safety risk to the expectant mother? This is the question which was considered by the Employment Appeal Tribunal in the case of O'Neill -v- Buckinghamshire County Council. Many employers carry out risk assessments for all pregnant employees as a matter of course. Ms O'Neill, a teacher at Holmer Green Junior School, was described by one of her fellow teachers as the most difficult teacher she had ever partnered in her career of almost 30 years. She was alleged to have failed to comply with requirements and procedures particularly in planning lessons, to have failed to engage with colleagues and her response to guidance and criticism "ranged from truculent to aggressive". On June 13 2006 Ms O'Neill notified her employer that she was pregnant. A standard risk assessment was commenced on 17 July but it was not completed before the end of term in July. Ms O'Neill returned to work in September but was off on sick leave from 19 September (when she was notified that she was required to attend a disciplinary hearing) so the assessment was still not completed. It was agreed that the disciplinary hearing should be postponed taking into account the sickness absence and pregnancy. Ms O'Neill subsequently resigned and claimed constructive unfair dismissal.
The tribunal concluded that the Management of Health and Safety at Work Regulations 1999 did not apply to the work undertaken by Ms O'Neill so that there was no need to carry out a pregnancy risk assessment. Alternatively, even if there had been an obligation to do so, it was not correct that an assessment had not been undertaken, even though it had not been completed. Ms O'Neill appealed on the grounds that a risk assessment was required, it was wrong that the school had not failed to carry out a risk assessment because this required a meeting with her which had not taken place and the tribunal had failed to make a finding as to whether she had suffered a detriment during her "protected period".
The appeal failed. There was no requirement under the Regulations to carry out an assessment. Even if there had been there was nothing in either the Pregnant Workers Directive or in the Regulations to indicate that a meeting with the employee was required before the obligation to carry out a risk assessment was satisfied. As for detriment, if there was no requirement for an assessment, there was no evidence of obligation and failure to comply with that obligation so that there was no evidence of detriment. Had there been an obligation which had not been complied with, detriment would have been automatically established.
Mr Khan, a Muslim, lost his claims for unfair dismissal and equal pay in the Reading employment tribunal September 2008 and appealed on the basis that he had not had a fair trial. He maintained that the tribunal should have granted his request made on the third day of the hearing for an adjournment to allow him to observe Ramadan and was wrong to dismiss the case in his absence when he nonetheless left the hearing. He contended that the tribunal made an error of law by depriving him of his right to a fair trial, contrary to Article 6 of the European Convention on Human Rights (ECHR).
He was dismissed from his employment when it was discovered that he had been accessing pornographic and other inappropriate internet sites at work using his work laptop. Claims of discrimination on the grounds of age and religion had been struck out because he failed to provide information required by the tribunal. The tribunal hearing which was scheduled for 14 April 2008 was postponed on medical grounds but there was no evidence of diagnosis or medical treatment. He was also refused a request for adjournment on the basis that he was not ready. However, the tribunal granted Mr Khan's request for "specific break times each day for the purposes of prayer". The hearing was rescheduled to commence on 1 September and notice was sent to the parties on 29 May. The hearing duly commenced on 1 September but midway through Mr Khan again requested an adjournment on the basis that he wanted to enjoy a "period of mental and spiritual purity during Ramadan" which would be inconsistent with a case involving the consideration of sexually explicit images. The tribunal rejected the application on the grounds that:
In rejecting Mr Khan's appeal in what was described as a sad case taking into account Mr Khan's undoubted dedication to his work as well as professional and technical competence, the Employment Appeal Tribunal noted that the tribunal had given the request for adjournment "most anxious consideration". However, refusal of the request for adjournment was a proper exercise of the tribunal's discretion. Given that Mr Khan had then left the hearing, the tribunal was entitled to proceed and to determine tha matter in Mr Khan's absence, taking into account in particular that it was clear that careful consideration was given to a 122 page witness statement made by Mr Khan in order to establish his version of events.
In Petersen v Berufungsausschuss für Zahnärzte für den Bezirk Westfalen-Lippe Ms Petersen, a dentist born in 1939, was not allowed under German law to continue practising dentistry beyond her 68th birthday in June 2007. She submitted a claim for age discrimination which was referred to the European Court. In response, the German authorities claimed that there was justification for the 68 year age limit, relying on three legitimate aims: (i) protection of the health of patients covered by the statutory health insurance scheme (on the assumption that the performance of dentists declines after a certain age), (ii) preserving the financial balance of the statutory health insurance scheme and (iii) ensuring opportunities for younger people to become dentists.
