Welcome to the March edition of the Canter Levin & Berg Employment Solutions newsletter.
April is always a busy month for employment law with lots of changes to regulations and rates for statutory payments, We reported on the payment changes last month and the regulations that matter are featured in our first news item.
The Protection of Freedoms Bill signals the demise of the safeguarding and CRB provisions which we have commented on (and criticised) in numerous previous newsletters. While I am sure that nearly everyone would agree that proportionate protection must be in place, the requirement for relatives and family friends to obtain clearance before, for example, collecting children from playing grounds really was a step too far.
"Pre-pack" administrations are a frequently derided way for businesses to reinvent themselves when facing cashflow difficulties by, effectively, walking away from creditors' and employees' claims through an insolvency procedure. Back in the 80s there was much talk of an "enterprise culture" which would not unnecessarily penalise entrepreneurs who fell on hard times. While the intention was undoubtedly laudable, the upshot was that company administrations ("intended to secure the survival of the business as a going concern" similar to Chapter 11 protection in the US) were in fact used for directors to fold a company and then, often on the same day, effectively continue the same business having divested themselves of unpaid bills and otherwise valid claims by employees. "Pre-packs" almost inevitably result in the liquidation of the company following the (often very rapid) completion of the administration so that the intention of obtaining a breathing space for the company to find its feet is neither intended nor achieved. At least as far as affected staff are concerned the Employment Appeal Tribunal has now called time on this process as a way of avoiding the effects of the Transfer of Undertakings Regulations. Employees now have protection of employment in such circumstances so that TUPE still applies and existing employment contracts survive the administration and are transferred to the new business.
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This month's news:
1. summary of forthcoming changes
Here is an outline list of eight employment law related changes (and non-changes) announced by the Government due in the near future. The last three are of sufficient general importance to merit separate consideration - provided by the next following three items in this newsletter.
The outline list is as follows:
2. Protection of Freedoms Bill
The "Protection of Freedoms Bill" is a Government Bill. It had its first reading on 11 February and is likely to be law by the end of 2011. It covers a variety of matters, including placing restrictions on wheel clamping of cars, use of CCTV and removal of restrictions on times for marriage and civil partnership ceremonies. From an employment law angle the most significant part of the Bill is Part 5, headed "Safeguarding Vulnerable Groups, Criminal Records etc.".
3. additional paternity leave
Employed new fathers who have completed 26 weeks continuous employment with their employer already have the right to two weeks' paternity leave with statutory paternity pay.
New, additional, paternity leave rights come into force in relation to children whose expected week of birth (or matching for adoption) begins on or after 3 April 2011 (the detail is in the Additional Statutory Paternity Pay (Weekly Rates) Regulations 2010). The general idea is that where parents of a child are both working, then once the mother goes back to work (which for this purpose cannot be before the baby is 20 weeks old), the father can then take up to 26 weeks of "additional paternity leave".
4. abolition of default retirement age
I wrote about the anomaly in the draft Regulations last month when I pointed out that it appeared that the new Regulations appeared to exclude the option to give notice to over 65s before the default age was abolished.
The Government announced in January that it was not going to back down on proposals to abolish the so called "default retirement age" on 1 October 2011. Many had argued that increasing the age from 65 to some higher age would be a better solution, on grounds of simplicity, of reducing the number of tribunal claims and of "humanity" (a default retirement age avoids the unpleasantness of having to tell an ageing employee that he is no longer up to the job). However that is not to be.
5. territorial jurisdiction
Regular readers will know that BA cabin crew have kept the courts and tribunals very busy in the last couple of years.
In the latest case involving them the Court of Appeal has ruled that cabin crew, based in Hong Kong but flying to and training in London, worked partly at an establishment in Great Britain: accordingly they are entitled to bring claims under the Race Relations Act 1976 and the Employment Equality (Age) Regulations 2006.
6. TUPE avoidance blocked by the EAT
A leading article in the Times of 23 February 2011 was headed "The TUPE regulations are a barrier to open services that needs to be removed". The Times was making the point that the TUPE Regulations make it practically impossible for local councils to achieve efficiency savings by outsourcing functions but there are also serious implications for business.
A main effect of the TUPE regulations is that they automatically transfer contracts of employment of staff performing a particular function to any another enterprise which takes over that function. The Regulations make it unlawful for the new operator to dismiss any of the transferred staff, to reduce their wages or otherwise impose less beneficial terms of employment (even if the staff agree, which they might well do if the alternative is redundancy). One effect is that it is practically impossible for a private enterprise taking on a staff intensive function from a local authority to do the job at lower cost. It is not hard to see that the end result of a well meaning attempt to protect employees can thus sometimes be to create even bigger problems than it solves.
7. corporate manslaughter
Alexander Wright, a junior geologist working for a company called Cotswold Geotechnical Holdings Ltd, was killed in September 2008 when a pit or trench from which he was taking trial soil samples collapsed on top of him. The company was prosecuted under the Corporate Manslaughter & Corporate Homicide Act 2007, the first prosecution of a company under that Act (which had recently come into effect, in April 2008).
Under the Act an organisation is guilty of corporate manslaughter if the way in which its activities are managed or organised causes a death and amounts to a gross breach of a duty of care to the person who died. A substantial part of the breach must have been in the way activities were organised by senior management. A conviction can lead to an unlimited fine and guidelines from the Sentencing Advisory Panel have recommended that a fine on conviction under the Act should rarely be less than £500,000, and "may be measured in millions of pounds".
8. HMRC's view as to whether an individual is an "employee" is not conclusive
We have commented on many occasions that HMRC and employment tribunals can reach equally valid but contrary views that a person can be both employed and self-employed at the same time. A recent case re-emphasises that just because the taxman regards a person as being an employee it does not follow that that is the correct position in law.
Mark Fitzpatrick is a designer in the aerospace field. He set up his own company, of which he was the sole director and only employee, to provide his services. The company (MBF Design Services Ltd) then contracted with Airbus, via two intermediaries, to provide his services to Airbus in connection with the design of their A380 aircraft. MBF received "fee income" from Airbus.
9. hugely significant pensions case in Europe
As you have probably read in the mainstream press the European Court has ruled that different insurance premiums for women and men constitute sex discrimination and that they are not compatible with the EU Charter of Fundamental Rights (see EC Press Release of 1 March 2011: Sex Discrimination in Insurance Contracts). The European Court ruled in early March in an important Belgian case which decided whether pension providers in the EU (and insurance companies in the EU generally) can, when calculating premiums and benefits including annuity rates, lawfully take into account the fact that women generally live longer than men.
10. and finally...branded as a "thief"
Taking the law into your own hands is always dodgy. For Simon Cremer, who runs a flooring company in Witham, Essex, taking a thief to the law (in the shape of the local police station) turned out to be expensive as well.
It may have seemed a good idea at the time but Mr Cremer must now regret that when he discovered one of his employees had stolen money from the company he frog marched him down to the police station with a cardboard sign around his neck reading: "THIEF. I stole £845 am on my way to police station". The employee concerned, a Mark Gilbert, admitted that even he was surprised when his boss was arrested. For those interested, the full story of what happened, including a photograph, is in the Daily Mail of 16 February 2011.
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