Employment SolutionsCLB Solicitors

May 2009

We have a lot of predictions in May's newsletter, mostly revolving around the proposals and intended reforms of this increasingly moribund Government. The most important proposed change in the law will be the Equality Bill which the Government wants to get passed before the election of 2010. The aim of the Bill is to combine all the different types of discrimination under one Act. We have no problem with that per se; however, there are further reforms proposed, the most important being the ability for employers to positively discriminate where circumstances allow and the compulsory pay auditing of companies with over 250 employees.

The ability to give a role to applicants who are from an under-represented ethnic background or gender and yet who are not outstanding against other applicants with similar qualifications is a step into dangerous territory. It stops short of “quotas” but allows employers to positively discriminate in certain circumstances and will provide them with a possible defence to legal action brought by the unsuccessful candidates (who were denied a job presumably because their ethnicity or gender was over-represented within the Company). It is, in my opinion, an attempt at socio economic engineering and I personally hope that this part of the Bill never becomes law. It will create a dangerous precedent in equalities law. The best candidate should get the job irrespective of race, gender or class. That is the rationale behind the law of equal opportunities and to change it is a departure from the purpose of the reforms of the 1970s.

Another part of the Bill that will be most unwelcome to employers is the compulsory auditing of the pay of all employees in companies that employ over 250 people. The results of the audit could lead to inquiries that could, in turn, lead to a mass of equal pay litigation in the private sector akin to that seen in the public sector over the last 10 years. Do employers or even employees really want this given the current economic climate? Even employees who stand to gain the right to litigate recognise that this kind of intrusive inquiry into commercial pay will lead to job losses and spiralling legal bills.

My prediction is that the Bill will not be passed before the next election due to hold ups and amendments by the opposition and the Lords which will mean it may never get passed.

The Government has also announced that it wants to increase the amount of redundancy pay available to employees by upping the weekly cap from the present £350. Obviously no one in the Government understands how the redundancy payment scheme works as the proposals would only affect those earning more than £350 per week gross because, as we all know, the figure of £350 per week is merely a cap on the amount an employee can receive, not a guaranteed payment for all employees irrespective of actual earnings. Politicians making mistakes concerning payments? Whatever next?

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 enquiries@clbemployment.com.


Will Burrows

1. The 2009 Budget, Redundancy pay and the Minimum Wage

2. The Equality Bill

3. Holidays

4. Fat cats

5. Pleural Plaques (asbestos claims)

6. Representation at disciplinary hearings

7. Corporate Manslaughter and Corporate Homicide Act 2007

8. Damages for injury to feelings

9. ...and finally


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1. The 2009 Budget, redundancy pay and the Minimum Wage

The April 2009 Budget report included an announcement that:

"To help provide adequate support for individuals who have been made redundant the Government announces a one-off increase in the level of statutory redundancy pay, making the weekly rate £380. The Government is also considering whether to introduce a new 'floor' which would set a minimum level for statutory redundancy payment rates, and would legislate on this in the next Parliament".

As it stands this is clearly nonsense as there is no such thing as a weekly rate of statutory redundancy pay. Presumably what it means is that the maximum amount of a week's pay to be taken into account in calculating statutory redundancy pay is to be increased from the current £350 to £380. Assuming that is what the Chancellor meant, there will be no increase at all for many employees - the increase will only be for those earning more than £350 per week.

The absolute possible, and generally theoretical, maximum for statutory redundancy pay will increase from the current £10,500 to £11,400 (applies only for employees who have served at least 20 years since attaining age 41).

Whether there is also to be a general increase in the maximum amount of a week's pay which can be taken into account for other purposes such as basic award on unfair dismissal remains to be seen. No indication was given as to the start date for the increase but we understand that it is likely to take effect from October 2009.

National Minimum Wage.

