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.

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.

Paul Gershlick, a Partner at Matthew Arnold & Baldwin LLP and editor of Upload-IT, comments: “This case shows the need for organisations to have clear IT and Internet usage policies. Organisations should also make sure that those policies have been updated since the increased use of business and personal social networking sites.”

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.

Employers should ensure that they have the correct workplace policies and procedures in place and that they know their employees’ rights, so that workplace disputes can be avoided.

Full details of Acas’ recommendations are here.

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.

In March 2011, the Office of Tax Simplification (OTS) published its interim report on the simplification of the tax treatment of small businesses. In it, the OTS recommended that the income tax and NICs regimes should be amalgamated and that the Government should begin work towards this objective by the end of 2011.

Following the Government’s call for evidence on the matter in July 2011, it became obvious that there was a real desire for reform, with the majority of respondents stating that there are potential gains to be made from aligning income tax and NICs. Respondents recommended that (1) the system for calculating NICs should be altered to reflect how income tax is calculated, and that (2) the same employee earnings should be made subject to the calculations for both taxes.

However, any reform will take time (and will only happen if the benefits outweigh the costs of making the change.)

The Government intends to work with stakeholders over the next few months, with a view to identifying high level options for reform by Budget 2012. Even if this happens, the Government has predicted that, due to the number of consultations on reform that would have to take place and the need to give employers sufficient time to prepare for a new tax system, any reform would probably not take place until 2017. Also, it appears that any reform will focus on alignment, simplification or operational integration rather than a complete merger of the two regimes.

In the past, governments have steered away from merging or integrating income tax and NICs, so it is surprising that reform is now a real possibility. However, the Government has accepted that there could be winners and losers even if there is just an integration of income tax and NICs, so it will need to fully investigate the impact any reform could have on individuals before deciding to proceed.

The Government has also published a discussion paper that outlines its proposals for simplifying the administration of personal taxes, by making tax information more accessible to taxpayers. It believes that online and mobile technology can help to improve taxpayer awareness of their tax liabilities. The discussion paper looks at systems in other countries, where taxpayers are able to access (and input) their own tax information online throughout the tax year. HM Treasury’s view is that a system that encourages greater taxpayer engagement also encourages greater taxpayer compliance.

Interesting times…

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.”

The guide also highlights that such actions can impact on the productivity and profitability of an employee to the business, whilst also risking legal action being taken against the business itself. Examples of infringing activity include an employee using work systems to sell goods both within the business and outside of the business, and even simply selling actual counterfeit goods from behind their desk.

During the presentation and in the following questions session, there was much debate about Regulation 10 of the Agency Workers Regulations (AWR). This Regulation has the potential to exclude the operation of the AWR in respect of pay. Compliance with the various provisions outlined by Regulations 10 and 11 are essential to avoid the equal treatment provisions in respect of equal pay.

Some temporary work agencies have been putting in place contracts with their agency workers, whom they have placed purporting to amount to a contract of employment wherein such contracts set out minimum rates of pay, location where the agency worker may be expected to work, the expected hours to be worked, nature of the work and a statement to the effect that during periods of absence of any assignment the agency as an employer will pay the agency worker a minimum amount of remuneration. The minimum amount of pay is calculated by reference to Regulation 11 and will generally be not less than 50 per cent of the pay paid to an agency worker during a relevant pay period. Furthermore any pay made will not be less than the national minimum wage and any pay due during a period where no work is undertaken must not be less than four weeks’ pay. 

One of the principle issues that have arisen is whether or not a temporary work agency can be an employer for the purposes of satisfying Regulation 10. This is because it is unlikely that such an arrangement would amount to a relationship of employer and employee. This is because based on tests laid down by case law, an employer must be in a position to exercise a sufficient degree of control over the worker, there must be mutuality of obligation and that the provisions of any contract must be consistent with it being a contract of service.

Umbrella companies have also been considering putting in place permanent contracts of employment so as to potentially exclude the operation of the Regulations in respect of pay. Remember umbrella companies are classed as intermediaries under Regulation 4.1.b and are potentially liable for any breaches of the AWR. I made a point during the session that again umbrella companies may find it difficult to persuade an employment tribunal that they are genuine employers. Whilst HMRC readily accept umbrella companies as having employer status, Leading Counsel instructed by us had expressed reservations as to whether or not a temporary work agency or an umbrella company could amount to a proper employer in these circumstances for the purposes of avoiding liability under the AWR.

The response from the floor was that an umbrella company is a proper employer and could put in place contracts of employment so as to exclude obligations insofar as they related to pay under Regulation 10. However, it will almost always be a question of fact in each case as to whether the arrangements put in place with agency workers amount to an employment relationship and not merely a device to get around obligations as to pay under the AWR.

