HR Updates and News

August 2010 Updates

PAYE Deadline
Don’t miss out on your PAYE deadline – the period of grace which used to be allowed by HMRC to take account of postal delays or other reasons beyond the business’ control has been withdrawn as the majority of employers now have to file returns on-line. From March 2011 there will be no ‘grace period’ returns will be due on 19 May each year.

Retirement Age
Big news this month on retirement age and a lot of discussion has been provoked. You will no doubt have read much of it. There will be consultation up until October this year with a view to the new legislation coming into effect from October next year. There will be some phasing of the changes to cover employees and employers already within an agreed notification period.

Personally my concern is the uncertainty now facing small employers in terms of workforce planning and also on just how they will be able to part company from long serving employees. It would seem from the details trailed so far that employees who keep on working and choose not to resign even if they are perhaps not able to fully carry out the range of duties required will need to be dismissed through capability procedures.

This would mean that a previously good relationship which may have ended in mutual if slightly reluctant agreement will become confrontational and there will be an inevitable effect on other employees. Additionally of course from the employers perspective there will be a requirement to pay notice which in a performance management situation may well mean paying in lieu of working the notice period.

There will be an option where employers can choose to retain a contractual retirement age where it is a proportionate means of achieving a legitimate aim – it is unlikely however that many businesses will be able to bring sufficient proof to qualify under this, it will be expected to be the exception rather than the rule.

Equality Act 2010
After some uncertainty when the new government came to power it has now been confirmed that the Equality Act 2010 will go ahead as planned, with the first implementation taking place on 1 October 2010. As noted in previous updates the Act brings together nine discrimination laws and aims to make it easier for employers to comply with discrimination law.

Recent Updates

The Budget
One of the big talking points from the budget is the Government announcement that it will speed up the increase in the state pension age for men to 66, possibly bringing this in by 2016 (the previous government had set the date for this as 2024 and then to 68 by 2046). They have also announced they will consult on how to stop employers forcing workers to retire.  A review chaired by Labour's former work and pensions secretary John Hutton will determine when the pension changes will come in.

The current default position on retirement age allows retirement at 65 and it is this which the new government have indicated may well change or be scrapped. The CBI continues to call for the default option to remain so that employers can better plan their business costs, however opinion polls seem to show a majority wanting the default age to be scrapped and with the speeding up of the increase in state pension age there will be an inevitable iknock on in those who wish or probably need to remain in employment until their state pension takes effect. Watch this space!

Enforcing Tribunal Awards
A new Employment Tribunal Fast Track scheme through the High Court Enforcement Officers has been introduced. This is in recognition of the high number of employers failing to pay awards. Under the new scheme, unpaid Claimants will have the support of specialist High Court enforcement procedures to assist them in getting their awards paid. The only cost will be a fee of £50 if a writ is needed to seize assets.

Disciplinary Proceedings
This is always a difficult area and recent cases don’t really help to clarify things. The Employment Appeal Tribunal has overturned the decision of an Employment Tribunal and ruled that where an employee is being investigated by the police at the same time as facing disciplinary proceedings, the employer can be allowed a ‘wide discretion’ on whether they continue proceedings or postpone the disciplinary hearing until after the police investigation has been completed. This is a difficult situation as such matters can take months to be completed and if an employee is suspended this must be on full pay, but there is a risk if employers take action prior to a resolution of the issue in the courts that they have acted prior to facts being fully established.

Previous Updates

World Cup and the workplace
World Cup Fever seems to be exercising the minds of many employment law experts with lots of advice on what to do and not do in relation to employees trying to keep up with the matches as they are played.

As a total non sports person I do wonder how we draw the line between seemingly a pervading expectation that employees should be given special treatment for the World Cup against for instance Wimbledon or the Grand Prix or perhaps for some things closer to home, but just as important to individuals, children’s birthdays, graduation ceremonies or even, having seen a recent TV programme, time off to carefully nurture a giant onion ready for The Show!