The Budget Report also says "The LPC [Low Pay Commission] will publish their recommendations for October 2009 NMW rates in May 2009". Those rates were duly announced on 11th May. The increase is to £5.80 per hour, a rise of 7p. This equates to £232 per week for an adult working 40 hours.

There is a change to the young persons' rate which takes 21 year-olds on to the adult rate from october next year. In the current round the 18-21 year-old rate increases by 6p to £4.83 and the rate for 16 and 17 year-olds increases by 4p to £3.57.

As usual, the rate changes will come into effect in October.

Personal tax allowance.

From 2010 personal tax allowance will be reduced by £1 for every £2 of income above £100K. It follows that the personal tax allowance will disappear completely for those with an income which is much above £100K (thus on the basis of a basic normal personal allowance of £6,475 the reduction would be to zero if income exceeds £112,950).

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2. The Equality Bill

The enormous and long awaited Equality Bill was published on 27th April 2009.

If and when it becomes law, it will replace 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.

Apart from this sensible rationalisation of current discrimination law, the Bill also proposes a number of changes of substance. Two have hit the headlines but there are also others. The two changes which have hit the headlines are:

  1. a gender pay information clause. This provides for regulations requiring employers with 250 or more employees "to publish information relating to the pay of employees for the purpose of showing whether...there are differences in the pay of male and female employees" in circumstances to be prescribed.
  2. a ban on 'secrecy clauses'. According to the former Equal Opportunities Commission, nearly a quarter of employers include "secrecy clauses" in employment contracts, forbidding staff from talking about their wages. This practice will become illegal so that work colleagues will be able to compare wages.

Other significant proposed changes include:

  • a defence of justification to mitigate the apparent effect of the 2008 House of Lords decision in London Borough of Lewisham v Malcolm
  • outlawing discrimination "by association" as in effect required by the 2008 ECJ ruling in Coleman v Attridge Law & anor; and also in relation to "perception";
  • a "public authority duties" provision will replace the three existing duties (relating to race, gender, disability) with a single duty covering race, sex, pregnancy and maternity, gender reassignment, disability, age, sexual orientation and religion or belief;
  • allowing positive discrimination in favour of disadvantaged groups in certain circumstances, notably in recruitment and promotion if candidates are otherwise equally qualified;
  • a power for Ministers to change discrimination statutes by regulation if required to bring them into line with EC law as it develops.

It is understood that MPs may try to use debates on the Bill to introduce a clause scrapping the age 65 default compulsory retirement age which is permitted under current British age discrimination law. Also that the government may introduce a further change to make it easier for workers to bring "multiple discrimination" cases (for example sex and race discrimination combined).

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3. Holidays

Subject to anything agreed in a particular cases, the normal rule is that a worker must give his employer notice of intention to take holiday and the notice must be at least twice as long as the amount of holiday to be taken. So if he is taking two weeks' holiday, the 1998 Working Time Regulations provide that he should give the employer four weeks' advance notice. The employer then has half that amount of time to object and refuse permission for the holiday to be taken at that time.

By the same token, the normal rule is that an employer can require a worker to take the holiday to which he or she is entitled on particular days provided appropriate notice is given to the worker. As with a holiday notice given by a worker to an employer, so with a notice given by the employer to the worker the notice must be at least twice as long as the amount of holiday to be taken.

A case decided by the Employment Appeal Tribunal in March this year (see last month's newsletter) puts an important gloss on the normal rules in respect of workers who have an "on/off" pattern of duty - such as teachers, some professional sportsmen and women and, in the case in point, people working on offshore oil rigs. It is therefore worthwhile taking a look at why this issue arose.

The EAT pointed out that workers in the categories noted above who do not work during certain periods of the year because there is no work for them to do are not to be regarded for purposes of the Working Time Regulations as being on leave during those periods. If it were otherwise they would be legally enitled to insist on taking their statutory holiday entitlement out of the periods when they were working. The result is that teachers, for example, cannot demand that they take their statutory holiday entitlement during term time and that oil rig workers who regularly work two weeks offshore and then have two week on-shore "field breaks" cannot demand that they take their statutory holiday entitlement out of the periods when they are rostered for off-shore work.