If a temporary work agency or an umbrella company wish to argue that they are true employers, then they will need to satisfy the employment tests which I have referred to above and laid down by iMcKenna J in Readimix Concrete (South East) Limited v Minister of Pensions and National Insurance (1968), which still remains good law and has been cited in a number of recent Court of Appeal decisions.

Furthermore the guidance issued by BIS, published in May 2011, states on page 6 that an individual is not prevented from being an agency worker under the Regulations simply because they work through an intermediary body. It cites the example of an individual working through an umbrella company who finds work through a temporary work agency will normally have an overarching employment contract with the umbrella company with full employment rights.  In such circumstances, according to the BIS guidance, this would not prevent the individual from benefiting from these Regulations.

This is a very grey area which no doubt will be an issue that will come before the employment tribunals for determination in due course.

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.

We now hear that the Chancellor has ordered an investigation into how much the tax brings into the national coffers. HMRC has been told to report back by January.

This shows us the power of the people (well, a very select group of the people) to get the Government to take action.  Or does it?  The Chancellor has done nothing but buy himself some time here. 

Time to think has to be a good thing, and it is commendable that there hasn’t been another knee jerk reaction of “yes” or “no”.  What is glaringly obvious, to me, is that whilst economists may be in a position to opine as to how measures such as the 50% rate of tax affect the economy, this is only part of the picture.

The other part is politics; and it is the politicians who are responsible for making changes.  The damage which could be done in being seen to favour the rich at a time when unemployment is high and growth is flat lining means that the merits of the 50% rate are of secondary importance to “how it looks”. 

Just listen to the news and take note of how often you hear the phrase “send a message”.  Policy seems to be more about messages sent than the merit of the measure. 

I fully expect that when the Revenue report back on this next year, the results will not show a strong case for the 50% rate.  I’ve helped enough clients to shape their affairs to reduce the impact of the 50% rate to form my own view on the matter. 

Whatever the outcome of this review, my personal opinion of this is that it won’t matter.  It’s the politicians that shape the policy.  Call me cynical if you will, but the bottom line is that any changes made by politicians are going to be based more on politics than economics

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.

According to Acas, almost six out of 10 workers now use social media at work, either on their computers or their mobile phones. However, whilst some employers encourage their employees to use social media for business development and marketing during work time (and others ban it altogether), many employers are naturally concerned that workers may be spending too much of their working day looking at personal-interest webpages, ‘tweeting’ or blogging; and it would appear that these concerns are well-founded, as Acas claims such behaviour costs the UK economy up to £14bn per year. However, despite these concerns, research has found that fewer than one in ten employers actually have a social media policy.

Through this new guide, Acas aims to provide guidance to employers about what they should be doing in regard to social media. The guide is split into the following areas:

1. Managing performance;

2. Recruitment;

3. Discipline and grievances;

4. Bullying; and

5. Defamation, data protection and privacy.

Acas recommends that employers should consult with staff and trade unions, and make it clear what employees can and can’t do when using the internet and social media (including the consequences of breaching its social media policy.)

The use of social media presents both risks and opportunities for companies. As well as a loss of productivity in the workplace, legal liabilities can arise from the use of social media – for example, discriminatory online comments made by one employee about another, leaks of confidential company information, the use of online information when recruiting new employees, data protection, and loss of company reputation.

With the use of social media still growing rapidly, employers must ensure that they act within the law and do not leave themselves open to a claim. An effective workplace social media policy is the first step.

If you would like any advice on this issue, or anything else employment-related, please contact our head of employment, Michael Delaney at michael.delaney@mablaw.com.

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.”

The case involved the provision of services by workers to Autoclenz, which in turn had a contract to provide valet services to British Car Auctions. In the contracts between Autoclenz and the individual workers, they were described as providing the services as subcontractors on a subcontract basis, they could provide a substitute worker (subject to complying with the standards set out in the agreement), there was no mutuality of obligation and the workers could refuse work. In addition, they wore BCA’s rather than Autoclenz’s overalls (as had been worn previously). Although Autoclenz provided the cleaning products and equipment and arranged insurance cover, Autoclenz deducted a fixed amount for the cleaning products and equipment and insurance cover from payments. The workers were responsible for paying tax and national insurance to HMRC. On the key relevant issues of control, mutuality of obligation and personal service, HMRC took the view that the workers were self-employed. Everything seemed to point in that direction.

The workers claimed to have been employees, though, and claimed employment rights. The matter ended up before the Supreme Court, which ruled that they were in fact employees. The workers were therefore entitled to minimum wage and statutory annual leave. Of most importance to businesses and service providers is the approach the Court took to considering whether to disregard the terms stated in the written contract. The Court said that those terms needed to reflect the reality of the position from inception and throughout, and the actual agreement of the parties – rather than the stated position in writing. The Court dismissed an argument that it could only set aside the stated position if there was an intention to mislead; an intention to mislead was not relevant. The Court said that all the evidence of the situation should be examined, including the written terms and how the parties conducted themselves in practice. The mere fact that a particular provision, such as a right of substitution, is not exercised does not mean that it is not genuine. But the evidence of how the parties conduct themselves can be so persuasive as to set aside what has been agreed in writing.

