Lesley Seldon was a partner at a law firm that had a policy of retiring partners at 65. When Mr Seldon reached the age of 65, he was duly retired under the partnership deed.

However, Mr Seldon brought an unlawful age discrimination claim under regulation 17 of the Employment Equality (Age) Regulations 2006, which prohibits discrimination on the ground of age against partners.

At the subsequent hearing, the Employment Tribunal found that the law firm’s retirement policy was justified, stating that it was a proportionate means of pursuing the firm’s legitimate aims of:

1. Giving the firm’s younger associates an opportunity of reaching partnership within a reasonable timescale, thus giving them an incentive to remain with the firm;

2. Facilitating workforce planning, by giving reasonable expectations on when partnership vacancies would arise; and

3. Limiting the need to expel underperforming partners.  

Subsequent appeals by Mr Seldon to the Employment Appeals Tribunal and the Court of Appeal failed.

Mr Seldon appealed to the Supreme Court on the basis that it was wrong to use the same test for justification for both direct and indirect age discrimination (and the aims pursued by the firm did not justify direct age discrimination), and that the treatment had to be justified in relation to his case and not just the retirement policy in general.

The Supreme Court unanimously dismissed the appeal, but remitted the case to the Employment Tribunal on an outstanding issue to consider whether the choice of a mandatory age of 65 was a proportionate means of achieving the legitimate aims of the partnership.

The ruling means that an employer can set its own default retirement age; however, it must have a legitimate aim and be able to provide evidence to justify its means of achieving it.

Although the case provides some clarity for employers over the issue compulsory retirement, some uncertainty remains. The fact that the Supreme Court has remitted the issue of proportionality back to the Employment Tribunal means that, currently, the issue of when particular retirement ages are justified is still a grey area. The issue of what age (60, 65?) is a justifiable retirement age remains unresolved.

Points to note

1. The ruling applies to compulsory retirement ages for all employees (and not just partners);

2. The employer will have to prove that there are problems with recruiting younger workers in the firm’s industry/sector (and that this is a direct result of retaining older workers);

3. The employer will have to show that its chosen mandatory retirement age has been set at a level that is appropriate and necessary to achieve the firm’s particular aim in question; and

4. The employer (or partnership) will have to carefully draft retirement policies that explain the need for a retirement age.

If you would like to discuss the implications of this ruling for your business, or anything else employment-related, please contact me at michael.delaney@mablaw.com.

Mental ill-health has a huge detrimental effect on productivity: 91m work days are lost every year, costing businesses £30bn a year through lost production, recruitment and absence.

Mental illness, including dementia, depression, bipolar disorder, obsessive compulsive disorder and schizophrenia, is classed as a disability (at the point of diagnosis) under the Equality Act 2010, making it unlawful for an employer to treat a disabled person less favourably for a reason relating to their disability, without a justifiable reason.

It therefore makes good sense for an employer to take steps to understand and addressing mental health in the workplace.

This step-by-step guide intends to shows employers and managers how to:

1. Spot early the signs of mental ill-health;

2. Raise awareness of mental health issues among managers and staff;

3. Develop a culture where an employee feels comfortable disclosing their condition;

4. Approach an employee who may have a mental health condition; and

5. Try to help the employee cope with their condition or overcome it so they can work effectively again.

If you are unsure whether your workplace equality policies sufficiently cover mental illnesses, please contact me at michael.delaney@mablaw.com.

Statutory Maternity, Paternity and Adoption Pay

1. The standard rates of statutory maternity, paternity and adoption pay increase from £128.73 to £135.45 per week. The weekly earnings threshold for these payments rose from £102 to £107.

2. Maternity allowance increased from £124.88 to £135.45, with the earnings threshold remaining at £30.

Statutory Sick Pay

The standard rate of statutory sick pay increases from £81.60 to £85.85 per week.

Apprenticeships

The Apprenticeships (Form of Apprenticeship Agreement) Regulations 2012 prescribe the form of the apprenticeship agreement between an apprentice and an employer in England and Wales under s.32 of the Apprenticeships, Skills, Children and Learning Act 2009.

The Regulations state that apprenticeship agreements entered into under the Apprenticeships, Skills, Children and Learning Act 2009 must contain the basic terms of employment required to be given to employees under section 1 of the Employment Rights Act 1996. This can be in the form of a written statement of particulars of employment, a written contract of employment or a letter of engagement.

The apprenticeship agreement must also include a statement of the skill, trade or occupation for which the apprentice is being trained under the relevant apprenticeship framework.

Under section 35 of the Apprenticeships, Skills, Children and Learning Act 2009, an apprenticeship agreement entered into under the Act has the status of a contract of service and not a contract of apprenticeship.