Anyway for those who have concerns there is advice from ACAS and some current views at www.acas.org.uk/worldcup. I think my only advice would be decide well in advance how you want to deal with this and let employees know where they stand so everyone is clear.

Paternity Leave changes
These changes come into effect for children born on or after 3 April (or matched for adoption at this date). From this point fathers can take additional leave of up to 26 weeks in total where the mother has returned to work and not used up all her entitlement to leave and to SMP.

The earliest that leave can be taken is from 20 weeks after the baby is born and it must be completed by no later than 12 months after the birth. It has to be taken in complete weeks with a minimum period of two weeks. Additional paternity leave will be paid at the same rate as SMP and will be paid to the father in the same way as it is currently paid to the mother. The father has to give eight weeks notice to the employer of his intention to take this leave.

Obviously the first question employers may ask is how they will know what the other half of a partnership is doing within their employment. This is proposed to be covered by virtue of the father and mother both completing self certification forms and an agreement that the father’s employer can check with the mother’s employer.

Recruitment
Just a reminder that when you are recruiting you should ask to see the necessary ‘approved documents’ to show entitlement to work in the UK. To ensure that there is no unlawful racial discrimination you should ask for these documents as a routine part of recruitment even where the candidates are seemingly of UK or EU nationality.

The checks must be made before the employment begins and you should ensure you see the original documentation and that the information contained in them is consistent and any expiry date has note passed. You should keep a photocopy of the document signed and dated to note who saw the original and when.

Equality Bill approved
The Equality Bill was approved on 6 April in a legislation ‘wash-up’ prior to calling the election. The Bill has now been sent for Royal Assent after which it will become the Equality Act 2010 and will begin to come into force from October 2010. Key provisions for employers include:

Multiple Discrimination - The Act will consolidate and replace the 9 existing pieces of legislation covering discrimination and there will be a new concept of Multiple Discrimination where a claim can be based upon discrimination because of a combination of protected characteristics.

Positive Discrimination allowed in Recruitment - Employers will be able to apply positive discrimination by selecting candidates from under-represented groups. This will be where two or more candidates are of ‘equal suitability’.

‘Protected Belief’ - a code of practice is to be published setting out types of belief capable of being protected from discrimination consistent with that currently offered to religious groups. The current draft code of practice suggests protection for vegans and atheists, amongst others.

Gender Pay Gap Audits - From 2013, employers with more than 250 employees will have to publish an audit noting any disparity in pay between male and female employees where they have failed to show progress in closing any gender pay gaps. Public Sector bodies will be required to report on gender pay gaps (in addition to other equality data) by April 2011.

Pay discussions - Some employers have a clause in their contracts preventing employees from discussing their pay with colleagues. The Act will ban these clauses. The idea is to ensure that women check with male colleagues to establish if their pay is equal.

Health Questionnaires - Employers will no longer be able to ask any health related questions during recruitment that are not directly applicable to the job role. This means that those with a disability will not have to disclose this prior to being made an offer of employment.

Pension Changes
The Pensions Advisory Service has confirmed that the government will abolish contracting out of the State Second Pension from 6 April 2012. From then, members of defined contribution occupational pension schemes, contracted-out personal pension schemes and stakeholder pension schemes will be brought back into the State Second Pension automatically. This will only apply to future state pension benefits, it does not affect contracted-out rights already built up at 6 April 2012.

Alongside this NEST as trailed a couple of months ago is a little further along in the detail. The expected annual management charge is 0.3% of the value of the fund. Rather than paying start up costs, the government will make a loan to NEST and the initial level of charges will include a 2% additional charge on all contributions (employer and employee) to repay this.

Statutory Pay and National Minimum Wage increases
The standard rates of statutory maternity, paternity and adoption pay have increased with effect from 4 April 2010, The change takes the rate up to £124.88 per week (formerly £123.06 ). Statutory sick pay (SSP) however remains unchanged and continues at £79.15 per week.