In this case, the following four key terms were what had really been agreed: (1) valet workers would perform services for Autoclenz within a reasonable time and in a good and workmanlike manner; (2) the workers would be paid for that work; (3) they were obliged to carry out the work offered to them and Autoclenz was obligated to give them that work; and (4) the workers must do the work personally and could not provide a substitute.

The Supreme Court argued that one critical difference between employment and ordinary commercial contracts is inequality between the parties. In an employment situation, the person obtaining the services often finds it easier to dictate terms. Paul Gershlick, a Partner at Matthew Arnold & Baldwin LLP and editor of Upload-IT, questions that reasoning. He says: “There are many situations where there is inequality of bargaining power in a commercial contract context and that does not mean that they are really employees. It’s just the fact of the commercial matter that some commercial entities find themselves in a position that they have to accept terms imposed by the other party.”

Paul adds: “The case does, however, provide useful guidance on whether someone is an employee or self-employed. This can have important tax and employment rights consequences. Although the case provides guidelines, each case must be judged according to its own particular circumstances. As can be seen in this case, it is possible for HMRC and the courts to come to different conclusions as to the status of the service provider. MAB provides assistance in helping clients through this tricky area. Please contact me if you would like our help on this.”

This trial, which is expected to begin on 12 June 2012, is only the second corporate manslaughter case to be brought under the Corporate Manslaughter and Corporate Homicide Act 2007 since the Act came into force on 6 April 2008. The previous conviction under the Act was in February 2011 (click here and here for further details). Under the Act, convicted companies face unlimited fines, remedial orders and publicity orders; the common law offence of gross negligence manslaughter carries a maximum sentence of life imprisonment. The directors will return to court on 8 December 2011 to enter their pleas.

The case is of particular importance, as it is also the first case to be brought against a medium-sized company, with over 100 employees. Cotswold Geotechnical Holdings, the first company to be convicted, had less than five employees and was ultimately fined £385,000. If convicted, Lion Steel Equipment can probably expect a much larger fine.

I have reproduced the article in full below, with permission from The Financial Times.

Resigned to losing director

Q. I run an advertising business and, 18 months ago, we appointed a non-executive director to advise on our growth. We appointed her on good faith as we have known her for a long time and regard her as a friend. However, it has come to my attention that she is also advising a rival company and we are very concerned about this. Can you advise on the best course of action?

A. The duties of the non-executive director in this case are now codified within the Companies Act 2006. Under section 172 of the Act, there is an obligation on the part of the director to promote the success of the company. That section also states that a director must act in a way that he or she considers to be in good faith.

The director is obliged to consider the likely consequences of any decision made by her in the long term, in so far as it may affect the business.

By section 174, there is an obligation on the director to exercise reasonable care, skill and diligence and, by section 175, to avoid a conflict of interest. So, by advising a competitor in the sector, the director clearly has a conflict of interest – and thereby risks being in breach sections 172, 174 and 175 of the Act.

Consequently, your board should consider asking the non-executive director to resign from her position to avoid being in breach of her statutory duties as described above.

If she refuses, the board will have to consider terminating the arrangement.

Michael Delaney is a partner and head of employment at Matthew Arnold & Baldwin, a law firm.

If you would like further advice on this issue, or anything else employment-related, please contact me at michael.delaney@mablaw.com.

The announcement follows a consultation on the future of the ‘right to request time off to train or study’ regulations.

This decision follows confusion earlier in the year over whether this right was going to be extended – click here and here for full details. The previous Labour Government had passed legislation to extend the right from April 2011, but this was put on hold – and now ruled out – when the coalition Government came to power.

The Government has also confirmed that the right will continue to be available to employees in large organisations with 250 or more employees.

Corporate manslaughter has been a criminal offence under the Corporate Manslaughter and Corporate Homicide Act 2007 since the Act came into force on 6 April 2008.

As in the Cotswold Geotechnical case, Lion Steel Ltd has been charged with corporate manslaughter under the Corporate Manslaughter and Corporate Homicide Act 2007. Three of the company’s directors have also been charged with gross negligence manslaughter and charged under the Health and Safety at Work Act 1974 for failing to ensure the safety at work of their employees. In this particular case, an employee of the firm died after he fell through a factory roof.

The hearing will take place at Tameside Magistrates’ Court on the 2 August 2011.

The bringing of a second prosecution further demonstrates how important it is for businesses to ensure that they regularly review their health and safety and risk management systems/policies.