Employment tribunals

1. Deposit orders. The amount of deposit order an employment tribunal will be able to order a party to pay as a condition to continuing with tribunal proceedings has increased from £500 to £1,000.

2. Costs awards. The maximum amount of costs an employment tribunal can award in favour of a legally represented party (without referring the case to the county court for detailed assessment) has increased from £10,000 to £20,000.

3. Witness expenses. Employment tribunals now have the power to order parties to bear the costs of witness attendance; the party who loses the case will have to reimburse the successful party for any such costs that have already been paid out.

Unfair dismissal

The unfair dismissal qualifying period has increase from one to two years.

Employees whose employment commenced on or after 6 April 2012 will need two years’ service before accruing the right to claim unfair dismissal or becoming entitled to written reasons for dismissal.

The qualifying period will continue to be one year for those employees whose employment commenced before 6 April 2012.

If you have any concerns about these changes and how they will affect your business, or want to discuss anything else employment-related, please contact me at michael.delaney@mablaw.com.

Under the Employment Rights Act 1996, an employee must have been continuously employed for at least one year to be able to claim unfair dismissal (except in specified circumstances). The draft legislation increases this qualifying period to two years for employees whose employment begins on or after 6 April 2012.

The Government confirmed last month that the change will not be retrospective. Therefore, the current one-year qualifying period will continue to apply to employees who started employment with their employer prior to 6 April 2012.

The draft Regulations also increase the qualifying period that applies to the right to receive a written statement of reasons for dismissal. The current one-year qualifying period will increase to two years for those employees who began working for their employer on or after 6 April 2012. 

Once the draft legislation has received parliamentary approval, the Government estimates that the increase in the unfair dismissal qualifying period will save businesses £6m per year, with a reduction of 2,000 unfair dismissal claims per year.

Correct. It was HMRC’s Chris Martin (who was propelled into the spotlight when Harry Redknapp and Milan Mandaric were found not guilty of tax evasion) putting a good spin on a rather embarrasing defeat.

It would be rather pointless to recap the events of this rather well publicised trial.  But what might be more interesting is to think about what this means to other tax payers.

First if you are a sportsperson then it’s probably good news.  My understanding of the oft mentioned £8m campaign was that it related to the whole operating to look into fraud in sport (not just Redknapp’s trial).  I also understand that it has led precisely nowhere.  If anyone from the Met is reading this, feel free to set me straight.  So politically, and economically, it seems that this campaign might be over faster than you can say “transfer fee”.

If you are a tax evader, it probably makes no difference.  I’ve not yet read the full case report but if HMRC can’t prove tax evasion then they won’t get very far.  I don’t want to do their work for them, but HMRC’s powers to get information from offshore tax havens is always increasing and the UK has entered into a number of Tax Information Exchange agreements that greatly assist in tracking down fraudsters.  If you are one of those, then Chris Martin (not that Chris Martin – the one at the start of the blog), is probably right.  There are a number of disclosure facilities which may result in a reduction in any penalties and it is worth speaking to an expert before turning yourself in!

There is nothing wrong per se in having bank accounts in tax havens, provided that you make sure that any tax planning is done properly.

If you are expecting a bonus, I also wouldn’t take this as carte blanche to become friends with your boss and ask for some seed money for your investments.  The law hasn’t been changed by this judgement – a bonus is still taxable, and it will be a question of fact as to whether or not a payment is a bonus.  The assumption should generally be that it is taxable, and any derogation from this would require professional advice.

There are also a lot of rather more “vanilla” and rather more tax efficient ways of motivating employees such as share options, which should be considered before paying sums into bank accounts in Monaco in the name of your dog!

If you would like to discuss any of these points, please contact our wealth management or employment teams.

The Department for Business, Innovation and Skills (BIS) will fund mediation training for employees from a group of 24 SMEs in each pilot area later this year. A network of trained mediators will be available to provide mediation to other organisations in their respective network.

An open tender to deliver the mediation training for prospective candidates has been published on the Contracts Finder website. The 24 SMEs in each area will be identified and selected later in 2012, once the mediation training contract has been awarded.

It is hoped that the pilot scheme will help to resolve workplace disputes before they escalate and need to be resolved at an employment tribunal.

Since coming to power, the Government has made it clear that it intends to create more opportunities for workplace disputes to be resolved outside the tribunals, and this pilot scheme is a further step in this direction. In November 2011, the Government published its official response to its Resolving Workplace Disputes consultation on reforming the employment tribunal system and announced that it intended to introduce a requirement for all potential tribunal claims to be lodged with Acas, so that parties have the opportunity to resolve their dispute through early conciliation. Click here for more details.