Perhaps rather amazingly this is what some oil rig workers were claiming in the case in question. Perhaps even more amazingly they won at an employment tribunal in February 2008. The EAT has now overruled that tribunal judgment, quoting from a 1997 House of Lords case that "'if a train of reasoning leads to an unbelievable consequence, it is in need of re-examination'" (Craig and Taylor v Transocean International Resources Ltd and Transocean International Resources Ltd v Russell & ors, EAT on 9th March 2009).

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4. Fat cats

As long ago as September 2003 the House of Commons Trade and Industry Committee issued a report called "Rewards for Failure". This dealt mainly with "golden parachutes" - large amounts paid to senior directors who have presided over failing companies.

The Committee noted that "excessive payments had been a long term concern and well-publicised instances of companies, such as Marconi and GSK, where directors' contracts would allow for this, were merely the most recent examples". However its report failed to deal with a main reason for enormous "golden parachutes" - namely, that it can be legal and in the best interests of a company to make a large payment to a departing director in return for a confidentiality agreement restraining the director from washing the company's dirty linen in public (indeed an MP recently accused Network Rail of indulging in this practice and justifying it on the basis that this behaviour was "no different from that of other companies of a comparable size in matters of that nature" - see Hansard 4th March 2009 if you would like to read the full speech).

While serious action after the 2003 report might have made at least some difference in the recent scandals involving huge pay offs to the heads of banks (not to bankers if Private Eye is correct in saying that none of Sir Fred Goodwin, Sir Tom McKillop, Andy Hornby or Lord Stevenson are qualified as bankers) in fact nothing much happened. As from 6th April 2009 new Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 are in force but that is about all.

Now, in the light of the recent cases, the Financial Services Authority is proposing what appear to be more serious changes. In February 2009 the FSA issued a draft Code of Practice to govern remuneration practices in larger banks, building societies and broker dealers. More recently it has issued amendments to tighten up that draft along with a quite tight timetable for implementation and an announcement that in June 2009 it will be starting a further consultation on the application of the Code to retail investment intermediaries.

It would be over-cynical to suggest that this is an example of trying to close the stable door after the horse has bolted as there are no doubt many more horses, and many foals as well, still in the stable. And although the intended new rules are proposed as a Code of Practice rather than as changes to the law, this does not mean they will be toothless. The FSA has many sanctions at its disposal to impose against those who break its rules and all of us involved in employment law know how important Codes of Practice can be!

The Courts also do their bit if and when they get involved. They will not allow golden handshakes which are not justifiable. For example at the end of April the High Court ruled that the Maidstone and Tunbridge Wells NHS Trust had no legal obligation to pay the £175,000 it had offered its former chief executive who had let hygiene standards slip at her hospital with fatal consequences (see BBC News 28th April 2009, "Bug scandal boss loses pay fight").

In conclusion, while it is normal for governments and quangos to attempt to solve problems by making new rules, according to Paul Moore, the senior RBS executive who decided to "tell all", the recent problems in the banking system did not result from a lack of rules so much as from failure to enforce them. Time will tell whether this particular stable door is in fact closed or whether there will merely be new rules requiring that to be done.

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5. Pleural Plaques (asbestos claims)

To the horror of many, often elderly, workers who were exposed to asbestos fibres when they were working, the House of Lords ruled in 2007 that the existence of "pleural plaques" was not a compensatable disease (the pleura is a lining on the inside of the chest cavity which protects the lungs and the plaques are calcified deposits which can form after exposure to asbestos).

Pleural plaques are themselves harmless but the High Court had accepted in 2005 that the anxiety they caused was itself a compensatable condition. The High Court ruled that £6,000 to £7,000 would normally be the appropriate award, considerably less than the £15,000 to £20,000 for which employers' insurers had typically settled before then.