As a heads up on future changes the National Minimum Wage will increase from 1 October 2010, there is also a change in the age bands so be careful to check these as well as the rates, the adult band now includes 21 year olds

• adult rate - aged 21 or over - £5.93 (up from £5.80)
• aged 18-20 - £4.92 (up from £4.83 per hour)
• aged 16 and 17 - £3.64 (up from £3.57)

Part-time working
A recent case has shown that you need to be very careful when looking at requests for part time working from female employees. There have been a number of past cases where this has been seen as indirect discrimination as more women than men are unable to work full-time.

In the latest of these Miller v Bellway Homes Ltd Ms Miller, who was show homes manager, worked part-time but had worked full time as a sales manager prior to going on maternity leave. Following a redundancy situation one of the sales managers volunteered for redundancy and Ms Miller was offered his role, provided she took the post on a full-time basis. Ms Miller refused to accept a change to full-time working and was made redundant.

Since a requirement to work full-time is indirectly discriminatory, Bellway had to be able to objectively justify the requirement of full-time work - it failed to do this and so Ms Miller won her claim of unfair dismissal and sex discrimination. The important part here is the need to objectively justify the need for full time working, if there is a pressing and genuine need then you can make the case but you must be very aware of the dangers.

Sick leave and holidays
A recent case seems now to show how tribunals are viewing the ongoing confusion over taking or not taking holidays whilst sick and carrying over any untaken holiday due to sickness absence. The UK Working Time Regulations state that if any employee does not take their statutory leave during the leave year, then the basic 20 days of statutory leave is lost.

We now have the first UK tribunal case on this, Shah v First West Yorkshire. Mr Shah was off work for three months between January and April 2009. He received contractual sick pay, apart from a pre booked period of annual leave, when he received full holiday pay. His holiday year ran from April to end March. He tried to claim back four weeks' holiday that he had previously booked and this was refused so he brought a claim. The tribunal found that: "Shah is entitled to take the holidays which he was prevented by ill-health from taking in March of 2009 at some subsequent time in the following leave year."

This case therefore does suggest that tribunals are prepared to comply with EU law regardless of what the UK legislation in relation to WTR says. To follow best practice and minimise risk employers should consider changing their policies to allow leave to be carried forward due to illness.

A slightly different Easter NESTegg….
The new national workplace pension scheme is to be introduced from October 2012 onwards. It will be called the "National Employment Savings Trust" (NEST) presumably to encourage us to think of it as a cosy nestegg for the future.

NEST will be phased in over five years the largest businesses from October 2012 and the smallest employers having up to 2016 to comply plus small business start-ups will have additional time. Employer contributions will also be phased in – starting from 1%, to the full 3% by 2017. It seems a long way off but it’s worth looking at what this may mean to smaller businesses.

The ‘Fit Note’ brings new responsibilities
As trailed some months ago the traditional sick note will be replaced with the ‘fit notes from 6 April 2010. Doctors can certify that an employee is unfit for work or MAY be fit for work. The second option can be supplemented with advice on helping an employee back to works such as phased return, part time work or adjustments in the work place.

The advice needs to be taken on board as if an employer fails to make reasonable adjustments they could be subject to a claim under the Disability Discrimination Act. There will be guidance issued on this but it is clear that more emphasis is now placed on employers ensuring they look carefully at the work environment and actively manage those returning from sick leave, particularly where this has been for a prolonged period.

The value of a well drawn up contract
A recent employment tribunal decision underlines the value of having a well drawn up contract to rely on. Asda introduced new terms and conditions for some staff during a process of harmonisation. Most staff accepted the new terms but a small group did not. Asda unilaterally applied the new terms relying on a clause in its contract which "reserved the right to review, revise, amend or replace the contents of this handbook, and introduce new policies from time to time reflecting the changing needs of the business". Asda relied on this clause to allow them to impose changes without the express consent of the employees, and the tribunal upheld their position. There was of course a proviso in this decision which was that this power should not be used arbitrarily, maliciously or capriciously with the expectation that all efforts are made to reach agreement prior to any unilateral imposition. It is important that it can be shown that due process has been followed or there could be a claim for breach of the implied duty of mutual trust and confidence which underlies all contracts of employment.

