Ashfords Solicitors - Employment Update

Increases to Statutory Maternity Pay (SMP) and Statutory Sick Pay (SMP)

From 6th April 2008 the SMP rate will increase from £112.75 per week to £117.18, and SSP increases from £72.55 per week to £75.40 per week.

Agency Workers

In the case of James v London Borough of Greenwich this month the Court of Appeal has ruled that it is for employment tribunals to decide upon the facts of each case whether or not an agency worker has become an ''employee'' of the end user, and therefore if they are entitled to the legal protection which flows from acquiring this status.

Facts

Miss James ("the Claimant") had a temporary worker agreement with a well known employment agency which found her work with the London Borough of Greenwich ("the Respondent") where she worked as a Housing Support Officer for several years. The Claimant was absent from work due to illness and when she returned to work she found that her role had been filled by another worker from the same agency. The Claimant brought a claim for unfair dismissal against the Respondent, a claim which can only be brought by "employees" as defined in The Employment Rights Act 1996.

Both the employment tribunal and the employment appeals tribunal held that there was no contract of employment between the Claimant and the Respondent, and ruled that the passage of time was not sufficient to create one. The decision was appealed.

Decision

The judgment was upheld by the Court of Appeal. Lord Justice Mummery stated in his decision that there was no implied contract between the Claimant and the Respondent. The Court of Appeal confirmed that tribunals must decide upon the facts of each case whether or not someone has attained ''employee'' status.

Those hoping for clear guidance on the issue of when an agency worker becomes an employee of the end user will be disappointed. Justice Mummery made it clear that this was a question for Parliament, not an issue of law:

''The courts and tribunals are also well aware of the nature of the arguments for and against a change in the law, but it is not for them to express views about a change or to initiate change. This is a matter of controversial social and economic policy for debate in and decision by Parliament informed by discussions between the interested parties- the Department for Business and Enterprise, the TUC, the CBI and other employers' organisations and the European institutions and governments of member states."

The decision also limits the scope for appeals to be made. Tribunals must decide the question of employment as a matter of fact and provided they have taken the right approach, there will rarely be scope for appeal.

Temporary and Agency Workers (Equal Treatment) Bill

The issue of rights of Agency workers has been very topical this month. MP Andrew Miller's private member's bill the Temporary and Agency Workers (Equal Treatment) Bill ("the Bill") received its second reading on the 22 February 2008.

The Bill, which was backed by an overwhelming 147 MP's calls for agency and temporary members of staff to have the same salary, sick pay, holiday and overtime rights as full-timers.

Unions say the UK's estimated 1.4 million agency workers deserve the same benefits as full-time employees and want the government to throw their weight behind the Bill.

John Cridland, deputy secretary of the CBI warned that the flexibility of agency workers is one of the UK labour market's strengths and warned that an estimated 250,000 jobs could be lost if the Bill becomes law.

Gordon Brown is suggesting that the issue be considered further by a specially convened commission.

Watch this space for further developments...

Expired Disciplinary Warnings

In the recent case of Airbus v Webb the Court of Appeal has held that in certain circumstances employers are entitled to take expired disciplinary warnings into account when deciding whether to dismiss an employee. However, this will only apply where the employer already has grounds for dismissal and they are considering whether or not to dismiss. Where the circumstances of the case would not justify dismissal, an expired warning cannot be used to tip the balance.

Facts

Mr Webb (''the Claimant'') commenced employment with Airbus (''the Respondent'') in 1990. In July 2004 the Claimant was accused of misuse of Airbus' premises and equipment and fraudulent misuse of company time. This behaviour constituted gross misconduct under the Respondent's disciplinary policy and the Claimant was summarily dismissed. The Claimant appealed against his dismissal, and he was reinstated. As an alternative to dismissal he was subject to a reduced penalty of a final written warning which would last for 12 months.

On 20 September 2005, The Claimant and four other staff members were caught watching TV in a locker room during contractual working hours. The allegation against the Claimant amounted to misuse of company time which was gross misconduct under the Respondent's disciplinary procedures.

Following an interview, investigation, and a disciplinary meeting, the Claimant was summarily dismissed for gross misconduct. The four other staff members received final written warnings as they had clean disciplinary records.

The question surrounding this case was whether or not Airbus were entitled to rely on the expired warning when dismissing the Claimant.

Decision

The Court of Appeal overturned the decisions made by the employment tribunal and the employment appeals tribunal holding that the dismissal was fair. In this case the Claimant's conduct amounted to gross misconduct and in the absence of mitigating factors it was within the range of reasonable responses for the Respondent to dismiss. The disciplinary record of the Claimant (and the other four employees) was only considered by the Respondent in relation to mitigation. In these circumstances, it was reasonable for the Respondent to take the Claimant's expired disciplinary warning into account.

As a word of warning, employers should tread with caution if they intend to rely on expired warnings, as Lord Justice Richards stated in the judgment, reliance on expired warnings should be ''the exception rather than the rule''.

TUPE - Reason For Dismissal "Transfer or Reasons Connected With It"

In the recent case of CAB Automotive Ltd v Blake and others, the EAT has held that where an administrator had effected redundancies as a means of "slimming down" a business in preparation for sale, a tribunal would be entitled to conclude that the reason or principal reason for the dismissal was "the transfer or reasons connected with it". This rule applies regardless of whether or not a potential buyer has been identified.

In CAB Automotive Ltd v Blake the tribunal questioned the approach to be taken in respect of regulation 8 of the Transfer of Undertakings Regulations 1981 ("TUPE"), where a transferee is neither on the scene nor identified at the date of dismissal of the employee.