The pilots will run for 12 months and, if successful, the Government may introduce similar schemes in other parts of the country.

From 1 October 2012, and depending on the size of the PAYE scheme, employers will have to enrol eligible employees automatically into a qualifying workplace pension scheme or the National Employment Savings Trust (NEST). Employers will also have to make mandatory contributions.

Under the scheme, employers will be given a “staging date” from which they must auto-enrol eligible employees if they are using a defined-contribution scheme or NEST as their qualifying workplace pension scheme.

On 25 January 2012, the Government published a revised auto-enrolment staging timetable. Click here to see the new timetable. The publication of the new timetable follows the Government’s announcement in November 2011 that small businesses with fewer than 50 employees would begin auto-enrolment in May 2015, instead of April 2014. (Click here for further details.) Under the revised timetable, there will be no change to the staging dates of employers with 250 or more employees. All existing businesses will have enrolled their staff by April 2017, followed by all new employers by February 2018.

The Pensions Regulator has published some useful information on auto-enrolment on its website. Click here.

If you have any concerns about how auto-enrolment will affect your business, please contact me at michael.delaney@mablaw.com.

In November 2011, the transport Minister Norman Baker launched the ‘Anywhere Working’ consortium, with its purpose being to enable employers to understand the benefits of flexible working. The consortium aims to help organisations achieve greater productivity, reduce employee stress and absenteeism, and reduce carbon emissions generated by business travel.

The Anywhere Working consortium is backed by big businesses (including Business in the Community, Microsoft, Nokia, Nuffield, Vodafone and Regus) and The Trades Union Congress.

On 16 January 2012, the consortium set up a new portal (click here) which contains a number of resources for employers and employees, including training, guidance, case studies and product offers. Organisations can also use the portal’s Savings Calculator to measure how much time, money and carbon energy they can save by working more flexibly.

The consortium is holding an ‘Anywhere Working Week’, beginning on 27 February 2012, and will provide additional guidance to organisations to help them learn more about flexible working and how it can benefit them and their workforce.

The EU Parental Leave Directive, which comes into force on 8 March 2012, increases the minimum parental leave provision from three to four months. Although member states should implement the Directive by 8 March 2012, member states can take an extra year for implementation if required.

BIS has said that it will utilise the additional year’s grace and will implement the changes in March 2013.

To find out what is changing in employment law in 2012, please click here.

When the government announced this change in October 2011, it did not confirm whether it would affect existing employees (who may already have qualified for unfair dismissal rights) or just new joiners.

The Department for Business, Innovation and Skills (BIS) has now confirmed that the regulations that will implement the change will, subject to Parliamentary approval, state that the new two-year qualifying period will only apply to employees whose employment begins on or after 6 April 2012. Employees who are already in employment before that date will retain the current one-year qualifying period.

The Government estimates that the change will save businesses £6m per year, with a reduction of 2,000 unfair dismissal claims per year.

For further details of other employment law changes taking place in 2012, please click here.

Many of these volunteers will be employees, so, in order to minimise the impact their absence may have on workplace productivity, Acas has advised employers to start talking to them now so suitable arrangements can be made.

To help employers, Acas has issued new guidance on employers’ legal obligations to employees who wish to fulfil their volunteering commitments. This provides advice on the following key questions which will inevitably arise during discussions between an employer and employee:

1. Three of my staff have got volunteer positions at the Olympics. I can only let one go. What’s the best way of handling this?

2. I have a member of staff who has got a volunteer place at the Olympics. Do they need to use their own holiday?

3. I have a member of staff who has got a volunteer place at the Olympics. Am I expected to pay for them while they volunteer?

To read this guidance (and answers to the above questions), please click here.

Statistics have revealed that depression affects approximately one in six people (and is more common in women) and it is therefore vital that employers take the necessary action to assist employees who are suffering from stress and depression, and avoid inadvertently breaking the law.

To read the full article, please click here. You may need to register to read the article in full.

If you would like to discuss the issue of depression in the workplace and what your legal rights and/or obligations are, please contact me at rebecca.fox@mablaw.com.

The consultation paper contains two options for consideration:

Option one: an initial fee of between £150 and £250 for a claimant to begin a claim, with an additional fee of between £250 and £1250 if the claim goes to a hearing, with no limit to the maximum award; or

Option two: a single fee of between £200 and £600 – though this would limit the maximum award to £30,000 – with the option of an additional fee of £1,750 for those who seek awards above this amount.