Snowed in?
There has been some interesting debate in the media about employees who did or didn’t make it into work during the recent cold spell. It may be worthwhile reviewing your contract documentation so you are prepared for the next time we get such severe weather. Generally the rule is that it is an employee’s responsibility to get themselves to work. An employer is quite in their rights to treat any absence as unpaid. If this is set out in contract documentation then it stops any ad hoc decisions being made at the time when people may feel aggrieved if they have had an expectation of being paid.

It would also however be useful for employers to consider more flexible ways of dealing with these enforced absences such as allowing work from home where the type of work undertaken allows it or where possible being flexible about start and finish times with any lost time being made up at a later date.

If you suspect an employee is taking advantage of a good excuse not to turn up for work (whether with the expectation of being paid or not) and does not attend when they patently were able to, then this should be dealt with through the disciplinary procedure.

Paternity Leave
As you will no doubt have heard through the media new fathers will have the chance to take up to 26 weeks of paternity leave. This works by the father taking up some of the 52 weeks of maternity leave which the mother is currently entitled to – he takes the remaining period leave from the mother who then returns to work. In some strange quirk of employment law this legislation comes into effect from April this year but only applies to babies due from 3 rd April 2011 – don’t ask?!

National Minimum Wage
Just a reminder that when an employee receives the minimum wage it must be their basic rate – if the minimum is reached by adding in a premium say for unsocial hours or carrying out an additional task this is not allowable even if this is paid for all the work carried out. Minimum wage level is the base rate of pay for the job.

Fuel Rates
New rates were introduced from 1 st December last year for anyone driving company cars.

• Engine size up to 1400cc: Petrol 11p; Diesel 11p; LPG 7p
• Engine size 1401cc to 2000cc: Petrol 14p; Diesel 11p; LPG 8p
• Engine size over 2000cc: Petrol 20p; Diesel 14p; LPG 12p

Extra Bank Holiday
It seems we are to get an extra bank holiday in 2012. This will be a one-off extra to celebrate the Queen’s Diamond Jubilee and will be on 4 th June, the Queen’s official birthday, the late Spring Bank Holiday will be delayed until 5 th June to give a long weekend 4 day break.

It is worth recollecting that there is no statutory right to have time off or to have premium payments for working a bank holiday. The actual rights of an employee will depend on the contract of employment. Most businesses now include bank holidays in the Working Time Regulations minimum of 28 days holiday per year but check your contracts.

Compensation awards go down!
The next bit of good news is that the level of compensation awards has actually gone down rather than up which is usually the case. Because of the low rate of inflation the following rates will apply with effect from 1 February 2010

• The maximum compensatory award will reduce to £65,300 (from £66,200)
• Statutory guarantee payments ("lay off pay") will reduce to £21.20 per day (from £21.50).
• Minimum compensation award for union exclusion or expulsion will be reduced to £7,200 (from £7,300).
• A week's pay for basic award and redundancy pay purposes, increased from £350 last October, will remain at £380.

The statutory rates for SMP, SAP and SPP along with Statutory Sick Pay will be reviewed in April.

Childcare vouchers U-turn
Continuing the good news trend previous plans to scrap tax relief on childcare vouchers have now been minimised.

Tax relief was to have been abolished but will instead be restricted to the standard income tax rate of 20% - higher rate taxpayers will therefore be penalised but basic rate tax payers will retain the benefits of tax relief. This gives a saving of around £900 a year, or £1,800 if both parents claim.

Parents with childcare vouchers will not be affected as the change will only apply to new entrants to the scheme from 2011.

Contributions to state pension
The final piece of good news is that the number of years' contribution required to achieve a full basic state pension reduces to 30 years for both men and women.

Pension Reforms
Proposed pension reforms for 2012 will require  employers to offer a private sector pension scheme, known as a Personal Account, to all eligible employees not covered by in-house alternatives. Employees will be automatically enrolled on the pension schemes and though they can opt out, if they do they have to go through the same process in three years’ time. Contributions to the Personal Accounts will be staged so that eventually employees will provide four per cent of their income, employers will provide three per cent and the government will contribute one per cent. For small businesses the reform will be gradually introduced, and they will not have to be fully compliant until 2015 or 2016.

