The speech, which is delivered to mark the state opening of Parliament, set out legislation that will be brought in by the Government in the coming year.

1. The National Insurance Contributions Bill, which will introduce an “Employment Allowance” (giving all businesses a reduction of £2,000 per annum from their employer national insurance contributions – aiming to help approx. 450,000 employers by reducing the cost to employ people), add a general anti-avoidance rule for NICs, restrict the use of offshore payroll companies as intermediaries and remove the presumption of self-employment for LLP members.
2. The Deregulation Bill, which will set out to reduce the burden of excessive regulation on businesses and include changes to employment tribunals (e.g. repeal the employment tribunal’s power to make wider recommendations in discrimination cases) and health and safety regulations. Additionally there are proposed changes to childcare for working parents and increased access to traineeships and apprenticeships,
3. The Immigration Bill, which amongst other things threatens tougher penalties for employers who employ workers who do not have the right to work in the UK.

 There are also separate provisions for changes to teachers’ pay.

Comment: Compared with previous years, this speech looks pretty quiet but as we have mentioned in previous e-bulletins, there are still many changes in the pipeline (such as fees, new tribunal rules and changes to TUPE) which do not require primary legislation and so are not featured in the Queen’s Speech. That’s why it’s always a benefit in having a professional HR resource (just like The Personnel Dept!)  to keep you informed and updated on these matters, we like to think!!

This employment tribunal case arose from a situation in which the employer felt that it had no option but to dismiss a foreign worker who lost her right to work in the UK.

Background

 Mrs Winful, a Ghanaian married to an EEA national, worked for a large company. The company has a policy providing for annual checks of employees’ right to work in the UK. She had worked satisfactorily for the employer since 2005, but had a visa that expired on 13 November 2010.

In October 2010, the employer reminded Mrs Winful that her visa was due to expire and that it was for her to show that she had the right to continue to work in the UK. She was shown the employer’s policy and warned that her employment could not continue if she did not produce the proper immigration documentation. Mrs Winful applied to the UK Border Agency to extend her stay in the UK.

In early November, the visa expired and the employer held a meeting with Mrs Winful. It became clear that the UK Border Agency had returned her application and that she was having difficulty showing that she was still with her husband, an EEA national. Mrs Winful said that she was going to reapply.

The employer dismissed Mrs Winful on 9 December 2010 on the basis that she was unable to demonstrate that she had the right to work in the UK. She claimed unfair dismissal.

The employment tribunal was struck by the similarity between this case and Klusova v London Borough of Hounslow [2007] EWCA Civ 1127 CA. In that case, the Court of Appeal held that it can be fair to dismiss a worker who no longer has the legal right to work in the UK. However, the Court of Appeal also said that an employee whose leave to remain in the UK has expired, but who has made a valid in-time application to extend her leave, is entitled to remain and work in the UK until that application is properly determined.

Tribunal decision

The employment tribunal held that the employer could easily show that, as of 9 December 2010, Mrs Winful had been unable to demonstrate that she had the right to work in the UK and the employer reasonably believed that it was acting illegally in continuing to employer her.

The employer successfully argued that, at the time of the dismissal, it had a genuine belief that it had to dismiss Mrs Winful because to keep her on would have been a contravention of the Immigration, Nationality and Asylum Act 2006. The dismissal was fair for “some other substantial reason”. The tribunal pointed out that dismissal was the only possible action open to the employer.

Comment: This scenario is not uncommon but employers need to ensure they follow a fair procedure and make a decision that is right in all the circumstances and make appropriate enquiries as to the position before considering dismissal.

 An employer can dismiss an employee who loses the right to work in the UK. The employer should still follow as fair a procedure as possible, for example by meeting with the employee and exploring what it can do to help the employee to secure his or her immigration status.

An employee whose leave to remain in the UK has expired, but who has made a valid in-time application to extend his or her leave, should not be dismissed until the application is properly determined.

Background

Kefil was a manager with 14 years’ service. In July 2010 he was informally warned about deficiencies in his management style. In April 2011 he was dismissed after 10 employees alleged he had mistreated them. The employer regarded his behaviour as gross misconduct: he had abused his position by threatening employees’ job security, created an intimidating environment, and failed to set an example as a manager by not treating employees fairly.

Tribunal decision

The employment tribunal found his dismissal unfair. Although there had been concerns about Kefil’s management style in the past, leading to an informal warning, he had not been formally warned that if he continued to manage in that way he might be dismissed, or been given any management training to remedy his perceived (and probably actual) deficiencies. The employer appealed, arguing that the tribunal had substituted its own view on what it would have done and the decision was perverse given the facts and Kefil’s abuse of his position.