In both options, the employment tribunal would be given the power to order the unsuccessful party to reimburse the fees paid by the successful party. At a time when employment tribunal claims are rising rapidly, the Government hopes that a fee system will encourage both sides to mediate or at least give more consideration to the strength of their case prior to launching legal action, thus saving time and (particularly) taxpayers’ money.

The Government says that introducing fees will bring employment tribunals into line with the civil courts, where claimants already pay a fee to use the service.

When the Government first mooted the idea of fees, there were concerns that those people who could not afford the fees would no longer have access to justice. Click here for more details. However, the Government has now allayed these fears, stating that it will fund a system of fee remissions (or waivers) for those who cannot afford to pay, in a similar way as the civil court system.

The consultation will close on 6 March 2012, with a view to introducing the fees in either 2013 or 2014. The date is dependent on which option the Government decides to adopt. If, following this consultation, the Government decides to implement option 1, fees would be introduced in 2013. If it decides to implement option 2 , it would require primary legislation, which would probably not be passed until 2014.

Automatic enrolment was introduced for all employees who meet certain qualifying criteria, in an attempt by the Government to encourage more people to save for their retirement. The scheme was due to be phased in for all employers over a four-year period, with the implementation dates dependent on the number of employees that an employer has.

However, the Government has recently announced that small businesses – defined as those employers who have fewer than 50 employees - will be given additional time to prepare for the implementation of auto-enrolment.

Under the revised timetable, small businesses will have to automatically enrol their staff into a pension scheme in May 2015, instead of the April 2014.

Pensions minister Steve Webb announced in Parliament that all jobholders previously “due to be enrolled this side of July 2013 will see no change in their dates.” Based on the Government’s existing implementation timetable, these comments would suggest that auto-enrolment dates for employers with fewer than 3,000 “jobholders” may also be delayed, although no revised date has been announced yet.

The announcement is good news for smaller employers, although larger employers must still comply with the requirements as originally set out in the timetable.

The required employer contribution rate will remain unchanged until all businesses have started auto-enrolment; however, the Department for Work and Pensions has indicated that the increase in the minimum employer contribution rate from 1 per cent to 2 per cent will be delayed beyond its original date of 1 October 2016. We will have to wait and see whether the Government also delays the date on which the minimum employer contribution rate rises to 3 per cent (which is currently 1 October 2017.)

If you have any concerns about how auto-enrolment will affect your business, please contact me at michael.delaney@mablaw.com.

Statutory sick pay will also increase, rising from £81.60 to £85.85 per week from 6 April 2012.

For details of further changes to employment law that will come into effect in 2012, please click here.

I have laid out below the main changes that are currently set to take place over the next 12 months; there are many other changes that are expected in 2012, but no dates have yet been given as to when they will come into force. However, we will discuss the current pending changes during 2012, once we have more information on when they will happen.

March 2012

Parental leave. The Parental Leave Directive 2010 repeals and replaces the Parental Leave Directive 1996. The permitted period of parental leave following the birth or adoption of a child increases from three to four months, and at least one of the four months will not be transferable between parents (i.e. it will be lost if not taken.) Member states have until 8 March 2012 to bring this change into force.

UPDATE (January 2012): The Department for Business, Innovation and Skills (BIS) has said that the increase in parental leave will now take place in March 2013. Click here for more details.

April 2012 (subject to the publication of draft legislation.)

Unfair dismissal. The unfair dismissal qualifying period will increase from one to two years.

Deposit orders. The amount of deposit order an employment tribunal will be able to order a party to pay as a condition to continuing with tribunal proceedings will increase from £500 to £1,000.

Costs awards. The maximum amount of costs an employment tribunal can award in favour of a legally represented party (without referring the case to the county court for detailed assessment) will increase from £10,000 to £20,000.

Witness expenses. Employment tribunals will be given powers to order parties to bear the costs of witness attendance; the party who loses the case will have to reimburse the successful party for any such costs that have already been paid out.

October 2012

Pension auto-enrolment. All employers in Great Britain must automatically enrol eligible jobholders into a pension scheme. These new duties will be formally implemented over four years, beginning on 1 October 2012, with larger employers being affected before smaller employers and new businesses. Employers will be able to voluntarily start auto-enrolment as early as July 2012.

If you would like to discuss any of these planned changes, or want to know how they will affect your business, please contact at michael.delaney@mablaw.com.

The Business Secretary Vince Cable outlined the Government’s plans in a speech at the Engineering Employers’ Federation last week; there is some cross-over between these proposals and the ones laid out in the plans to reform the employment tribunal system. The key proposals are as follows:

1. Requiring complaints to be submitted to Acas for pre-claim conciliation before an employment tribunal claim can be issued;

2. Introducing “protected conversations” to allow employers to raise workplace issues “in an open way, free from the worry it will be used as evidence in… tribunal”. Further details are here.