Foreign Workers
The requirements for Tier 2 jobs has been changed , jobs must be advertised for at least four weeks before they can be offered to non EEA workers rather than the current two weeks (one week where the job is salaried at £40,000 or above). The four weeks do not have to be continuous. Also the government has accepted all of the revisions to the shortage occupation list suggested by the Migration Advisory Committee. The new list is at www.ukba.homeoffice.gov.uk and will apply to all certificates of sponsorship assigned on or after 14 December 2009. From 24 th November ID cards issued under the Identity Cards Act 2006 have been added to list of documents that an employer can check to verify the right to work in the UK.

Disability Discrimination
Following an earlier case coming to the Employment Appeals Tribunal it has now been decided that the Disability Discrimination Act can be interpreted to cover ‘associative discrimination’ - ie discrimination or harassment of an employee on the grounds of the disability of another person. This brings it into line with other discrimination such as race, religion or belief and sexual orientation where associative discrimination is already recognised. Employers should ensure that they do not discriminate against employees with caring responsibilities for disabled persons. Requests for flexible working should be looked at very carefully in these instances. A carer would not however qualify for the requirement of an employer to make "reasonable adjustments" in the workplace.

Self employed v employee
A recent case has again highlighted the situation of the ‘sham’ contract and tribunals have been advised to consider the actual obligations rather than the words in the contract. In Autoclenz v Belcher, contracts were in place between Autoclenz and valeters which included the right to send a substitute to carry out their work and indicating that there was no mutual obligation i.e. Autoclenz did not have to provide work to them and they did not have to do any work that was offered. This would normally be a good ‘proof’ of self-employment. In reality though the valeters could not actually send a substitute and they were expected to do the work that was offered to them. They were seen to be integrated into the company, and a degree of control was exercised where they were required to notify the company if they were not going to turn up for work. The EAT deemed this to be 'wholly inconsistent' with their express written term that there was no obligation for them to perform any work, and that the written terms did not reflect the true agreement between the parties. The Court of Appeal agreed and decided that in reality they were in fact employees. Where you have work carried out by self employed individuals you should check that the terms of the contract are actually reflected in the working practices.

Agency Workers Directive Delay
The government has delayed the introduction of the Agency Workers Directive. The AWD gives temporary staff the same employment rights including pay as permanent staff after 12 weeks’ work, The directive is delayed until October 2011 as part of efforts to cut the cost of business regulation.

Maternity Pay Changes Delay
The government has also postponed proposals relating to the extension of maternity pay from 39 weeks to 52 weeks having taken the current economic climate into consideration. However consultation continues on proposed regulations, which would extend the rights of fathers to take up to 6 month’s paternity leave. Under these regulations mothers could transfer up to 26 weeks of their 52 week maternity leave to the father. Additionally if the mother had not used all of her 39 weeks statutory maternity pay period, then the father could receive the remaining Statutory Maternity Pay (currently £123.06 per week). This would have a big impact on employers when both parents can take long periods of time off work, not to mention the complications of communication between employers. The new proposals will only affect parents of children born on or after 3 April 2011. We will keep you updated.

Sickness absences and holidays
Two recent European Court of Justice (ECJ) cases have now resulted in rulings that mean that in some circumstances holiday entitlement should be allowed to be taken in the next annual leave year despite the UK Working Time Regulations which state that it is unlawful to carry over more than eight days per year.

Last week, in the case Pereda v Madrid Movilidad SA , the ECJ ruled that workers who fall sick while on holiday should be allowed to take their leave, even it if meant carrying it over to the next leave year. This is in addition to a ruling earlier this year as discussed on this website (see Previous Updates), Stringer v HMRC , which ruled workers can accrue holiday pay while on sick leave, and that holiday should be allowed to be carried forward.