Like a pack of cards, the fall out from the phone hacking scandal continues to gather pace and threatens to engulf the UK. Rebekah Brooks arrested and out on bail, Commissioner Sir Paul Stephenson and Assistant Commissioner John Yates resign, Murdoch senior and junior to answer before the Culture, Media and Sports Select Committee. What next? Is No.10 under threat by employing Andy Coulson as Communications Chief, who resigned earlier this year? The very core of society shaken as politicians, police and journalists are put under the spotlight.

This innate thirst for information and knowledge is all encompassing. This need to be aware of what is happening around you, whether in business or in pursuit of a newsworthy story, has always been central to the modern world. People want to know what is going on: think Facebook, twitter.

So how far is too far? Employers will face this problem when dealing with employees and monitoring their use of the internet and emails during working hours. To protect legitimate business interests, how far can employers really go? For example, can they hack into an employees private email account such as Gmail, Yahoo? Can an employer record an employee’s telephone conversation?

Certain disciplines require telephone calls to be recorded, for instance if dealing in financial services, but the requirement is to inform members of the public and staff that their calls are being recorded. Employers should have a clear computer, internet, social networking, and email policy which sets out what is being monitored and what the consequences of an abuse of that policy will be for the employees. Will employers too face criminal charges for intercepting employees’ personal emails accounts in the pursuit of their civil case against an employee who has stolen key confidential information (which the employer is entitled to protect) and misused that information for their benefit. There have been cases dealing with this very issue, as to whether employers can use an employee’s personal email account to show the court that the employee has been abusing their duties of confidence and fidelity.

I would be interested in your views on the fine line of having access to information where there is a purpose to this information, against the threat to someone’s human rights.

Only time will tell whether this scandal will engulf the Government; I wonder if this is the UK’s Watergate?

There were a total of 218,100 claims made during 2010-11, compared to 236,100 in 2009-10. However, despite the decline, this year’s figure still represents a 44 per cent increase on 2008-09. The statistics reveal a fall in a number of claims: unfair dismissal, breach of contract, religion or belief discrimination, race discrimination, disability discrimination, and equal pay. 

However, the number of age discrimination claims rose sharply. This year, 6,800 age discrimination claims were filed – a rise of 31 per cent on 2009-10 and 79 per cent on 2008-09.

With levels of redundancy and unemployment still currently very high, these statistics will be of concern to employers, particularly as there is now more opportunities than ever for employees to bring age discrimination claims.

Employers should bear in mind that all employees – whether young or old – can potentially bring an age discrimination claim.

Recent legislation has been introduced to further clamp down on age discrimination. The Equality Act 2010, which took effect on 1 October 2010, prohibits direct age discrimination, indirect age discrimination, and age harassment in the workplace. Also, the default retirement age was abolished with effect from 6 April 2011, subject to certain transitional provisions. This means that, from this date, any dismissal because of age will constitute direct age discrimination under the Equality Act 2010, unless it falls within the transitional provisions. Total abolition of the default retirement age will take place on 1 October 2011.

The full affects of the abolition of the default retirement age have yet to be felt, but it will be unsurprising if next year’s employment tribunal statistics reveal a further rise in age discrimination claims.

In the meantime, it is essential that employers review their policies on redundancies, recruitment, employee benefits and pay to take into account these changes.

If you are concerned that your business may be open to age discrimination claims, please contact me at michael.delaney@mablaw.com.

I have outlined some of the ways employers can ensure they comply with the new Act – please click here.

This article is only intended as guidance. There are many issues to consider, so employers should seek legal advice where necessary to ensure they are not contravening the Act, or inadvertently breaking other laws when implementing compliance measures.

If you would like any legal advice regarding the Bribery Act and its implications on your business, please contact me at michael.delaney@mablaw.com.

A bribe is defined in section 1 of the Act as “a financial or other advantage” offered, promised or given to “induce a person to perform improperly a relevant function of activity, or to reward a person [for doing so.]”

This definition covers many “advantages”, including gifts, hospitality and entertainment, political or charitable donations, sponsorship and publicity.

Employers should note the following:

1. A “financial or other advantage” is still a bribe even if it is given or paid after the event; and

2. Employers or other individuals can be liable even if they unwittingly give or receive a bribe.

Section 7 of the Act introduces a criminal offence for the failure of a commercial organisation to prevent bribery by an “associated person” for its benefit. The statutory definition of “associated person” is very wide, and it covers those people who perform services for, or on behalf of, the employer (e.g. employees, agents and subsidiaries.) However, other people working for the employer, such as consultants, agency workers and volunteers, will also be “associated persons” for the purposes of the Act. Consequently, an employer is potentially responsible for the actions of a wide range of individuals, some of whom it may have only minimal control over.

Breaching the Act: The penalties

* Individuals who breach the Act could be imprisoned for up to ten years; and

* Commercial organisations can face an unlimited fine and be prevented from tending for public contracts.

Preparing for the Bribery Act: The key principles for employers

In March 2011, the Government published Guidance on the Bribery Act which set out six key principles to give commercial organisations assistance in planning, implementing, monitoring and reviewing their anti-corruption and bribery policies and procedures before the Act comes into force.