The Court of Appeal and the House of Lords both overruled this High Court decision. The House of Lords held that asymptomatic pleural plaques do not give rise to a cause of action because they are harmless in themselves and do not signify damage or injury that is sufficiently material to found a claim for damages in tort.

Although this judgment was pleasing to insurers it upset many others. As a result in March 2009 the Scottish Parliament passed the Damages (Asbestos-related Conditions) (Scotland) Act 2009. This effectively overrules the House of Lords judgment in Scotland. It is due to come into force on 17th June 2009. The British (English!) Parliament is currently considering a Bill to similar effect, the private member's "Damages (Asbestos-Related Conditions) Bill". This passed its second reading in the House of Commons on 24th April 2009.

Four major insurance companies have taken up the cudgels against the Scottish Act. Aviva, AXA Insurance, RSA and Zurich, which together represent more than half the employers' liability insurance market, have lodged an application for judicial review. This is essentially based on Human Rights law. They consider the Act ignores the fundamental legal principle of negligence and clear medical evidence and that it was passed without adequate consideration of the financial impact not only on them but also on taxpayers. They have failed in an attempt to get an interim interdict (injunction) to delay implementation of the Scottish Act but a full hearing is expected later in 2009.

Whether the English Bill becomes law and if so whether the insurers will challenge it in the same way as they are challenging the Scottish Act is an open question.

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6. Representation at disciplinary hearings

The normal rule is that a worker has the legally enforceable right to be accompanied by a fellow worker or trade union representative at any internal disciplinary or grievance hearing. In a recent case an employee asked if he could have a lawyer instead. The employer refused. Normally that would have been an end of the matter but in this case the employee applied to the Court for judicial review of that decision.

The facts were somewhat exceptional (see below) but the important point is that the employee won. The Court agreed to make an order giving the employee the right to legal representation at the employer's disciplinary hearing and at any internal appeal. The essential reason for this decision was that, in the particular circumstances, proceedings for unfair dismissal at an employment tribunal could not have provided a sufficient remedy for the employee if he won.

The employee, referred to as "G", was a young man who was working as a part-time assistant music teacher at a school. It had been alleged that he had made sexual advances to a 15 year old male student at the school.

If, after a disciplinary hearing, the governors of the school found the charges substantiated it would be likely that G's name would be added to the "POCA" (Protection of Children Act) list kept by the Education Department. This is the list of people who are indefinitely forbidden from carrying out work which directly or indirectly involves children. That would have potentially devastating consequences for G's future.

Although in some ways ground breaking, the case is of little direct general significance to private employers for two reasons: first, the Court's decision relied on G's employer being a public sector body with the result that G was able directly to call in aid the Human Rights Act; and second the basis of the ruling was that the charge against G was so serious that unfair dismissal proceedings could not provide an adequate remedy.

So although of little direct significance in most situations, the case may be of considerable indirect relevance. This is because it may open the door, in certain situations, for an employee in the private sector to claim that their employer's refusal to allow legal representation at a disciplinary hearing would give them the right to resign and claim constructive unfair dismissal. Clearly this would not be so in the vast majority of cases but it might be possible, for example, where the consequences of an adverse finding at a disciplinary hearing could result in the employee being blacklisted by a governing body (for example by the FSA in the financial services industry).

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7. Corporate Manslaughter and Corporate Homicide Act 2007

Until 2008 a company could only be convicted of corporate manslaughter if there was enough evidence to find a single senior person guilty. Only seven small organisations had ever been convicted.

The Corporate Manslaughter and Corporate Homicide Act 2007, which came into force on 6th April 2008, is intended to make it easier to prosecute organisations. The new criminal offence it created enables the courts to consider the overall picture of how an organisation's activities were managed by its senior managers rather than focusing on the actions of one individual.

