Employment Update - April 2010

News and Developments

"Volcanic" Delay - To Pay or Not to Pay?

Over the last few weeks, the news has been full of stories of people stranded abroad as a result of flights grounded by the volcanic ash cloud.  But now that flights are running, employees are returning to work and once again, employers are faced with the issue of how to deal with these unplanned and unprecedented absences.

It is unlikely that employment contracts or staff handbooks will provide for situations such as this, and it is possible that the normal policy is that where an employee does not return from leave on the agreed date, they would be subject to disciplinary action for unauthorised absence and/or not paid.

The TUC's general secretary Brendan Barber however, is urging employers to be flexible in dealing with employee absences and says "we would ask bosses to be sympathetic to the plight of their employees and be flexible in their approach to resolving the situation.  Docking wages is an extreme reaction."

In general terms, employers must pay staff wages which are 'properly payable'.  In deciding whether or not wages are "properly payable" and whether an employee must be paid, the starting point is the employee's contract of employment, and any workplace policies that are in place. 

Employees are (usually) contracted to work the hours set out in their contract of employment.  So if employees do not attend work during those hours, they will have no legal right to receive wages and as such, employers are under no obligation to pay employees absent as a result of grounded flights.

Some employers will allow their employees to take days that they are unable to get to work as holiday, waiving their usual holiday booking procedures.  This may be a workable alternative as it allows employees to be paid, but still ensures that employers are not out of pocket either.  However, this may not be possible if employees have already used their full holiday entitlement, and may generate employee resentment.  In this respect, employers may wish to consider allowing employees to use holiday entitlement from the next holiday year.

It is important for employers to consider consistency in their approach.  Whilst the volcanic ash cloud may seem like a one-off event, it falls under the heading of an 'Act of God' (an event outside of our control), much in the same way as the 'snow chaos' in earlier in the year.  As such, it may be important to consider what action you took earlier in the year in response to absences due to snow. 

If as a matter of course, employers have regularly paid their employees for days missed due to matters beyond their control, then this could imply a right to be paid through custom and practice.  For this to occur however, such payments will need to be an established course of behaviour rather than just as a one-off payment.

Some employees may have been able to undertake limited work via Blackberry's or internet café's and should, as a minimum, be paid for the work that they have done.  If there is no contractual entitlement to payment, we advise employers to consider whether to exercise their discretion to pay employees who were unable to get to work on a case by case basis.

Judicial Mediation in Employment Tribunals

On 30 March 2010 the Ministry of Justice published its report on the use of judicial mediation in discrimination claims brought in Employment Tribunals.

The judicial mediation service was piloted in Newcastle, Central London and Birmingham, in the Employment Tribunal discrimination cases between June 2006 and March 2007.

The aim of the pilot was to:
a)    Gauge the extent to which judicial mediation was able to resolve such cases without the need for a formal hearing;
b)    Consider whether this resulted in lower cost to the Employment Tribunals Service; and
c)    Consider if this had benefits for claimants and employers, in terms of outcomes and improved process.

The report concluded that there was no statistically significant effect identified for the impact of judicial mediation on the:

• rates of cases settled within the set time period;
• rate of resolution thereby avoiding a hearing; or
• overall levels of satisfaction.

Although 76% of the users of the service said they would use it again, it was estimated that the Employment Tribunals Service would incur a cost of £908 per judicial mediation case.

The report concluded that the judicial mediation service is an expensive process to administer and was not offset by the estimated benefits.  It was recommended that the service should not be implemented across the Employment Tribunals in its current form.

It has been suggested that, as employers were much more positive about the process than claimants, and considering that employers are embracing resolution within the workplace (such as workplace mediation), it may be worth considering charging employers for the use of a judicial mediation service, prior to the submission of the ET1 claim form.

National Equality Framework for Business announced

The Government Equalities Office ("GEO") has recently announced a new National Equality Framework for Business which will help businesses assess their progress on equality.

The concept of a national equality standard, which businesses could use to demonstrate their progress towards equality, has been in consideration for some time. In collaboration with the Equalities and Human Rights Commission, the Government committed itself to working with businesses and others, to explore the feasibility of developing an equality scheme framework for employers.

The feasibility study was completed in 2009 and the Government has now announced the outcome - a proposed model of the National Equality Framework for Business.

The GEO hopes that this voluntary improvement model and practical tool will assist in helping businesses understand relevant equality legislation, benchmark their own position and achieve better performance by unlocking the benefits that good equality practices can deliver.

The overarching principles for the model include:

• a focus on the voluntary take-up and encouragement of improved practices in the private sector;
• the importance of the engagement and involvement of stakeholders in both feasibility and future development; and
• the need to ensure that the final product is applicable and accessible to any sized  organisation, in any sector.

In general, the framework will:

• allow organisations to benchmark their equality performance;
• recognise continuous improvement;
• be publicly and readily available to business; and
• be usable without requiring external verification.

The framework is now entering its development stage.  It will be developed through wide consultation with partners and stakeholders and it is anticipated that it will be complete by Spring 2011.

Budget report: impact on employers

The following changes will be of note for employers:

• there is now a 50% tax rate on earnings over £150,000;
• the national minimum wage (NMW) will increase by 2.2% (from £5.80 to £5.93) in October 2010;
• tax relief on pension contributions will be restricted for those incomes of £150,000 and over from April 2011;
• employer rates of National Insurance contributions will increase from 12% to 13.8% from April 2011, affecting all those who earn £20,000 or more;
• the Government has extended the Young Person's Guarantee, to ensure that young people continue to be guaranteed a job, training or work experience if they cannot find work within six months of claiming Jobseekers' Allowance;
• the Government is consulting on whether the default retirement age (currently 65) should be increased or be scrapped altogether. A final decision is expected in the summer; and
• employers will continue to be able to provide childcare vouchers and directly contracted childcare via salary-sacrifice arrangements - even if some of their employees are not able to benefit because their pay would fall below the national minimum wage if they were to join the scheme.
  

