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• Employment Law Update - March 2006

Introduction

NO CHANGE TO AGE BANDS ON REDUNDANCY PAYMENT CALCULATIONS

The upper and lower age limits and the tapering reduction at age 64 will be removed.

2 March 2006 - Government Press Release

"The Government has been considering what amendments might be needed to the statutory redundancy payments scheme to bring it into line with the EU Employment Directive, which requires Member States to outlaw discrimination on the grounds of age, among other things, in the employment field. The current scheme contains three age bands and directs greatest financial support to older workers and those with long service.

We have been discussing the way forward with key stakeholders over the last few months, including the CBI, EEF and TUC. In the course of those discussions the Government became concerned that a system using a single multiplier might not meet our overall policy aims. We have therefore carefully examined the rationale for the current scheme, and come to the conclusion that this provides the best fit with our aims.

Evidence the Government has gathered demonstrates that younger, prime age and older workers fall into three distinct economic categories, with older workers facing a particularly difficult position in the employment market. Young workers tend not to be out of work for long, and see only a small fall in pay when switching jobs. Older workers are much more likely to become long-term unemployed, and to experience a substantial fall in pay when finding a new job. Prime age workers fall into the middle. We therefore believe that it is sensible for the level of support provided through the scheme to reflect these three categories. A system using a single multiplier would leave a significant group of older workers substantially worse off than at present, and we believe this would be unacceptable. Even if a substantial amount of money were injected into the scheme so as to leave older workers no worse off, the enhanced benefits to younger workers are not justified by their position ! in the employment market.

The Directive provides for the possibility of Member States providing for different treatment on the grounds of age, where this difference of treatment is objectively and reasonably justified by a legitimate aim, including employment policy. We have looked at this question very closely and are confident that retaining the age bands is permitted by the Directive.

The Government has however decided to remove the lower and upper age limits in the redundancy scheme (at 18 and 65 respectively) and the taper at the age of 64 because it believes, as employees are living and working longer, these cannot be justified under the Directive. A small group of amendments to the scheme will be set out in the forthcoming age regulations, which will be laid before Parliament shortly."

THE EAGERLY AWAITED TUPE REGULATIONS 2006 ARE HERE

The Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) have now been made publicly available on the web and were laid before Parliament on 7th February and come into force on 6th April 2006, entirely replacing TUPE 1981. They will apply to any transfer that takes place on or after 6th April 2006.

The main changes which the new regulations will introduce are:-

STATUTORY GRIEVANCE PROCEDURES

Case law has provided us with more food for thought on this topic this month. There is further guidance on what constitutes a grievance letter under the statutory procedure and a surprising decision about an apparent failure to comply with the Statutory Grievance Procedure.

What constitutes a grievance

In Arnold Clark Automobiles v Stewart & anor the EAT confirmed that a letter before action from a solicitor, which is adversarial rather than conciliatory and which is intended to claim financial compensation rather than invoke a grievance amounts to a grievance letter under s32 of the Employment Act 2002 even though it was marked "without prejudice".

Employers must be alert to any correspondence (including e-mail) which could constitute a grievance (particularly resignation letters) If you do not call the employee to a meeting (or at the very least ask them to confirm if they are raising a grievance), then you could have failed to follow the statutory procedures which could result in an uplift to the award of 10 – 50%.

Failure to follow SGP

In the cases of BUPA Care Homes (BNH) Ltd v Cann and Spillet v Tesco Stores Ltd, the EAT has recently held that a tribunal may consider a discrimination complaint where the grievance was submitted more than four months after the act of discrimination complained of.

The legal position is that where a claimant has served their claim without having first complied with the requirement to raise a grievance, the employment tribunal must reject the claim and the claimant must then raise a grievance within one month of the expiry of the original time limit.

Under discrimination legislation, the tribunal has a discretion to extend the time limit for presenting a claim where it is "just and equitable" to do so. In Cann, the tribunal felt that this was the case and also concluded that although the claimant had not raised a grievance before submitting his ET1, he had in fact raised a grievance at the pre-hearing review. The claim was therefore allowed to proceed without the claimant having to submit a fresh claim form. The case was appealed to the EAT.

The EAT held that the "original time limit" under the Employment Act 2002 referred to the period within which a complaint under the DDA may be considered by the employment tribunal, including any exercise of its "just and equitable" discretion. Therefore, even though the grievance was submitted more than four months after the discriminatory act complained of, and one month past the three month limit, the tribunal would be permitted to exercise its discretion to allow the claim to proceed.

UNFAIR DISMISSAL: INCONSISTENT TREATMENT

The EAT has recently handed down a decision overturning a tribunal's decision that a dismissal for misconduct was unfair in the case of Enterprise Liverpool plc v Bauress and another. The tribunal found that on a previous occasion an employee in similar circumstances had not been dismissed for the same offence. However, the EAT was of the view that there were material differences between the two cases and it had been perverse for the tribunal to find that dismissal was outside the band of reasonable responses.

Two joiners were moonlighting during working hours and using their employer's van and materials, instead of undertaking work for the employer. They were consequently dismissed.

The tribunal found that previously an employee had not been dismissed for the same offence and declared the dismissals unfair, although compensation was reduced by 75% for contributory conduct.

The EAT pointed out two major differences between the previous employee and the two employees now dismissed. Firstly, the previous employee admitted his guilt and secondly, the previous employee had 30 years' service. The two employees in question lied about their conduct and were just out of their apprenticeship.

Therefore, the Eat held that it fell within the band of reasonable responses to regard these as distinguishing features and held that the tribunal's decision was perverse.

The case is a useful reminder of the principles which should be used in deciding the appropriate penalty for misconduct:-

EQUALITY ACT 2006 RECEIVES ROYAL ASSENT

Further to our report in last month's update, the House of Lords considered the amendments made by the House of Commons on the Equality Bill's 3rd reading and passed the Bill without any further amendments. Consequently, on 16th February 2006 the Bill received Royal Assent and became the Equality Act 2006.

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.