1. The employer’s anti-corruption and bribery policies (and related policies) should be clear and accessible to all those people who work for them and who  fall within the definition of “associated person”;

2. The management team should establish a zero-tolerance culture regarding bribery and corruption, and ensure that all workers, and those that the company does business with, are fully aware of the company’s anti-corruption and bribery policies;

3. Employers should be fully aware of the bribery risks they face in their sector(s) and in the countries or regions in which they do business. They should carry out regular and comprehensive risk assessments;

4. Employers must take steps to ensure that they know who they are doing business with;

5. Employers should embed anti-bribery principles into their internal controls, recruitment and remuneration policies, operations, communications and training; and

6. Employers must decide who will be responsible for monitoring and reviewing their policies and procedures. They should ensure that they have effective financial and auditing controls that pick up potential and actual irregularities.

Staying on the right side of the law: The key considerations for employers for 1 July and beyond

Employers should consider the following issues to ensure that they do not contravene the Bribery Act, and should seek legal advice where necessary.

1. Recruitment: carry out additional background checks and vetting during the recruitment process (e.g. bankruptcy checks, criminal record checks and additional references);

2. Inductions: include training on the company’s anti-corruption and bribery policies and procedures for all employees and workers (e.g. agency staff, voluntary workers and independent consultants);

3. Expenses: carry our regular audits and ensure there is evidence as to how and why money was spent for each expenses claim submitted;

4. Hospitality: create a hospitality policy, including clear guidance on both the giving and receiving of gifts;

5. Disciplinary procedures: amend disciplinary policies and procedures to make it clear that any breach of the company’s anti-corruption and bribery policies (and related policies) may amount to gross misconduct. Employers may wish to (1) consider making it a specific contractual requirement that employees and other workers comply with these policies and procedures, and (2) consider whether it should be a contractual requirement for some workers to report any suspicions or knowledge they have of a breach of these policies;

6. Bonus and commission schemes: review these schemes to ensure that, as far as possible, they do not unintentionally encourage employees to ignore bribery and corruption risks. Employers should also review incentive arrangements to ensure they do not unintentionally incentivise workers to act improperly or illegally;

7. Whistleblowing: set up a comprehensive and up-to-date whistleblowing policy. All workers should be made aware of its existence, understand how it applies and be given access to a copy of it;

8. Investigating potential breaches: ensure that every incident of a suspected breach is investigated and documented. All investigations should be fair and confidential; and

9. Discrimination: ensure that any anti-corruption and bribery policies and procedures are not based on racial stereotyping of certain nationalities.

This article is intended to simply highlight the main issues and potential problems that employers may face when trying to comply with the Bribery Act. There are many issues (and pitfalls) to consider, so employers should seek legal advice where necessary to ensure that they are not contravening the Act, or inadvertently breaking other laws when implementing compliance measures.

If you would like any legal advice regarding the Bribery Act and its implications on your business, please contact me at michael.delaney@mablaw.com.

I have reproduced the article in full below, with permission from The Financial Times.

Hard to set up exclusion zone

Q. My brother and I run an independent letting agency based in South London. We are looking to recruit, so are preparing an employment contract. We intend to include a clause to restrict employees from soliciting clients and other employees, but wondered if it would also be possible to add a clause to restrict them from setting up a business within a five-mile radius of ours?

A. Employers often wish to protect their business interests from unfair competition by employees and former employees who are employed in senior positions – and who are privy to sensitive confidential information or have developed strong client connections.

When drafting such covenants, the employer will have to demonstrate that it has not fallen foul of the restraint of trade doctrine.

Any contractual term that purports to restrict an individual’s freedom to work for others or carry out his business is void and unenforceable unless the employer can demonstrate that it has a legitimate proprietary interest that requires protection. Furthermore, any protection should be no more than is reasonable having regard to the circumstances.

The employer should almost certainly include a term within the contract of employment restricting employees from soliciting clients with whom they have had contact during the period of their employment for a period following the termination of that employment. The period of restriction should be no more than is reasonable in the circumstances and will in practice be between six to 12 months.

A clause that prevents a former employee from setting up a competing business within a radius of five miles will be difficult to enforce in an urban area given the size and nature of the population. A geographical restriction of five miles is only likely to be justifiable if the office is based in a rural location where business opportunities are more limited and the employer can establish a substantial personal connection between the employee and its relevant clients.

Michael Delaney is a partner and head of employment at Mathew Arnold & Baldwin, a law firm.

If you would like further advice on this issue, please contact me at michael.delaney@mablaw.com.

After this date there will be a significant reduction in the annual investment allowance for qualifying expenditure which potentially could result in lost 100% up-front tax relief.

Claiming on the balance not covered by AIA at rates applicable to the general, special or short-life asset pools spreads the claim for tax relief over much longer periods.