3. Simplifying compromise agreements;

4. Creating a “Rapid Resolution Scheme” for “more straightforward” employment disputes, such as over holiday pay, so eliminating the need for expensive tribunal hearings’;

5. Carrying out a review of employment tribunal rules;

6. Introducing different fees for different types of employment tribunal claims. The Government will publish a consultation paper on introducing fees for tribunal claims, seeking views on (1) a system involving the payment of a fee to lodge a claim, and a second fee to take that claim to a full hearing; and (2) a £30,000 threshold, so that claimants seeking an award of more than this figure will need to pay a higher fee;

7. Amending whistleblowing legislation to prevent employees from being able to “blow the whistle” about breaches to their own employment contracts, which the Government says is not something that the legislation was designed to achieve;

8. Increasing the unfair dismissal qualifying period from one to two years;

9. Improving Criminal Records Bureau (CRB) checks by making them instantly accessible online. From 2013, once a CRB check has been completed, the results will be made available online for employers to confirm that no new information has been added since the check was originally conducted’;

10 Simplifying the UK’s recruitment sector by reducing complex rules on employment businesses and agencies;

11. Reviewing the Agency Workers Regulations 2010 in 18 months’ time;

12. Simplifying the 17 pieces of National Minimum Wage legislation into one set of regulations;

13. Extending the right to request flexible working to everyone; and

14  Creating a more modern system of parental leave so that it becomes “shared and flexible parental leave”, thus reflecting the greater involvement of fathers in childcare.

The Government will also look at doing the following:

1. Reducing collective redundancy consultation periods from 90 days to 60, 45 or 30 days;

2. Simplifying the TUPE Regulations, which may be overly bureaucratic and “unnecessarily gold-plate” the EU Acquired Rights Directive. It has launched a call for evidence that is open until 31 January 2012;

3. Introducing a “compensated no-fault dismissals” for micro-businesses (i.e. those with 10 or fewer employees.) The Government will seek views on a proposal to introduce no-fault dismissals for these companies;

4. “Radically slimming down” the existing dismissal procedures, potentially by changing the Acas Code of Practice on Disciplinary and Grievance Procedures; and

5. Merging the national minimum wage legislation into one consolidated set. 

It has been well documented that there has been a lot of wrangling within the Coalition Government over how far workers’ right were hindering job creation, and compromises have been made by both Conservative and Liberal Democrat cabinet ministers. This package of proposed reforms reflects the Prime Minister’s and Mr Cable’s belief in deregulation and employers will welcome them. However, Liberal Democrat supporters will question whether a loss of workers’ rights will heighten employees’ fears at a time when unemployment is still rising.

It has now finalised the proposals that will form the basis of its “radical” legislative and policy change. These include the following:

1. Unfair dismissal. The Government intends to increase the qualification period for unfair dismissal protection from one to two years. It is hoped that this will improve business confidence in hiring people and thereby boosting economic growth;

2. Compromise agreements. The Government will create a “standard text” and guidance for parties to use in compromise agreements. It will consider amending the Employment Rights Act 1996 to enable compromise agreements to cover all existing and future claims without the need for a full list of causes of action; it will also change the name of compromise agreements to “settlement agreements” in primary legislation;

3. Protected conversations. The Government will launch a consultation next year to look at the introduction of a system of “protected conversations” that would allow either employers or employees to initiate a discussion about an employment issue. Further details are here;

4. Mediation and early conciliation. The Government intends to introduce a requirement for all potential tribunal claims to be lodged with the advisory service Acas, so that parties have the opportunity to resolve their dispute through early conciliation. The early conciliation period will be set at one month; if this offer of conciliation is refused or is unsuccessful, the claimant will be allowed to lodge his or her claim with the employment tribunal;

5. Modernising employment tribunals. The outgoing President of the Employment Appeals Tribunal, Mr Justice Underhill, will review the Employment Tribunal Rules of Procedure, and, by 30 April 2012, produce  a streamlined procedural code that will make the Rules less complex and unwieldy. The Government will also increase the limit for deposit orders from £500 to £1,000 and for costs orders from £10,000 to £20,000;

6. Financial penalties. The Government intends to introduce a discretionary power for employment tribunals to impose a financial penalty on employers, payable to the exchequer, who lose a claim. The financial penalty will be half of the total award made by the employment tribunal, with a minimum threshold of £100 and a maximum ceiling of £5,000. A penalty will be reduced by 50 per cent if payment is made within 21 days. An employer can appeal against the imposition of a financial penalty.