EAT decision

The EAT dismissed the appeal. The tribunal was in a position to evaluate all the facts properly, and had approached the band of reasonable responses test correctly. It clearly did not see Kefil with rose tinted glasses, and was entitled to find, on the evidence, that dismissal was unreasonable without first giving him a warning, not just about what he was doing, but that he might be dismissed if he went on doing it.

Comment: Case law is clear: in dismissal situations there is a band of reasonable responses to an employee’s conduct within which one employer might reasonably take one view and another quite reasonably take another. The function of a tribunal is to decide whether the decision to dismiss fell within the range responses that a reasonable employer in those circumstances and in that business might have adopted, but the tribunal must not substitute its own view as to what it would have done.

This case reminds us that while the band of reasonable responses test is broad, an employment tribunal itself has a wide discretion, as long as it adopts the right approach. The EAT, in making its ruling, commented that while it was sympathetic to the employer’s case, the circumstances could not lead to a finding of perversity on the tribunal’s part. Simply put, just because you don’t like the outcome, and some may agree with your view, it doesn’t mean the law has been applied incorrectly.

It may be argued that a senior manager should know that if they keep on doing something wrong then, at their level, they automatically understands the consequences could be very serious. BUT the Acas Disciplinary Code requires employees to be warned officially in non-gross misconduct cases about the outcome of continued unacceptable behaviour, albeit that some stages of a disciplinary procedure may be bypassed depending on the seriousness of the offence.

As the EAT commented, “the over authoritarian manager is not unknown in industry and it would be unfortunate if such managers were not warned, if the circumstances were such that they might not clearly have understood, that repeat of that conduct might lead to their dismissal.” Therefore, employers need to understand that no matter ‘what their level of seniority, if non-gross misconduct could result in dismissal, then formally warn them that is the case.

The Government proposes to introduce employee-shareholder contracts, under which individuals would receive shares from their employer of between £2,000 and £50,000, exempt from capital gains tax, in return for giving up specified employment rights. A clause was added to the Growth and Infrastructure Bill to effect this proposal. 

On 24 April 2013, the provisions were passed by the House of Lords at the third time of asking after the Government made a final concession: 

• an agreement that someone shall become an employee shareholder is invalid unless, prior to entering into the contract, the individual has received advice from a relevant independent advisor (i.e. a lawyer, CAB, law centre, union etc). Further, the employer has to pay the reasonable costs of that advice – whether or not the employee then accepts the role – if they would otherwise have been payable by the employee. (no doubt savvy Unions will now start charging fees for advising on employee shareholder status, and look for those fees to the employer.) If the employee does not receive independent advice before agreeing to become an employee shareholder, then s/he will be an ordinary employee.

However, the House of Lords voted on two previous occasions to remove the provisions in the Growth and Infrastructure Bill introducing employee-shareholder contracts.  

The Government therefore made a number of concessions in an attempt to get the Bill through the House of Lords, including that:

• benefits such as jobseeker’s allowance will not be affected if an individual does not wish to accept an employee-shareholder position;
• there will be day-one unfair dismissal rights and protection against detrimental treatment for refusing to agree to an employee-shareholder contract;
• there will be a requirement for employers to provide a written statement of the particulars of employee-shareholder status and the rights attached to the shares;
• the written statement will have to set out the employee shareholder’s loss of specified employment rights; and
• there will be a 7 day “cooling off” period of seven days, during which an individual’s acceptance of an offer to become an employee shareholder will not be binding
• the first £2,000 of shares will not attract income tax
• existing workers will be protected from detriment if they refuse to switch to an employee-shareholder contract

 The Government has stated its intended implementation date of 1 September 2013. 

 The Growth and Infrastructure Bill became the Growth and Infrastructure Act 2013 on 25 April 2013, when the Bill received Royal Assent. 

Comment: General commentators are very sceptical of how successful these contracts will actually be in practice, from both the employer and employee point of view. Only time will tell if they are fraught with so many problems they actually become a damp squid and only used by the bravest of parties.

Fee levels are unchanged from the information issued following consultation, i.e. a £250 issue fee, and a £950 hearing fee for most types of claim (including unfair dismissal, discrimination and whistleblowing) whilst straightforward claims such as unlawful deductions and statutory redundancy payments carry a lower fee (£160 issue; £230 hearing).

Comment: Couple of points to note:-

• it states the ‘hearing fee’ will fall due on a date set out in the employment tribunal’s notification of hearing date (which does not deal with the question of whether it falls due shortly after the hearing date is set, or a certain number of weeks before the hearing – they could be months apart).
• the nomenclature has changed: ‘level 1′ and ‘level 2′ claims are now ‘type A’ and ‘type B’ claims.

On 25 June 2013 the following will come into force:-

• the new tribunal procedural rules (final version not yet available)
• changes to whistleblowing laws (introducing a public interest element, removing the requirement that the disclosure must be made in good faith, imposing vicarious liability on employers for detriments by employees on other workers)
• removing the 2-year qualifying period for unfair dismissal where the main reason for dismissal is the employee’s political opinions or affiliations.

