Ashfords Solicitors - Employment Law Update

Work and Families Bill passed by The House of Lords

On 8th May, the House of Lords passed the Work and Families Bill which will impact on a number of areas including statutory maternity pay, adoption pay, maternity allowance and flexible working.

The government will have the power, under the Bill, to issue regulations extending statutory maternity pay, adoption pay and maternity allowance from 26 weeks as it currently stands to a maximum of 52 weeks.

Changes will be made to an employee's obligation to notify her employer of her intention to take maternity leave or her obligation to inform her employer of the date she plans to return from maternity leave. A date will be specified which, when it passes, will allow the employer to contact women on maternity leave to ask if they intend to return to work. It will also enable employers to make reasonable contact with those on maternity leave. Guidance on what is reasonable and on how to keep in touch whilst a woman is on maternity leave will be provided.

The right to request flexible working, which is currently only available to those with children under six years of age, or under eighteen years of age where the child is disabled, will be widened.

The government will be empowered, under the Bill, to issue regulations which will introduce a right to additional paternity leave of up to three months. This will eventually be increased to up to six months.

The government will be able to issue regulations which will increase the right to paid annual leave under the Working Time Regulations 1998 to meet the government's manifesto commitment to provide paid bank holidays.

The government will also have the power to increase the maximum amount of a week's pay for the calculation of redundancy, unfair dismissal and insolvency related compensation payments.

The Bill will now be passed back to the House of Commons to approve an amendment of a slight drafting error before receiving Royal Assent.

Injury to feelings award-payable by employees?

The EAT has ruled that tribunals can make a joint and several award of compensation for discrimination where the case involves more than one respondent. Awards can therefore be made against the employer and a third party (e.g. an employee) who aided the discrimination. Tribunals must consider the extent to which each respondent is responsible for the loss suffered by the claimant and must not decide this on the basis of the financial circumstances of the respondents.

In Miles v Gilbank [2006] the EAT upheld a tribunal's decision that the maximum award for injury to feelings (£25,000) be awarded to a pregnant employee who was subject to a campaign of bullying and discrimination by her manager. The employer and the manager were also held to be jointly and severally liable for the entire award, including the employee's lost maternity pay.

Facts

In this case, Miss Gilbank was a senior hair designer and trainee manager. Ms Miles ran the business and was the majority shareholder. Each had a good working relationship with the other.

After Miss Gilbank announced her pregnancy, Ms Miles became unsympathetic. No risk assessment was made and Miss Gilbank's condition was not accommodated for. Ms Gilbank was, among other things, required to use bleach which caused her concern as to the safety of her unborn child. She also heard laughter when she entered the office to complain of her treatment, which she believed to be at her expense. Further, she did not receive any maternity pay.

Ms Gilbank brought a claim for direct sex discrimination. The tribunal found in Ms Gilbank's favour and awarded her damages for personal injury, lost maternity pay and the maximum award for injury to feelings. The compensatory award was made jointly and severally between the hairdressing salon and Ms Miles.

EAT's decision

On appeal by Ms Miles, who cited the case of Way and another v Crouch which gives authority for the fact that tribunals can make joint and several awards is discrimination cases, the EAT upheld the tribunal's decision.

The EAT gave guidance to tribunals on dealing with such a case. This is as follows:

Liability can be apportioned between employers and individual employers which works well in practice and can do justice to individual cases;
However, it will not be necessary in most cases of make a joint and several compensatory award;
If a tribunal does order a joint and several award, they should make their reasons for doing so clear;
Tribunals should consider s2 (1) of the Civil Liability (Contributions) Act 1978 (CLCA);
Under the CLCA a tribunal is not allowed to have regard to the relevant financial resources of the respondents when considering whether to make a joint and several award.

It should be noted that in this case and in Way v Crouch the second respondent was the majority shareholder and controlling mind of the business.

Further information

A new Pensions System

A white paper has been published by the Department for Work and Pensions on pension reforms. The white paper includes plans to reform the state pension system, encourage workers to save more and increase the state pension age to 67 by 2044.

In 2002 the government established the Pensions Commission to review and propose reforms for pensions. It published its final report in November 2005, which the government responded to by announcing the white paper. The consultation on the white paper will finish on 11 September 2006.

Proposed reforms

The state pension system will be reformed to include an increase in the state pension age to 67 by 2044. The contribution conditions which relate to basic state pension will be reviewed to make it easier to build up entitlement. The state second pension will be made a flat-rate weekly top-up to the basic state pension by 2030 or thereabouts, and state pension increases will be in line with wage inflation from 2012 as opposed to price inflation.
Low-cost personal pension accounts are proposed to be introduced to workers who do not have access to occupational pension schemes. Employees between the lower and upper earnings limit will pay approximately 4% of earnings and employers will pay a minimum contribution of 3% of the same band earnings. Contributions will benefit from tax relief. Automatic enrolment into this new system or the employer's occupational scheme is proposed for employees but employees will have the option to opt-out of this system. Self-employed workers and carers will have the option to opt-into the system. Employers will also be compelled to make contributions which will be phased in over 3 years at 1% per year. Further consultation is required for small employers.
The contracting out for money purchase schemes is proposed to be abolished in 2012 when state pension increases are linked to earning. The existing regulatory regime will be reviewed and the government proposes introducing a "Pensions Law Rewrite Project".

Further information

For more information on the government's proposals, see the white paper "Security in retirement: towards a new pensions system" at: -

Ashfords is regulated by the Solicitors Regulation Authority. The information in this article is intended to be general information about English law only and not comprehensive. It is not to be relied on as legal advice nor as an alternative to taking professional advice relating to specific circumstances.

1st June 2006

Key Contacts

Employment Law Update - June 2006