7. Rapid Resolution Scheme. The Government will launch a consultation on how to introduce a scheme that would be an alternative to the tribunal process and would provide quicker, cheaper determinations in low value, straightforward employment claims (e.g. holiday pay) with the intention of saving time and money. This scheme may not involve judges or oral hearings.

The Government is obviously determined to bring about a change in workplace culture. However, whilst it is promoting new ways of quickly resolving employment disputes (without the need for an employment tribunal hearing), it is questionable how successful these will be and whether Acas could cope with the extra workload.

There is a real risk that the changes may not benefit either employees or employers: employees may feel that these changes will reduce their ability to seek redress when their employment rights are breached, whilst employers may be faced with more regulations and red tape.

The change was initially mentioned by the Deputy Prime Minister late last month, when he unveiled a raft of new measures designed to reduce bureaucracy and restrict inspection for businesses.

Under the proposals, employers and employees could, at either’s request, have frank discussions about issues such as underperformance and retirement plans. These conversations would be inadmissible in employment tribunal proceedings.

The announcement will be welcomed by business groups, which have long called for the introduction of protected conversations as a means of informally resolving workplace disputes.

The Prime Minister also reiterated that the Government will be increasing the qualifying period for unfair dismissal claims from one year to two years from 6 April 2012. Click here for full details.

Also, from 6 April 2013, employees will have to pay £250 to apply for an employment tribunal hearing and a further £1,000 if a hearing is granted. The money will be refunded if the claimant is successful, but will be forfeited if they lose. Click here for full details. Since the announcement, the Government has said that “poor claimants” will not have to pay the fees, although we are still awaiting clarification as to how a claimant qualifies as being “poor.”

It has not yet been confirmed when the consultation on protected conversations will take place.

Although the Equality Act 2010, which came into force on 1 October 2010, implements the principle that men and women should receive equal pay for equal work, there is still a significant gender pay gap: women who work full time are paid on average 10 per cent less than men in the public sector, and 19.8 per cent less in the private sector.

The new guidance will assist private sector and voluntary organisations that want to address gender equality issues, but who are unsure about how to proceed. It provides practical advice on tackling inequality between men and women in the workplace and gives information about the Government’s new voluntary initiative “Think, Act and Report.”

Although employees face difficulties in enforcing the law, comprised with the fact that most equal pay claims are currently brought in the public sector, private sector employers should not be complacent – there are several reasons why private sector employers may soon be facing multiple equal pay claims:

1. Employees are more aware of the equal pay gap following the introduction of the Equality Act 2010;

2. The Equality Act 2010 has made it easier to bring equal pay claims;

3. The Equality and Human Rights Commission has taken a number of steps aimed at addressing the gender pay gap, including a code of practice on equal pay, and employers need to be aware of these; and

4. “No-win no-fee” lawyers are now more active in the private sector.

To avoid any potential claims, employers should identify whether potential gender pay disparities exist within their businesses and act accordingly.

If you have any concerns regarding equal pay, or anything else employment-related, please contact me at michael.delaney@mablaw.com.

1. The unfair dismissal qualifying period will rise from one year to two years; and

2. Fees will be introduced for employment tribunal claims.

Since the speech, the Department for Business, Innovation and Skill (BIS) has confirmed that the change to unfair dismissal law will take effect on 6 April 2012. However, as yet, no further detail has been given. The Government claims that increasing the period to two years will help to reduce the number of unfair dismissal claims by approximately 2,000 per year, saving businesses £6m per year.

Fees for claimants lodging employment tribunal claims are expected to be introduced from 6 April 2013. The introduction of the fees are an attempt by the Government to reduce the number of “vexatious” claims which cost employers millions of pounds each year. Details of how much the fees will be set at are expected to be included in a consultation paper, due to be published by the end of November 2011. There have been reports in the press that employees will have to pay £250 to apply for a tribunal hearing, and pay a further £1,000 if a hearing is granted. The fees would be refunded if the claimant was successful. However, these are only suggested figures, and we will have to wait for the consultation paper (or further announcements from the Government) to find out for sure.

UPDATE: Since this announcement, the Government has said that “poor claimants” will not have to pay the fees, although we are still awaiting clarification as to how a claimant qualifies as being “poor.”

1. The Agency Workers Regulations 2010 come into force

The Agency Workers Regulations 2010 (AWR) will establish new rights for temporary agency workers from 1 October 2011.

After a 12-week qualifying period, agency workers will be entitled to “basic working and employment conditions” that are no less favourable than if the worker had been recruited directly by the hirer. These entitlements include pay, annual leave, duration of working time, rest breaks, rest periods, and night work.

NB: The right to equal treatment in relation to pay after the 12-week qualifying period includes fees, bonuses linked to individual performance, commission, vouchers and holiday pay.