Mr Blake (''the Claimant'') was employed by RDS Automotive Interiors ("RDS") Ltd. RDS manufactured interiors for motor vehicles; half of its business was with MG Rover. MG Rover went into administration on the 8 April 2005 and RDS also went into administration on 4 May 2005.

The Claimant was dismissed by the administrator on grounds of redundancy. The assets of RDS were transferred to Inglethorpe Ltd which later became "CAB Automotive Ltd" (''the Respondent'').

At first instance the employment tribunal held that the Claimant had been dismissed by reason of the transfer of the RDS to Inglethorpe which later became the Respondent. The EAT endorsed the approach of the tribunal and held that, where an administrator was "slimming down" a business with a view to sale, a tribunal could conclude that the reason or principal reason for the dismissal was "the transfer or a reason connected with it", even though a potential buyer was not yet on the scene.

Flexible Working To Be Extended?

Amidst proposals to extend the right to request flexible working to parents with children over the age of 6, John Hutton the Business Secretary, has this month warned that this may lead firms to turn down all requests from workers.

Last year Imelda Walsh, the Human Resources Director at J Sainsburys, was appointed by the Prime Minister to examine whether the right to request flexible working should be extended to those with children over the age of 6. Ahead of the publication of her findings Hutton warned that "we want to avoid a situation where employers are so overwhelmed with requests from newly eligible groups that they feel they have to say no to everyone".

Statistics published in the Financial Times newspaper on 19 February 2008 indicate that approximately 6 million employees currently enjoy the right to request part time and flexible working. If eligibility was extended from its current position (parents with children aged 6 and under) to parents with children aged 12 and under, the total of those entitled to this benefit would rise to 8.6 million. If the age was further increased to children aged 17 and under, this figure would increase to 10.5 million.

It will be interesting to see the conclusions of Imelda Walsh's report when it is published. Inevitably the report will have a large influence on the Government's decision on whether or not to extend this right.

Watch this space for further information...

Changes To Laws Concerning Immigrant Workers To Take Effect 29 February 2008

As part of the crackdown on illegal workers, radical changes will be implemented at the end of February 2008 with the introduction of ''civil penalties'', in addition the government are introducing a new "points system" for immigration which is scheduled to take effect later on this year.

The Government is introducing new measures to prevent and deter illegal working in the form of "civil penalties". Employers who negligently hire illegal workers could face a penalty of up to £10,000 for each illegal worker employed by their business. If an employer has knowingly hired an illegal worker they risk facing an unlimited fine or being sent to prison!

Home Secretary Jacqui Smith stated "the new civil penalties are a more effective way of dealing with employers who use slipshod or exploitive recruitment methods, together with the introduction of compulsory identity cards for foreign nationals next year, there can be no excuse for checking the identity of those applying for jobs."

In addition to civil penalties, a new points based system will also be introduced. The new migration system will comprise of 5 tiers as follows:

Tier 1: Highly skilled individuals to contribute to growth and productivity.

Tier 2: Skilled workers with a job offer to fill gaps in the United Kingdom labour force.

Tier 3: Limited numbers of low skilled workers needed to feel temporary labour shortages.

Tier 4: Students.

Tier 5: Youth mobility and temporary workers: people allowed to work in the UK for a limited period of time to satisfy primary, non-economic objectives.

Each tier will have different conditions, entitlements and entry clearance checks. Applicants will need to show that they have sufficient points in order to gain entry clearance or leave to remain in the UK for each tier. Points will be awarded according to objective criteria, for example age, qualifications and salary.

Under the new point based systems, employers who wish to sponsor migrants for visa applications will require a licence. In order to be granted a licence they must agree to fulfil certain obligations. An example of such duties will include:

Providing a certificate to certify that the migrant is employed by them to complete a particular job.

Informing Immigration if they do not turn up for their first day of work.

Informing Immigration if their contract of employment is terminated, or if they are leaving their employment.

This new points system will be implemented progressively during 2008 and 2009. It is anticipated that the first tier will be introduced in March this year.

The points system aims to fill gaps in the employment market by attracting the right people into the market and if their skills are required, retaining them for longer. The new system also aims to make the application process quicker and easier to understand. Hopefully this will lead to a more efficient process for both employees and employers.

Increased Redundancies Indicates Economic Slowdown

A survey conducted by CIPD/KPMG labour market outlook (LMO) survey, published this month indicates a rise in the number of employees who anticipate that they will need to make redundancies in the next few months. Andrew Smith, Chief Economist at KPMG commented, "the survey reflects the general uncertainty about the economic outlook".

The survey by CIPD and KPMG interviewed 1,553 employers. Of those interviewed 38% of employers intended to make at least some redundancies this quarter. This statistic represents a dramatic increase from the statistics taken from last year's survey where 17% indicated that they intended to make redundancies. Indeed, this figure is the highest figure reached since they began their survey in 2004. Of those who intend to make redundancies this quarter, 25% advise that 10 or more employees will lose their jobs, 37% expect to make less than 10 redundancies, and the remaining percentage were unsure of how many redundancies they would make.

Geographically the worst areas affected are the East Midlands (47% of those interviewed intended to make redundancies), West Midlands (45% of those interviewed intended to make redundancies) and the South West of England (45% of those interviewed intended to make redundancies).

CIPD's Chief Economist, John Philpott commented, "employers initial reaction to talk of an economic slow down was to hold fire and take stock of the emerging situation but a substantial number now expect to trim their workforces in the private sector because ...of tougher trading conditions and higher costs".

Employment Update - February / March 2008