Employment Law Update Issue 151 - July 2013

Robert Gibson Robert heads the Employment Law Department and is a member of the Employment Lawyers Association and an ACAS appointed Arbitrator. Robert

was educated at Newcastle Royal Grammar School and studied law at Newcastle University. He qualified as a solicitor in 1984 and is also the firm's managing partner. He also sits as a deputy district judge. He enjoys playing golf, walking and is a youth rugby coach. Sally Lomas Fletcher is a partner specialising in Employment Law who regularly carries out detailed audits for clients to ensure compliance with employment legislation and prepare employment contracts, disciplinary and grievance procedures and all other policies needed in the ever-changing landscape of employment law. Shirley Scott qualified as a Solicitor in 2001. Before joining the employment team at Samuel Phillips, she practised in the field of professional regulation, acting for one of the healthcare regulators, handling a broad range of conduct and capability cases. In her spare time Shirley is often seen enjoying the open roads with her husband in their classic 1970 Lotus Elan.

Welcome to the latest issue of our free employment law update. If you have a query, concern or comment we’d be delighted to hear from you. Call us on 0191 2328451 or text “law” to 82010. Of course there’s always e-mail

robertgibson@samuelphillips.co.uk. Robert

UPDATE ON SEX DISCRIMINATION We provide a brief overview of the sex discrimination provisions of the Equality Act 2010.

PENSION CONTRIBUTIONS Although the Employment Rights Act states that the definition of wages does not include pension payments, the Employment Appeal Tribunal has clarified that pension contributions made by employers are also excluded.

REDUNDANCY APPRAISAL We look at a case in which the appeal tribunal held that employers should not use a redundancy selection exercise that was based entirely on assessments and which did not have the benefit of input from managers who knew the staff in question.

IN BRIEF The government has announced the implementation dates for various new employment law provisions.

Employment Protection Scheme

The scheme is designed to act as an additional HR resource to cover the minefield of compliance and legislative issues that face many businesses. The firm can offer clients peace of mind through the provision of an insured arrangement for employment disputes. In addition Samuel Phillips offer an audit facility, Help Line and this regular e-mail update to keep clients informed.

If you would like further information or you wish to nominate colleagues, friends and or associates to receive their own free subscription please forward details to Sally Lomas Fletcher

Employment Law Update Issue 151 - July 2013

Barry Speker OBE DL is an Employment Judge of the Employment Tribunal for Newcastle, Middlesbrough and Carlisle and this puts him in an excellent position to advise with regard to potential employment disputes.

James English joined Samuel Phillips from EEF - The Manufacturers' Organisation in Gateshead. He joined EEF in 2006 as its Senior Legal Advisor, representing the organisation's members in employment tribunals. With EEF, he has worked with companies of every size, including multi-nationals. James qualified as a solicitor in 2003, attaining Solicitors' Higher Rights of Audience accreditation in 2004. The firm has wide experience in dealing with:

• Unfair dismissal • Redundancy • Equal Pay • Wages Act • Discrimination • Breach of Contract

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Employment Law Update Issue 151 - July 2013

UPDATE ON SEX DISCRIMINATION

The Equality Act 2010 (which applies in England, Scotland and Wales) outlaws discrimination against workers in relation to the “protected characteristic” of sex in employment (among other things).

What does the Act cover?

The Act covers all forms of discrimination in the workplace and applies to apprentices, those working under a contract of employment and the self employed working under a contract personally to do the work. Ex-employees can also make a claim against a former employer, if they are complaining about something that was closely connected to their employment. The employer is generally liable for acts of discrimination, harassment and victimisation in the workplace but individual employees may also be found liable.

What does the Act outlaw?

The Act outlaws direct sex discrimination which occurs when an employer treats one person less favourably than another, because of their sex. It covers anyone discriminated against because they are perceived to be of a particular sex or because they are associated with someone of a particular sex. It also outlaws indirect discrimination which arises when an employer applies a provision, criterion or practice which puts people of one gender at a particular disadvantage compared to those of another and which the employer cannot justify.

Harassment

There are three types of unlawful harassment under the Act:

• when an individual is subjected to unwanted conduct related to sex that has the purpose or effect of violating their dignity or creating an intimidating, hostile, degrading, humiliating or offensive environment. When deciding whether the conduct has had that effect, courts must consider the perception of the individual and whether it was reasonable to conclude it could have had that effect

• when someone engages in unwanted verbal, non verbal or physical conduct of a sexual nature that has the purpose or effect of violating their dignity or creating an intimidating, hostile, degrading, humiliating or offensive environment

• when someone treats another person less favourably because they rejected the unwanted conduct.