From the beginning of an assignment, a hirer must ensure that all its agency workers have access to information about its job vacancies and that they can access its facilities and amenities (e.g.  canteens, gyms, transport and parking facilities), unless the hirer can justify exclusion on grounds other than cost alone.

It is possible for hirers to be ordered to pay compensation to agency workers if inequality of treatment in relation to employment conditions arises due to the hirer supplying inaccurate or no information to the agency about its terms and conditions.

2. National Minimum Wage rises

Following an announcement by the Government on 7 April 2011, the new rates for the National Minimum Wage will increase on 1 October to the following:

* Adult rate (21 years old or more): £6.08 an hour (an increase of 15p an hour);

* 18-20 year olds: £4.98 an hour (an increase of 6p an hour);

* 16-17 year olds: £3.68 an hour (an increase of 4p an hour); and

* Apprentices: £2.60 an hour (an increase of 10p an hour.) This applies to those who are under 19 years of age, or those aged 19 and over but in the first year of their apprenticeship. All other apprentices will continue to receive the national minimum wage at the appropriate age rate.

Over the past few months, Matthew Arnold & Baldwin have hosted and taken part in a number of seminars on the AWR, explaining to hirers what they need to do in order to be compliant from 1 October. We will be taking part in a further two seminars this month.

I will be the guest speaker at recruitment specialist Hay’s breakfast seminar, discussing the implications of the AWR, on Tuesday 20 September in High Wycombe. Full details of the seminar and how to attend are here.

Also, in collaboration with Scottsdale Consulting, Matthew Arnold & Baldwin will be hosting a legal workshop on 22nd September 2011 in Newport Pagnell. This workshop will cover the AWR and pensions auto-enrolment, due to take place in 2012.  Full details of the workshop and how to attend are here.

If you have any concerns regarding the AWR, or anything else employment-related, please contact me at michael.delaney@mablaw.com.

I am speaking at a seminar hosted by Hays Recruitment on Tuesday 20th September 2011 at the Holiday Inn, High Wycombe commencing at 7.30am. If you are interested in attending please e mail me.

However today it has been reported in the press that the Prime Minister has secretly commissioned a review of the proposed legislation, notwithstanding the effect that it was reviewed by the coalition government after the election during the summer of 2010.

The Government are considering the following options, watering down the legislation, and delaying its implementation,seeking to introduce changes to the planned laws, to over- rule the relevant EU diktat or simply ignore the EU directive. The reasons for the review come about as a result of the impact of the legislation and concern about economic growth.

However such strategy risks a confrontation with the Trade Unions who were closely consulted by the last Labour Government when the legislation was drafted as well as Vince Cable the Business Secretary and the Liberal Democrats who reviewed the legislation.

However a review may be too late as the EU Directive requires implementation within the EU zone by 5th December 2011.

Munir Yakub Patel is due to appear before Southwark Crown Court on 14 October 2011 for allegedly “requesting and receiving a bribe intending to improperly perform his functions” (a breach of section 2 of the Act.) It is alleged that Mr Patel told an individual, who had been summonsed to court for a motoring offence, that he could influence the course of the proceedings in exchange for £500.

The Bribery Act, which came into force on 1 July 2011, increases the maximum penalty for bribery from seven to 10 years imprisonment. Further details of the Act are here.

The Act has also introduced a corporate offence of failure to prevent bribery by persons working on behalf of a business. To avoid breaching the Act, employers must demonstrate that they have adequate procedures in place to prevent bribery. For more details of what employers should be doing to avoid breaching the Act, please click here to read an article by our head of employment, Michael Delaney.

Paul Gershlick, a Partner at Matthew Arnold & Baldwin LLP and editor of Upload-IT, comments: “The Bribery Act is the biggest legal development of the year and given its very wide reach and political force behind it, it is no surprise to see a prosecution so soon after it came into force.  What this prosecution shows is that the law is there not just to catch big businesses on complex international deals, but also small payments made on a local level too.  Prosecutors will take action regardless of size.  Every business should be aware of the Act and should take appropriate steps to stop its employees, agents and other representatives from breaking the law, particularly as their actions can in turn leave their business criminally liable too.”

Background

The first £30,000 of a termination payment is tax free for non-contractual payments made on termination. Currently, if the termination payment is paid after the P45 is issued and it exceeds £30,000, the amount over £30,000 is subject to tax at the basic rate of 20 per cent.

However, this is now changing.

What is happening?