The Advocate General accepted the submissions made on behalf of the German government and the European Court of Justice (ECJ) has partially agreed. There were factual issues with points (i) and (ii) so they might have succeeded but did not on the particular facts. However (iii) was successful and the significance is, of course, that it is this "fresh blood" point which is likely to be of the widest application in age discrimination cases. According to the Court:
"In accordance with Article 6(1) of the Directive, the aims which may be regarded as 'legitimate' within the meaning of that provision are inter alia legitimate employment policy, labour market or vocational training objectives...a measure intended to promote the access of young people to the profession of dentist in the panel system may be regarded as an employment policy measure."
Meanwhile, in Wolf v Stadt Frankfurt am Main restricting applications for active jobs in the German fire service to people under 30 was prima facie age discriminatory but justifiable as a "genuine and determining occupational requirement". Mr Wolf had applied for an "intermediate career post" in the German fire service but his application was rejected on the specific ground that he was over 30. It was suggested on behalf of the fire service that the age limit was justifiable on grounds including "the concern to ensure a long career for officials", to "limit the amount of social benefits paid", to "set up a balanced age structure within an occupation" and "to ensure a minimum period of service before retirement".
The Advocate General took the view that the policy was age discriminatory but justified for the stated reasons and the ECJ agreed, observing that,
"...it is apparent that national legislation such as that at issue in the main proceedings which sets the maximum age for recruitment to intermediate career posts in the fire service at 30 years may be regarded, first, as appropriate to the objective of ensuring the operational capacity and proper functioning of the professional fire service and, second, as not going beyond what is necessary to achieve that objective".
The cases are indicative of a trend to allow legitimate justifications as a response to claims of age discrimination which would otherwise succeed. This is of particular interest taking into account the current moves to abolish the UK state retirement age as reported in item 1 above.
Reed Recruitment ad banned
The Advertising Standards Authority has banned a radio advert for Reed Recruitment which implied that all Germans are "tyrranical". The ad features a man speaking to his boss who, according to a report in the Guardian, responded in German in "loud, staccato bursts evocative of the speeches of Adolf Hitler". The voice was described by the ASA as that of a generic "German-sounding orator". They stated:
"We concluded that, given the extreme reaction and aggressive tone of the German-speaking boss, the ad reinforced a negative and outdated cultural stereotype of German people as overpowering and tyrannical and therefore the ad had the potential to cause serious offence to some listeners".
You can judge for yourself by listening to the ad here.
Beardism at the BBC
According to a report on RTE, BBC presenter Adrian Chiles has been told by his bosses to get rid of his newly grown beard on the basis that it "doesn't look right" and is a "bit scruffy, like he hasn't bothered to get ready properly". In response The Sun has started a campaign to "smash beardism on TV" with Justin Lee Collins commenting that "wearing a beard is every man's right". Other supporters of the campaign are reported to include Noel Edmonds and...David Blunkett?!
Binman forced out by Council for "picking up too much rubbish"
Albert Stewart has been carrying out the same bin round for West Lancashire Borough Council for the last 33 years. However, he's now been removed from the round for picking up too much rubbish. He was spotted taking away extra bin bags left beside overflowing wheelie bins, which was against the Council's refuse collection rules. As a result he was issued with a written warning and moved to a different round eight miles away. According to a report in the Daily Mail Mr Stewart stated, "I?m really annoyed and upset about this. I?ve been on the same round for 33 years ? I?ve seen babies born, go to school, grow up and have babies themselves. They weren?t just people I took rubbish from ? they were my friends too. I?ve had lots of people coming up to me saying they miss me.".
UK's smallest policeman
At just five feet tall (1.5 metres) PC Robin Port has been reported to be Britain's smallest policeman. Height restrictions in the 19th and early 20th century required that police officers should be at least 5ft 10in and by 1960 the limits were reduced to 5ft 8in for male and 5ft 4in for female police officers. It was as a result of the McPherson Report in 1999 that all police forces removed height restrictions altogether on the basis that they might be seen to discriminate unfairly against certain ethnic groups.
However, notwithstanding his height, PC Port is undoubtedly an officer to be reckoned with. He has martial arts training and is a former lance corporal who served in Oman, Kuwait, Iraq and Northern Ireland. His hobbies include weight training, running, cycling and hill walking.
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