Employers may also be found liable for harassment by third parties such as clients or customers, provided the employer knows the worker has been subject to harassment on two previous occasions and has not taken any reasonably practicable steps to prevent the harassment. This provision is being repealed with effect from 1 October 2013.

Victimisation

The Act says it is unlawful for an employer to victimise an individual because, in good faith, they:

Employment Law Update Issue 151 - July 2013

• brought proceedings under the Act or previous discrimination legislation • gave evidence or provided information in connection with proceedings that

someone else brought

The law is not clear on whether workers can bring claims for victimisation post termination of employment. This confusion has not been helped by two recent - and conflicting - appeal tribunal decisions.

Are there any exceptions?

There are two exceptions under the Act:

• Occupational requirement - the Act does not apply when the employer can show that they need to recruit someone of a certain sex, if it is a proportionate means of achieving a legitimate aim

• Religious requirement - discrimination because of sex is also lawful in relation to employment for the purposes of an organised religion. Employers have to show that it is required to comply with the doctrines of the religion; or to avoid conflict with the strongly held convictions of the religion’s followers.

What is the public sector equality duty?

Public bodies such as the NHS and those carrying out public functions are under a duty to consider equality when making day to day decisions both in terms of service delivery and employment. This consists of a general duty and specific duties.

What is positive action?

The Act allows employers to treat someone with a protected characteristic more favourably during the process of recruitment and promotion if they are “as qualified” as the other candidate, and they don’t have a policy of treating people of the underrepresented group more favourably.

Discrimination because of marriage and gender reassignment

Anyone who is married is protected. Marriage covers any formal union of a man and a woman legally recognised in the UK as a marriage.

It is also unlawful for employers to discriminate against someone because of the protected characteristic of gender reassignment, including anyone who proposes to undergo, is undergoing or has undergone a process to reassign their sex.

Questionnaire procedure

The government has announced that, in spring 2014, it will repeal the provision in the Equality Act whereby workers can use a standard questionnaire form for obtaining information from their employer. Currently, if the employer fails to reply within eight weeks, the tribunal can use that fact to infer discrimination.

Employment Law Update Issue 151 - July 2013

PENSION CONTRIBUTIONS

Although the Employment Rights Act (ERA) states that employers cannot make unlawful deductions from workers’ wages, the definition of wages does not include pension payments. In Somerset County Council v Chambers, the Employment Appeal Tribunal (EAT) held that pension contributions made by employers are also excluded.

What happened?

Mr Chambers worked as a full time social worker for the Council at the top of his pay scale (grade 9 on point 41), until his retirement in 2003. He was also a member of the superannuation scheme to which both he and the Council contributed.

He subsequently joined the Emergency Duty Team as a locum social worker, doing the equivalent of about one third of a full-time post. He was paid on a daily basis at point 37 on the pay scale for the period between 2003 to 2012.

Initially he was allowed to continue his membership of the pension scheme but following a change to the rules in 2008 which required members to be on contracts lasting at least three months, the Council stopped making contributions as it considered him to be a casual worker. After an appeal, he was reinstated into the scheme but then told again he was ineligible and his contributions refunded.

He claimed that as he had continuous service with the Council, he should have been paid at the same rate as a full-time social worker. The Council had therefore made unauthorised deductions from his wages in relation to his ordinary pay, holiday pay and superannuation payments.

The tribunal found that as Mr Chambers had been continuously employed as a locum by the Council, he was entitled to be paid at the same rate as a full-time social worker employee. It followed that his holiday pay should also have been paid at the higher rate and that he was entitled to be a member of the superannuation scheme.

The EAT, however, allowed the Council’s appeal. It said that Mr Chambers was only entitled to be paid according to the rate of pay set out in the Council’s letter to him, dated 31 July 2003. This meant that his claim for the higher rate of pay (at point 41) in relation to ordinary and holiday pay, could not succeed.

As for the Council’s failure to make pension contributions to the superannuation fund on his behalf, the EAT said that these were not unauthorised deductions. Although European law considered entitlement to a pension to be “deferred pay”, that did not mean that an employer’s contributions to a pension fund on behalf of an employee amounted to “wages”.