Here is an example I’ve seen from accountants Smith & Williamson:

Using an example of a 30 June 2012 year end, the table below shows the effect of delaying expenditure until after 1 April 2012 or 6 April 2012 on the maximum amount of AIA claimable for that year.

Businesses need to consider more than just the availability of allowances when incurring expenditure, however this change in allowances is significant enough to justify very careful consideration of when to incur qualifying expenditure.

For more information, please email me on shimon.shaw@mablaw.com.

Both the existing statutory process for an employee to request a flexible working pattern and the now defunct statutory right to request working beyond a default retirement age involve a highly prescriptive procedure that the employee must follow in order to trigger their statutory rights. Although the default retirement age is to be abolished from 1 October 2011, tribunals are still dealing with claims arising from notices of intended retirement issued by employers before 5 April 2011. In one such case, Bailey v R&R Plant, The Employment Appeal Tribunal recently said that it was not enough for an employer to merely tell an employee that they were entitled to make a request to continue working beyond the employer’s proposed retirement date. In order to comply with its statutory obligations, the business had to notify the employee of the “essential conditions” that the employee had to comply with during the statutory process, ie the business had to tell the employee that in order to trigger the business’ obligation to consider his request to work beyond retirement age, the request had to be in writing and state that it was being made under paragraph 5 of Schedule 6 to the Employment Equality Age Regulations 2006 (now repealed).

The statutory flexible working request procedure is, if anything, more onerous on the employee than the statutory right to request working beyond normal retirement age was. In order to trigger a business’ obligation to conisder a flexible working request, the employee’s application must: 

• set out the work pattern the employee is requesting;
• specify their entitlement to make the application in accordance with the Employment Act 2002;
• specify any effect that they anticipate the proposed work pattern would have on the employer’s business; and
• specify how such effects might be accommodated or addressed in practice.

In the past, tribunals have held that they have no jurisdiction to hear a claim for breach of the flexible working procedure because the employee’s flexible working request did not meet these requirements. Given that background, I would be interested to see whether a tribunal would now take the view that a business is obliged to notify its employee of these requirements. The difference, of course, is that the retirement process is triggered by an employer’s notice to the employee of an intended date of requirement, whereas in the flexible working process, the first step is the employee’s application. I think it is more of a stretch to imply an obligation for an employer to notify employees of deficiencies in their flexible working application than to tell them what they have to do if they want to request working beyond a default retirement age but there are some parallels.

Even if a tribunal would not be willing to imply an obligation that a business must effectively guide its employees through a proper flexible working application, there may be good reasons for businesses to do so anyway. Irrespective of any rights arising out of the flexible working procedure, in some circumstances employees who are refused the right to work flexibly may be able to pursue claims for sex discrimination, or resign and claim constructive dismissal. The more thoroughly such requests are dealt with, the better a position the employer will be in to defend themselves against such claims.

The High Court agreed with MMP. The franchisee was responsible for the actions of its employee. It disagreed with the franchisee’s  argument that her actions were outside of the course of her employment and were a matter for her private life. This was about an employee who had misused personal data obtained from a CV obtained through her employment.  This was a breach of her employment contract, but MMP was still responsible.

However, the franchisor’s purported termination of the contract was wrongful and that action in itself was a repudiatory breach of contract as it showed an intention not to perform the contract. The reason was that the relevant clause which had been breached said that MMP must not “do anything to adversely affect our name, Trade Marks or other Intellectual Property”.  On a true construction of those words, Antal would have needed to provide evidence that MMP’s conduct had in fact damaged the Antal brand.  It had not provided that evidence.  A mere fear or concern of the harm or reputation that would be done was not sufficient on the wording used in the agreement.

Paul Gershlick, a Partner at Matthew Arnold & Baldwin LLP and editor of Upload-IT, comments: “This case should act as a warning to businesses to be careful when selecting and managing their staff.  However, even more stark is the consequence of failing to have an agreement that says what the franchisor or other business thinks it says.  Care should be used before terminating an agreement, or the otherwise innocent party ends up being the wrongful party.  It should also have made the contract wording tighter by talking about damage to its reputation “in the franchisor’s opinion” so that it would not have to attain evidence to prove that the damage did actually occur.”

There are four elements to the proposals:

1. A system of flexible parental leave;

2. A right for all employees to request flexible working;

3. Amendments to the Working Time Regulations; and

4. Measures to encourage equal pay

The proposals

1. Flexible Parental Leave

These proposals, which are not anticipated to come into force until 2015, will essentially mean that parents will share parental leave.

* Retain 18 weeks’ maternity leave and pay exclusively for mothers around the time of the baby’s birth; and

* Reclassify the existing entitlement to a further 34 weeks’ maternity leave as “flexible parental leave”. Four weeks will be exclusive to each parent and will be taken in the first year, with the remaining 30 weeks available to either parent.