The first prosecution under the Act is due to take place before magistrates in Stroud on 17th June 2009. A company called Cotswold Geotechnical Holdings Ltd is being prosecuted following the death of Alexander Wright, an employee killed when a pit collapsed in September 2008. Given that the company is small and family owned it might well have been possible for it to have been prosecuted under the old law but even so it may, in a general sense, set an interesting precedent.

If the company is found guilty of the new offence of corporate manslaughter it will face the possibility of an unlimited fine and a "name and shame" publicity order requiring it to publish details.

Separately the Health and Safety (Offences) Act 2008 quadruples the normal maximum fine a Magistrates Court can impose in Health and Safety cases from £5,000 to £20,000 and gives Magistrates Court powers to impose prison sentences in more serious cases.

The combined effect shows that the powers that be are taking an increasingly strict approach to health and safety related matters.

All employers have a legal obligation to take Health and Safety seriously. Those with five or more employees have additional obligations. Both from a human and a commercial point of view it is most important to ensure that these laws are complied with and that proper advice be taken.

Please remember that we can provide you with comprehensive health and safety support and resources. Please contact Jameel Abbas or Collette Malton for further information.

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8. Damages for injury to feelings

An employment tribunal in Leeds has recently awarded what is believed to be the highest award ever for injury to feelings for an act of discrimination.

In the case an NHS manager, Mrs Linda Sturdy, had won a claim of unlawful age discrimination after a job she was in line to get was given to a younger, less well qualified colleague. The employment tribunal found that her NHS Trust employer had aggravated its discrimination by trying to force her into taking the lesser position using what she claimed were "bully-boy" tactics and a series of accusations which amounted to "character assassination".

Following guidelines set out a few years ago by the Court of Appeal, £25,000 has been the normal absolute maximum which would be awarded for injury to feelings. In this case, the employment tribunal awarded that maximum but decided it should be increased by 18.5% on account of inflation. It awarded Mrs Sturdy £29,500 for injury to feelings plus £5,000 aggravated damages because of the "high handed, oppressive and malicious" way the employer had dealt with her.

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9. And finally...

No one can complain that employment law is completely dry. After the case of the Coventry bus driver who lost his unfair dismissal claim last October following a complaint by a passenger that he had stopped his bus and then relieved himself in semi-public there are now reports of another bus driver, this time a lady bus driver in France, who has been sacked for stopping her double decker bus to protect a frog - "It was in the middle of the road so I slowed down and put on the hazard flashers. Then I climbed out and put the frog in a box so I could take it to the side of the road and let it free".

And in Scotland a policewoman has told Jane's Police Review that all police officers should be Jedis. Apparently she said "For me, it is not a joke. Being a Jedi is a way of life. I love the Star Wars films and the concept of being a Jedi, that the faith is not divisive." If you want to read the story click here on this link to the Ananova website.

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advice service

Call free on 08000 320974, e-mail enquiries@clbemployment.com or contact one of our employment lawyers:

Will Burrows
Direct dial: 0151 239 1010
e-mail: williamburrows@canter-law.co.uk

John Booth
Direct dial: 0151 239 1124

Misbah Sadiq
Direct dial: 0151 239 1138
e-mail: misbahsadiq@canter-law.co.uk

Rupert Budgen
Direct dial: 0151 239 1059
e-mail: rupertbudgen@canter-law.co.uk

Kath Kelly
Direct dial: 0151 239 1079
e-mail: katharinekelly@canter-law.co.uk

Martin Malone
Direct dial: 0151 239 1003
e-mail: martinmalone@canter-law.co.uk

For sales and client services enquiries please contact:

Jameel Abbas
Direct dial: 0151 239 1017
e-mail: jameelabbas@canter-law.co.uk

Collette Malton
Direct dial: 0151 xxx xxxx
e-mail: collettemalton@canter-law.co.uk

use our extensive resources on the CLB Employment Solutions website.

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