The Act just stated that wages included any sums payable to the worker in connection with their employment, not contributions paid to a pension provider on their behalf.

Employment Law Update Issue 151 - July 2013

REDUNDANCY APPRAISAL

When carrying out a redundancy exercise, employers have to adopt fair selection criteria and apply them fairly. In Mental Health Care (UK) Ltd v Biluan and Makati, the Employment Appeal Tribunal (EAT) held that it was not fair to use a redundancy selection exercise that was based entirely on assessments and which did not have the benefit of input from managers who knew the staff in question.

What happened?

Following its decision to close a ward in a small residential hospital, the company announced in late 2010 that it intended to make 19 staff redundant. It selected the entire nursing and support staff (58 in all) who worked at the hospital as the pool from which to make the redundancies.

Staff were selected on the basis of a competency assessment (maximum 60 points); disciplinary record (maximum 20 points); and sickness absence record (maximum 20 points). Employees were selected for redundancy strictly according to their scores and for most, the competency assessment was decisive.

As none of the team conducting the assessments knew the individuals who were being assessed and did not rely on past performance appraisals, some of the selection decisions turned out to be “unexpected”, with some “good employees” chosen for redundancy, according to the acting hospital manager. However, as the process was felt to have been “robust” and “transparent”, none of the decisions were overturned.

Ms Biluan (a support worker) and Mr Makati (a nurse) were among those chosen for redundancy and who brought claims of unfair dismissal. The tribunal held that the selection criteria used by the company were not fair as they were normally used for recruitment purposes and that the consultation was inadequate. Because the company failed to consider length of service, appraisal records and the opinion of managers who had known the employees concerned, it concluded that the system was grossly unfair.

The EAT said that although the tribunal could have been more explicit about how it came to its decision, it had not misdirected itself. It was unusual for an employer to carry out a redundancy exercise based entirely on assessments and “in those circumstances, whether or not a finding that the use of the criteria was unfair was inevitable, it cannot be said to be inexplicable”.

Acknowledging that the company had taken a lot of trouble over the redundancy selection exercise and put a lot of resources into it, it had nevertheless chosen an elaborate and HR-driven method which meant it did not have the benefit of input from managers who actually knew the staff in question. Despite the fact that it produced results that the company found “very surprising”, it stayed with the process because it was thought to be so “robust”.

The EAT concluded that the company had lost touch with common sense and fairness and although it was commendable to try to avoid “subjectivity and bias”, that determination could also be misplaced.

Employment Law Update Issue 151 - July 2013

IN BRIEF

Now that the Enterprise and Regulatory Reform Act 2013 has come into force, the government has announced the implementation dates for various new employment law provisions.

25 April 2013 The government implemented the power to introduce regulations for tribunals to order equal pay audits following a successful equal pay claim. These will come into force some time next year and will only apply if the discrimination is likely to be ongoing and the firm has not done an audit in the last three years. Micro-businesses (those with fewer than 10 employees) will be exempt, at least initially.

25 June 2013 A number of changes have been made to the current whistleblowing provisions. Claims are now restricted to qualifying disclosures which “in the reasonable belief of the worker making the disclosure” were made “in the public interest”. As a result, disclosures which might be characterised as being of a personal nature (for example terms of an employee’s contract) are no longer protected.

The disclosure no longer has to be made “in good faith” but tribunals will have the power to reduce a compensatory award by up to 25 per cent if it was not. In addition, there is no longer a qualifying period for unfair dismissal claims in situations where the dismissal relates to the employee’s political opinions or affiliations and the effective date of termination is after 25 June 2013.

The Secretary of State now has the power to introduce a cap on the compensatory award of 12 months’ pay or £74,200 (the current cap), whichever is the lower.

29 July 2013 This is the date when implementation of fees in employment tribunals and Employment Appeal Tribunals requiring all claimants and EAT appellants to pay a fee or submit an application for remission of the relevant fee becomes effective.

1 October 2013 The third party harassment provisions in the Equality Act will be removed on this date.

Spring 2014 The questionnaire procedure under the Equality Act will be repealed, on a date yet to be confirmed.

To be determined Implementation dates for a number of other amendments including changes to the Equality Act have yet to be announced. Likewise, a date for the provisions enabling tribunals to order employers to pay financial penalties of between £100 and £5000 is not yet clear.

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