The consultation also considers (1) whether parental leave could be taken in “chunks” (i.e. broken into two or more periods), or on a part-time basis; (2) whether the age limit for taking unpaid parental leave should be increased from the age of five to either eight, 12, 16 or 18; and (3) whether a new statutory right should be designed to give fathers the right to paid leave to attend a specific number of ante-natal appointments.

2. Flexible Working

The consultation proposes that the right to request flexible working should be extended to all employees.

* Extend, by 2013, the right to request flexible working to all employees who have been working for their employer for 26 consecutive weeks (and not just to  those with children under 17 years of age, or disabled children under 18 years of age);

* The existing statutory procedure for considering requests will be replaced by a new duty on employers to consider requests “reasonably.” The Government will consider publishing a statutory code of practice for businesses to give employers guidance on how to handle requests; and

*Allow – but not require – employers to prioritise competing flexible working requests to take account of the employees’ personal circumstances. This would mean that employees making a request due to parenting or caring responsibilities could be given higher priority than those making a request for other lifestyle reasons.

NB: There are no plans to alter the current eight business reasons for a business to turn down a flexible working request.

Currently, employees are only permitted to make one request for flexible working in any 12-month period. However, the consultation seeks views on permitting an additional request within 12 months if the employee’s original request states it is only expected to be a temporary arrangement.

3. Working Time Regulations (WTR)

The proposed changes to the WTR, anticipated to be made in 2012, enshrines recent European Court of Justice case-law. This case-law established that employees who cannot take all their annual leave entitlement, due to sickness absence or maternity/parental leave, must be permitted to carry it forward into the following annual leave year.

The Government also proposes that:

* Where someone has been on sick leave, employers may limit an employee’s ability to carry over annual leave to the four weeks required under the WTR. The employee would therefore lose the extra 1.6 weeks they receive under the WTR;

* Amend the WTR to permit the carry over of annual leave due to maternity, paternity, parental or adoption leave – this will include the full 5.6 weeks of leave entitlement per year; and

* Employers may insist that annual leave not taken due to sickness absence must be taken in the current leave year, where possible, rather than being carried over. Employers may also defer that annual leave until the following year if it can  be justified to be in the interest of the business.

Views are also sought on increasing flexibility for employers. For example, employers could be allowed to ‘buy out’ the additional 1.6 weeks of annual leave, or require employees to defer that annual leave until the first six months of the following leave year, if this can be justified to be in the interest of the business.

4. Equal Pay

The consultation considers imposing a mandatory equal pay audit on those employers who have been found by an employment tribunal to have breached equal pay legislation. The employment tribunal would be obliged to order the audit unless it believed it would not be productive to do so – e.g. if an audit had been conducted in the past three years, or if the employer has other appropriate means of ensuring a non-discriminatory pay structure.)

The consultation also seeks views on the appropriate sanction for an employer’s failure to comply with an audit requirement.

The Government has made clear in the consultation paper that there will be exemptions for micro-businesses (i.e. those with fewer than ten employees) and new start-up businesses.

All responses to this consultation are required by 8 August 2011.

LJ Burnton also held that the legal test for dismissal on discriminatory grounds was applied correctly, and that he believed the Tribunal had found that Mr Power was dismissed on the grounds of his conduct, which included a disruptive attitude in the course of role play exercises, as well as expressing his beliefs in an unacceptable way (distributing posters and CD ROMs,) and not because of his beliefs.

I have written an article, published in May’s edition of Workplace Law magazine, on what employers need to do now to ensure they meet the demands of these impending Regulations. A copy of the article is available to read here.

To read other articles I’ve written on the issue, please click here.

If you would like more information on these Regulations and their potential impact on your business, or if you are considering employing agency workers, please contact me at michael.delaney@mablaw.com.

The areas under consideration are:

1. Compensation for discrimination;

2. Collective redundancy consultation periods; and

3. TUPE.

However, the announcement does not set out any proposals; it merely confirms that the Government will “look in detail at the case for reforming” these areas.

Although there is no commitment to change, the Government has provided some brief details on why the Government is looking at the areas in question.

1. Compensation awards for discrimination

Discrimination compensation is currently uncapped. Employers have “expressed concern” about (1) the high levels of compensation that are sometimes awarded, (2) the lack of certainty about what they may be required to pay out, and (3) vexatious litigants, who are encouraged to make claims against employers due to the high levels of compensation that can be awarded.

2. Collective redundancy consultation periods

Currently, if an employer wants to make more than 100 employees redundant in a 90-day period, he or she must consult on the issue at least 90 days before the first dismissal takes effect. However, employers feel that this consultation period is too long, as it (1) hinders flexibility when restructuring, and (2) forces struggling employers to keep paying employees after it has become clear that they should be dismissed.

3. Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE)

These Regulations protect employees’ terms and conditions of employment when a business is transferred from one owner to another. Despite the Government stating in November 2010 that it had no plans to reform TUPE, employers are concerned that the Regulations are (1) ‘gold-platted’ (i.e. they went further than required to do so by the EU’s Acquired Rights Directive when they were transposed into UK law), and (2) “overly bureaucratic.”

The Government’s review will begin later this year; however, it is debatable as to whether any significant reform will happen, as these three areas are governed to some degree by EU law and any changes must comply with it.

I have reproduced the article in full below, with permission from The Financial Times.

Q. I run a small IT company with 18 employees. Most of my staff are highly skilled but some still request time off for training. Am I legally obliged to offer staff leave to attend training courses?

A. Since 6 April 2010, employees working for employers with 250 or more staff are entitled to request time off work for study or training provided they have completed 26 weeks’ continuous service.  The employee must demonstrate that the training or study is to improve their effectiveness at work and the performance of the employer’s business, although it may not necessarily lead to a formal qualification. 

An employer is required to hold a meeting within 28 days of receiving a written application. Thereafter, the employer must give a written decision within 14 days. An employer can refuse the request on the basis of cost, the inability to reallocate the work during the absence, the effect on the ability to meet customer demand, or the employer’s belief that the training would not improve the employee’s effectiveness or business performance. If the employer refuses the request, he or she must offer a right of appeal.

If the employer fails to follow these basic procedures, an Employment Tribunal can make an award of up to eight weeks’ pay. 

These rights were due to be extended to all employees regardless of the size of the employer from 6 April 2011, but the coalition government has decided to delay extending the right further so that it can scrutinise the impact on smaller employers.

At this time, a small business with 18 employees will not have to grant any request for training or study leave. However, a watchful eye is required pending the outcome of the Government’s review.

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

If you would like further advice on this issue, please contact me at michael.delaney@mablaw.com.

The Regulations give temporary agency workers the right to equal treatment in comparison to permanent workers in regard to basic working terms and conditions (e.g. pay, working time and annual leave) once he/she has completed a qualifying 12 weeks’ service in the same role.

On 1 April 2011, the Government launched a two-week consultation on the draft version of the guidance. Click here for more details.

The final guidance, which has been produced by the Government in partnership with businesses, trade unions and recruitment agency representatives, aims to help hirers and agencies understand the requirements of the Regulations.

Among other things, the guidance explains:

1. How to determine whether the Regulations apply to a particular organisation or individual;

2. What arrangements fall outside the scope of the Regulations;

3. How to calculate when the 12-week qualifying period for equal treatment has been met;

4. The facilities to which agency workers will be entitled from the beginning of an assignment;

5. When agency workers will be entitled to bonus payments; and

6. The terms and conditions to which agency workers will be entitled after having completed 12 weeks in a given job with a hirer.

Separate guidance for agency workers are expected to be published shortly.

For further details of what changes these Regulations will introduce, please click here to read an article I wrote on the subject for Eat Out magazine.

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

The High Court agreed with Vestergaard. Although there had been no written agreement, Skovmand had breached an express term of the oral contract that he had had with Vestergaard to the effect that the consultant would keep information arising out of his work for them confidential. Even if there had been no express term, though, it was an implied term of the contract that he would keep the information confidential. Once Skovmand had stopped working for Vestergaard, the scope of the obligation of confidence only extended as far as ‘trade secrets’. This approach for consultants was analogous to the position of employees. After the relationship had terminated, the consultant could use information forming part of his own skill, knowledge and experience – whether for his own benefit or for third parties – even if it was learnt during the course of the relationship. The information used by Skovmand here – technical details kept in a database – had amounted to Vestergaard’s trade secrets.

• The judge said that the following factors would help to decide whether any particular information amounted to a trade secret:
• The nature of the work – here, the consultant was engaged in a role likely to produce inventions.
• The nature of the information – experiment results should be protected as trade secrets, just as are formulae and manufacturing processes.
• Engager’s attitude – Vestergaard regarded the information as confidential.
• Steps taken to protect the information – Vestergaard took lots of steps to protect the information.
• Separability of the information – the information could be separated from Skovmand’s general skill and knowledge.
• Commercial value of the information – the information was clearly regarded has commercially valuable here.
• Usage and practices of the trade – little evidence was available on this factor in this particular case.

The case has now gone to the Court of Appeal. The Court of Appeal largely upheld the High Court’s ruling, although it found that one of the employees had not breached the confidence on the particular facts of the case. As far as the consultant’s expertise was concerned, the Court of Appeal ruled that Skovmand could have scientifically reached the particular formulation from his own research, but that did not mean that he actually did so rather than take the short-cut of use of Vestergaard’s trade secrets. There was enough evidence relied upon by the High Court to justify its ruling that Vestergaard’s database had been relied on to create the competing product; it was not simply a matter of Skovmand’s general skill and knowledge.