The WTR requirement that no more than eight days can be carried forward into the next leave year, means there is a confusion in the law until UK case law clarifies the situation. Employers have to decide if they take the risk of a tribunal taking their guidance from European law or removing current terms and conditions which do not allow holiday to be carried over or which require sickness days during a holiday period to be treated as holiday. Obviously complying with the latest rulings will mean businesses are at risk from a minority of employees who claim illness during a holiday period and then take that holiday period at a later point. The best advice is to strictly enforce a requirement to have a sick certificate from a GP if employees claim they have fallen sick whilst on holiday, even if the illness is only for a few days and generally reinforcing procedures dealing with sickness absence .

Lawful Retirement Age
In another long awaited ruling the High Court handed down its decision last week in the Heyday appeal, ruling that it is lawful for employers to force employees to retire at age 65. Following the Heyday challenge supported by Age Concern the European Court of Justice referred the case back to the High Court and they have now ruled that the law does allow UK employers to force workers to retire at the current default retirement age of 65 and an employer can lawfully retire an employee at the age of 65. Employers should always bear in mind however that retirement is seen as a dismissal in law and statutory procedures for retirement must be followed for the dismissal to be fair.

As reported last month the government has already announced that it was bringing forward a review of the compulsory retirement age by a year to 2010 which may eventually lead to a change in the rules.

National Minimum Wage and Apprentice rates
The National Minimum Wage increases next month. With effect from 1 October 2009 the rates are as follows:

• adult rate (for those aged 22 and over) £5.80 per hour
• youth rate (18-21 £4.83 per hour
• those aged 16 and 17 years £3.57 per hour.

There has also been an increase in the minimum pay rate for apprentices. The minimum pay rate for apprentices is now £95.

Retirement age
Currently employers may require staff to retire at 65. Over one million people choose to work beyond the state pension age, and many more say they would do so if their employer permitted it.

The Government has now announced that, in response to "changing demographic and economic conditions", it will be carrying out its planned review of the default retirement age a year early, in 2010 rather than 2011 as originally promised. Whilst we cannot forecast what the outcome of the review will be it would seem there is a possibility that employees state pension age will be raised.

Dismissal
It is worth noting that there has been a change in the definition of an effective date of termination. This may not seem to be very important but it is the date used to check if someone has the right to bring a claim for unfair dismissal. It can therefore mean the difference between a case being heard or not. In a recent case Gisda Cyf v Barratt the court of appeal has confirmed that the EDT is the date that the dismissal is communicated, ie when it is received by the employee.

If you are not dismissing someone in person and actually handing them the letter of dismissal, you should always check you have a correct, up to date address and send any letter by recorded delivery to be sure they receive and have signed for the letter.

Right to Train
A bill is currently being debated in Parliament for a proposed statutory right for employees to request time off to undertake training and, if approved, regulations are likely to come into force next year.  

This affects employees who have at least 26 continuous weeks service and where they can show the training will improve the employee’s effectiveness in the employer’s business, as well as improving the performance of the employer’s business. Only one application can be made in 12 months (although one application can cover a number of training courses). It is not however a right to train; it is simply a ‘right to request’ time and there are a number of circumstances in which employers can refuse a request to train.

Given the costs of training, the administrative burden and the problems of employees being away from the job for periods of time there are proposals for firms with fewer than 50 employees to receive wage subsidies through the government’s ‘train to gain’ scheme. It is expected that the scheme will come into force next year.

Working with vulnerable groups
Employers with staff who are going to regularly work with children or vulnerable adults should prepare now for new safety checks to be introduced in October, the government has warned. Employers can only employ those who are registered with the new Independent Safeguarding Authority (ISA) - which will have the power to bar individuals from those occupations.

New checks under the vetting and barring scheme (VBS) will not only cover employees and volunteers in sectors that already have similar schemes, including education, care and health, but as “regular” contact with vulnerable groups is defined as once a month or more, other positions may well be affected for the first time. The Home Office has not yet confirmed a comprehensive list, insisting it depends on the “individual details of each role”.

Potential employees will have to pay £64 to register with the ISA from the autumn. Volunteers will also need to be vetted, although they can register for free.

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