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• Employment Law Update - January 2006

The Employment Rights (Increase of Limits) Order 2005 has been announced and will take effect from 1 February 2006. The main increases will be:-

New rates of statutory maternity and sick pay

The earnings threshold for these payments will rise from £82 to £84 per week.

GRIEVANCE PROCEDURES: CONFIRMING WHAT CONSITUTES A GRIEVANCE LETTER

The EAT has maintained its position about statutory grievances and what constitutes a statutory grievance letter under the Employment Rights Act 2002. The EAT's most recent judgement in the case of Shergold v Fieldway Medical Centre held that a claimant who submitted a resignation letter detailing a number of complaints about her working arrangements had submitted a valid grievance for the purposes of the Act. It held that the requirements for a step one letter under the standard procedure are minimal and the employee just needs to set out their grievance in writing.

Mrs Shergold was employed by Fieldway Medical Centre (Fieldway) as an audit clerk. Mrs Shergold resigned on 31st October 2004 and in her resignation letter complained in general terms about the Practice Manager and in particular her treatment of various employees.

Fieldway responded by letter, inviting her to a meeting at which she was advised to submit a formal grievance under the grievance procedure. She did not do so and it was later agreed that her employment would terminate on 24th December 2004.

Mrs Shergold subsequently submitted a claim to the Tribunal for unfair constructive dismissal, citing occasions which were not directly or obviously referred to in her letter. Therefore, the Tribunal held that the resignation letter was not an invocation of any grievance procedure and that her claim could not proceed.

The EAT referred to their decision in Thorpe & Soleil Investments v Poat & Lake (referred to in the last monthly update), which made it clear that it is crucial to first decide whether the standard or modified grievance procedures apply.

In relation to Mrs Shergold's claim, the EAT found:-

Practically, employers must treat any letter from an employee setting out complaints as though it is a grievance, even where there is no obvious intention of resolving those issues through a grievance procedure. Prudent employers will promptly invite the employee to a meeting as failure to do so could breach the standard procedures, which would increase any likely damages if the employee brings an successful claim.

As an alternative, if the complaints are contained within a resignation letter, the employer could suggest that the parties agree in writing to use the modified procedure, which would not require the meeting. Either way, the view of the EAT is clear: grievance procedures are intended to be simple and compliance should not be approached with undue technicality.

TRANSSEXUALS: THE UK IS IN BREACH OF EU LAW

The Advocate General has given his opinion in the case of Richards v Secretary of State for Work and Pensions stating that the UK is in breach of the Equal Treatment Directive by requiring male to female transsexuals to reach 65 before they can draw their state pension. Under the Pensions Act 1995, women are currently entitled to a state pension at 60, whilst men become entitled at 65, although this will gradually change. The UK failed to recognise transsexual persons in his or her acquired gender in equal terms with persons recorded as of that gender at birth.

Ms Richards was born a man but had gender reassignment surgery in 2001. She subsequently applied for her state pension to be paid from her 60th birthday in 2002 but this was refused by the Department for Work and Pensions on the basis she was not entitled to it until she reached 65.

She appealed this decision and the matter was referred to the ECJ in September 2004 The Council Directive 79/7 provides that there will not be discrimination on the grounds of sex in the calculation of benefits under a social security, including the conditions governing duration and retention of entitlement to benefits. (Art 4(1))

Therefore, the Advocate General held it was contrary to community law for a member state to refuse to grant a retirement pension before the age of 65 to a male-to-female transsexual, where that person would have been entitled to it had she been regarded as female. Obviously, the Advocate General's opinions are not binding on the ECJ and they will give their opinion at a later date.

However, it is interesting to note that the Gender Recognition Act 2004 came into force on 4th April 2005 and provides that a male-to-female transsexual who has reached the age of 60 will be entitled to a state pension. Therefore, since April 2005, Ms Richards has been entitled to receive her state pension.

CHANGES IN EMPLOYEE SHARE SCHEMES

The Association of British Insurers (ABI) has just published its revised guidelines on executive remuneration covering, among other things, share incentive schemes. Although minimum vesting periods and dilution limits remain the same, changes have been made in a number of key areas reflecting the movement away from conventional share options.

Advisors should be aware of the changes in the guidelines which have been occurred due to the recent accounting changes.

The above guidelines should be taken seriously and the points should be considered carefully by the listed companies and their advisors. This is especially important as some institutional shareholders will sometimes withhold their support for employee share schemes that do not meet the ABI guidelines.

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.