However, there’s so much employment law still to come into force – Commencement dates are still awaited for:-

• confidential termination negotiations (expected summer 2013)
• new caps on the compensatory award (expected summer 2013)
• fees for bringing tribunal claims (expected summer 2013)
• employee shareholder status (expected 1 September 2013)
• changes to TUPE (expected October 2013)
• Acas early conciliation (expected 2014)
• financial penalties for employers (expected 2014)
• changes to Equality Act (no indications known)

Comment: Watch this space on all the above changes, we’ll keep you informed as they come into force.

Q1 – Are employees entitled to time off for bank holidays in addition to the statutory minimum annual leave entitlement (5.6 weeks)?

A - As a result of amendments to the Working Time Regulations 1998, the statutory minimum annual leave entitlement increased from 4 to 5.6 weeks between October 2007 and April 2009. There is no automatic entitlement to take time off on bank holidays in addition to this, unless the terms of the employment contract provide otherwise.

Under s.1 of the Employment Rights Act 1996, employers must give new employees a written statement of terms and conditions of employment. Under s.1(4)(d)(i) of the Act, the statement must contain terms relating to holiday entitlement, including bank holidays, and holiday pay.

Prior to the increase in holiday from 4 to 5.6 weeks, many employers worded contracts to the effect that employees were entitled to “statutory entitlement plus bank holidays”. Previously, this wording would have granted an entitlement to 20 days’ leave (for an employee working a five-day week) plus 8 bank holidays. Following the increase, that same wording would denote an entitlement to 28 days’ leave plus eight bank holidays, which is perhaps not what the employer intended!

Comment: Employers should check their employment contracts to determine whether or not this could be an issue. The Personnel Dept conducts regular contracts reviews and updates for our retained clients or as a one-off project for other clients.

Q2 - What are part-time workers’ rights to paid holiday?

A – Under the Working Time Regulations 1998, workers have the legal right to 5.6 weeks’ paid annual holiday.

The number of days or hours that this 5.6 weeks’ statutory holiday entitlement constitutes will vary depending on the number of days or hours that a part-timer works. For example, a worker who ordinarily works only three hours a day on Monday and Tuesday will be entitled not to come to work for those six hours a week for 5.6 weeks, whereas a worker who works from 9am to 5pm four days a week will be entitled not to come to work for those four days for 5.6 weeks.

If a comparable full-time worker’s contract allows for longer annual holiday, e.g. six weeks’ holiday, the extra entitlement should be extended to part-time workers on a pro rata basis. The length of service needed to qualify for longer annual holiday must also be the same for part-time and comparable full-time workers.

Q3 - Are part-time workers entitled to bank holidays?

A - Under the Part-time Workers (Prevention of Less Favourable Treatment) Regulations 2000  a part-time worker has the right not to be treated less favourably than a comparable full-time worker on the grounds that he or she is a part-timer. This includes entitlement to bank holidays.

Where an employer includes bank holidays in the statutory minimum entitlement to paid holiday under the Working Time Regulations 1998 this is unlikely to cause problems. However, where full-time workers are entitled to bank holidays in addition to their statutory entitlement to holiday, difficulties may arise.

It may be fair to allow part-time workers to take a bank holiday where their day of work coincides with a bank holiday, particularly if a shift system means that both full-timers and part-timers are equally likely to be rostered to work on a bank holiday. However, where workers work fixed days each week, part-timers could be disadvantaged by such a practice. As most bank holidays fall on a Monday or a Friday, those part-timers who never work on these days will be entitled to proportionately fewer days off than full-timers who regularly work on these days. In these circumstances the disadvantage could be removed by giving all part-timers pro rata entitlement to time off in lieu of bank holidays according to the number of hours they work. However, the Part-time Workers (Prevention of Less Favourable Treatment) Regulations 2000 provide protection only where any less favourable treatment is on the grounds that the worker is part time. In McMenemy v Capita Business Services Ltd [2007] IRLR 400 CS, an employee who worked Wednesday to Friday claimed that his lack of entitlement to time off in lieu of Monday bank holidays amounted to less favourable treatment, but the Court of Session held that the cause of the difference in treatment was the fact that the employee did not work on Mondays, not that he was part time.

Q4 - How should an employer calculate a week’s pay in relation to an employee’s holiday pay entitlement?

A - In the absence of any relevant agreement to the contrary, a week’s pay is the amount a worker would expect to earn in a week. For workers whose pay varies, a week’s pay is their average weekly earnings over the 12-week period ending with the week immediately preceding the date on which their holiday begins. A week’s pay for a salaried worker is generally taken to be the worker’s annual salary divided by 52.