From 6 April, employers will have to use the OT code when deducting PAYE from payments in excess of £30,000 made to employees after they leave their employment and are issued with a P45. This will mean that income tax will be deducted at source from post-termination payments at the basic (20 per cent), higher (40 per cent), or additional (50 per cent) rates of tax as appropriate, with no personal allowance. Currently employers are only required to withhold income tax at the basic (BR) tax rate.

The regulations also enable HM Revenue & Customs to specify that the 50 per cent additional rate of tax should be used by employers as a flat rate of tax, and to apply the new 0T code to pension payments received while the employee continues to receive salary payments from an employer.

This change will be relevant to businesses that deal with various types of post-termination payments, including payments under compromise agreements and income arising under employee share plans.

What should employers do?

Employers are responsible for ensuring that the correct amount of tax is deducted, or risk the possibility of HM Revenue and Customs imposing financial penalties.

Employers should ensure that they have spoken to ex-employees about the amount of tax that will be deducted from payments made to them on or after 6 April 2011.

Compromise agreements that involve terminations on or after 6 April 2011 should include appropriate wording regarding the tax deduction implications under these new rules. Also, any existing compromise agreements that make provisions for payment after 6 April 2011 may need to be checked.

The study (the Truth about Bonuses) by the University’s School of Economics involved subjects either being paid a bonus or fined depending on their performance in certain areas.  The results showed that the joint earnings of employers and workers were almost 19 per cent higher when fines were handed out than when bonuses were paid. However, while employers were better off when fines were introduced, workers earned less than in the scenario without fines.

Alternatives to bonuses

So what does work?  I suspect it depends on who you ask.

Employees (especially those in the, ahem, financial services sector) will probably say cash is king, and when it comes to it, a bonus will do nicely, thank you very much.  Now where is the Ferrari showroom?

Employers will often take a longer term approach to incentives and will often prefer employee share schemes and options.  These have the benefit of being tax efficient and of promoting long term commitment to the business since employees will benefit from future growth.

I’ve yet to come across anyone offering employee fines as an incentive and, if my boss is reading this, I am not sure that it would go down well in practice.

If you would like to discuss employee incentives for your business please contact me (for a discussion of tax), or Emma Cameron in our corporate team.

Will staff lose out on share scheme payouts?

Q. In the past, I have offered share schemes to my staff, most of which mature at their retirement age. However, I have on occasion dismissed staff for poor performance or conduct issues. Now we are also looking at the abolition of am statutory retirement age? Could any of these issues mean staff should be deprived of a share scheme payout?

A. From the 1st October 2011, it will not be possible for employers to automatically retire workers at the age of 65 without facing claims for unfair dismissal or age discrimination. Many share schemes reward employees who are considered “good leavers”.

Difficulties will arise if older employees are dismissed for reasons of capability or conduct. Dismissal on such grounds could deprive older workers of the right to exercise valuable share options on the basis that these workers no longer constitute “good leavers”. 

Amendments to schemes are required where employees could lose the right to exercise share options if they cease to be employed by virtue of retirement through age 65. The wording of share schemes should be amended and refer to the employment of the employee ceasing, and make no reference to retirement due to age. 

To protect the employer, provision can be made to the effect that no options are exercisable in the event of the employee being dismissed for gross misconduct.

Michael Delaney is an employment partner at Matthew Arnold & Baldwin, a law firm.

If you have any questions or concerns about how the abolition of the default retirement age will impact on your company and/or your company’s employee share scheme or other employee benefits, please contact me at michael.delaney@mablaw.com.

The Government has also signalled its intention to phase out the default retirement age from 1 October 2011. However, under existing legislation, employers must serve six months’ notice on their existing employees who are approaching 65 years before 6 April 2011, if they wish to retire them. After that date, it will no longer be possible to serve notice of retirement. From 1 October 2011, retirement will no longer be an automatic fair reason for dismissal. Employers wishing to dismiss or retire an older worker will have to rely upon a fair reason set out under s.98 of the Employment Relations Act 1996, namely capability, conduct, illegality or some other substantial reason.

One of the difficulties employers face with an aging workforce is the cost of providing benefits which are not based on length of service and include health cover, income protection, death in service, critical illness and life cover. It will be not be justifiable treatment to withhold the benefit on the basis of increased cost and to do so could leave an employer facing claims for age discrimination.

Employers also need to look at share schemes and how they deal with the departures of older staff. Since, if the dismissal of older staff is by reason of capability, conduct, illegality or some other substantial reason, it could deprive an employee of valuable share options. Employers should re-examine share documentation and ensure such documentation enables the employer to dismiss older workers without them losing valuable share options.

We have presented this talk to a group of HR directors, managers and providers of employees’ benefits at a conference in the City of London on 12 November 2010.

If you would like further details, please contact me at michael.delaney@mablaw.com