Overtime hours do not form part of a worker’s normal working hours for these purposes unless the employer is contractually bound to provide a specified number of overtime hours and the worker to work them.

Q5 – Does an employer have to pay holiday pay to its casual workers?

A - Yes. Every worker (whether an employee or otherwise) is entitled to 5.6 weeks’ paid annual holiday, and (as is more likely, given the short-term nature of casual workers’ engagements) accrued holiday pay on termination, calculated from day one of their contract.

Therefore, in October the rates will increase by:

• 12p to £6.31 an hour for adults (21+)
• 5p to £5.03 for 18 to 20-year-olds 
• 4p to £3.72 for 16 and 17-year-olds
• 3p to £2.68 an hour for Apprentices

Vince Cable said he was confident the rates struck the right balance between boosting the income of the low-paid and not putting off employers from recruitment.

The TUC said it was pleased the Government had turned down calls for freeze rates, although it said the increase should have been larger.

But Adam Marshall, Director of Policy at the British Chambers of Commerce, said it was disappointed the Government has raised rates by 1.9%, which it said was more than 50% higher than average pay increases.

Comment: Whether these new wage increases cause job losses or see recruitment freezes remains to be seen, but it’s fair to say that the increases won’t help employers.

• Statutory sick pay is increased

The standard rate of statutory sick pay increases from £85.85 to £86.70 per week.

• Collective redundancy consultation period is reduced to 45 days

The minimum period for collective redundancy consultation is reduced from 90 to 45 days. Under the Trade Union and Labour Relations (Consolidation) Act 1992, employers are required to carry out consultation with employee representatives where they propose to dismiss as redundant 100 or more employees. From 6 April 2013, there must be at least 45 days between the beginning of consultation and the date on which the first dismissals take effect, rather than at least 90 days. 

Also from 6 April 2013, fixed-term contracts that have reached their agreed termination date are excluded when calculating whether or not there is a requirement to consult collectively. 

New non-statutory guidance, produced by Acas, will address the key contentious issues that arise during collective redundancy consultation. Acas has confirmed that it intends to publish the guidance by 6 April 2013.

From 7th April

• Maternity, paternity and adoption pay are increased

The standard rates of statutory maternity, paternity and adoption pay increase from £135.45 to £136.78 per week.

In considering whether a person is disabled, should the focus be upon the cause of the person’s symptoms or upon their effect?  Their effect, said the EAT in this case.

Background

The claimant, Mr Walker, brought a claim of disability discrimination. At the tribunal, the preliminary issue of whether or not he was disabled for the purposes of the Disability Discrimination Act 1995 (DDA, now replaced by the Equality Act 2010) arose. 

Mr Walker suffered from various conditions including asthma, dyslexia, knee problems, diabetes, chronic fatigue syndrome, bowel and stomach problems and anxiety and depression. These gave rise to multiple symptoms, including pains in the head and knee, bowel symptoms, constant fatigue and poor concentration, and caused him significant difficulty in his day-to-day life. The symptoms could not be attributed to a recognisable physical or mental cause, but were regarded by the tribunal as being compounded by Mr Walker’s obesity (he was 21 and a half stones or 137 kilograms). At the tribunal, there was no challenge to the genuineness of Mr Walker’s symptoms and their effects. 

Tribunal decision

The tribunal held that Mr Walker was NOT disabled for the purposes of the DDA because no physical or mental cause could be identified for his symptoms. 

EAT decision

The EAT disagreed. It found that the tribunal should have had regard to the effect of Mr Walker’s impairments, not their cause. The EAT said that the relevant questions are whether or not an individual has an impairment and whether or not the impairment may be properly described as physical or mental. The EAT found that Mr Walker was both physically and mentally impaired and had been for a long time. 

The EAT observed that, while the absence of an apparent cause for an impairment may not be relevant as a matter of law, it may be taken into account in reaching an evidential conclusion if the genuineness of the symptoms are at issue. Where an individual claims to be disabled, but there is no recognised cause of that disability, it is open to a tribunal on the evidence to conclude that the individual does not genuinely suffer from the disability. 

The EAT did not accept that obesity is a disability within the meaning of the DDA. However, it observed that obesity may make it more likely that someone is disabled. On an evidential basis, obesity may permit a tribunal to conclude more readily that a claimant suffers from an impairment. Further, it may also be relevant evidentially to ask whether or not the obesity might affect the length of time for which an impairment would be suffered. 

Comment: Obesity is an increasingly common (and sometimes ‘thorny’)  issue for employers and will remain so for the foreseeable future. As a result of this case, employers should bear in mind that while an employee’s obesity is not a disability in itself, it may make it more likely that the employee is disabled, with the result that he or she is protected from disability discrimination and entitled to reasonable adjustments.