Case Law

Religious Discrimination: Nurse loses Religious Discrimination claim

Shirley Chaplin, a nurse at the Royal Devon and Exeter Hospital, has lost her claim that she was discriminated against on grounds of her religion by being told to remove her crucifix necklace.

Nurse Shirley Chaplin claims she had worn her crucifix necklace for over 30 years without any issue from her employer.  Last summer, Mrs Chaplin was asked to remove her crucifix necklace due to health and safety concerns about patients grabbing necklaces.

Despite attempts by the Trust to reach a compromise on this issue - such as suggesting that the cross be worn inside a pocket - Mrs Chaplin refused to remove the necklace and was reassigned to a desk job.

Mrs Chaplin subsequently brought a claim against the Trust claiming that she had been discriminated against on grounds of her religion.

Decision
The Tribunal rejected Mrs Chaplin's case.  The panel chairman, Mr John Hollow, ruled the hospital trust had acted in a 'reasonable' manner in trying to reach a compromise.

The Tribunal concluded that the damage to Mrs Chaplin was 'slight' and that she should have accepted one of the hospital's compromises.  In addition Mr Hollow stated that the hospital had treated staff from ethnic minorities equally, ordering Sikhs to remove bangles and Muslim doctors to switch to tight-fitting sports hijabs.

Other key points made by the Tribunal included that the wearing of a crucifix is not mandatory for a person of Christian faith, and the fact the hospital was acting on guidance from the Department of Health and would have applied the policy to another person of a different religious persuasion.

Comment
This case follows on from the Eweida v BA case and confirms that reasonable and justifiable dress codes are enforceable.

The case also highlights the need for employers to treat matters of dress code, particularly where it may impact on religious symbols (whether mandatory or not), carefully.  Employers should consider the objectives of the dress code and ensure that it is applied consistently throughout the workplace.

Mrs Chaplin has stated that she intends to appeal this decision.

Disability Discrimination: 'Reasonable adjustments' have to be effective to be 'reasonable'

In Secretary of State for Work and Pensions (Job Centre Plus) and Others v Wilson, the Employment Appeal Tribunal (EAT) has reversed the Tribunal's decision that reasonable adjustments were not made.

Facts
Mrs Wilson was agoraphobic and required assistance from someone she trusted when being outside, meeting new people or visiting new places.  It was acknowledged by her employers that she was 'disabled' within the definition provided by the Disability Discrimination Act.  Mrs Wilson was employed providing back-office support at an office one hundred metres from her home.  This role involved some face-to-face interviews with the public and the handling of confidential information.

The office was being closed however, and the team disbanded.  Upon finding out about the reassignment, Mrs Wilson requested that she work from home.  Her employer considered her request but was unable to find any role which would accommodate her working from home.  A number of alternative suggestions were made, such as roles with additional support, accompanied transport to the new office, work at a completely different office where Mrs Wilson's husband worked, and consideration of a more senior role which would involve less face-to-face contact (none of which were available).  All alternative suggestions made by the employer were rejected by Mrs Wilson - she only wanted to work from home.

Mrs Wilson subsequently brought a claim under the Disability Discrimination Act and the Tribunal found that the employer had failed to make reasonable adjustments by not allowing her to work from home.

Decision
The EAT reversed this decision.  The EAT considered that allowing Mrs Wilson to work from home was not a reasonable adjustment as there were no home-working vacancies available or which could be created.  In addition, it was not considered that the proposed adjustment would overcome the disadvantage suffered - it would not allow Mrs Wilson to return to work.

The EAT also considered that the Tribunal should have looked at whether the suggestions made by the employer, which were rejected by Mrs Wilson, would have been reasonable. 

Comment
The Disability Discrimination Act requires employers to make reasonable adjustments to its premises or work practices in order to remove any disadvantage a disabled employee may suffer.  Employers will be pleased to hear the confirmation that an adjustment will not be 'reasonable' where it does not remove the disadvantage suffered by the individual.  In this case, for example, working from home would not allow Mrs Wilson to return to work and therefore would not remove the disadvantage.  Only once this initial hurdle has been overcome should the employer go on to consider whether the adjustment would be practicable for example, in terms of taking the required steps or incurring the associated costs.

Age Discrimination: enhanced redundancy scheme justified

In MacCulloch v Imperial Chemical Industries plc, an Employment Tribunal decided that an enhanced redundancy payment scheme based on age and length of service was objectively justified and therefore was neither directly nor indirectly discriminatory under the Employment Equality (Age) Regulations 2006.

Facts
Imperial Chemical Industries Plc ("Imperial") had a contractual enhanced redundancy payment scheme which did not mirror the statutory scheme but, instead allowed redundant employees to receive payments calculated on the basis of age (with the maximum being reached at age 50) and length of service (up to a maximum of 10 years).  A person aged 50 with ten years' service would receive 175% of their salary.

In the case of Ms MacCulloch, who was nearly 37 and who had seven and a half years' service, she was informed that she was only entitled to 55% of her salary.  As a result, Ms MacCulloch brought a claim under the Age Regulations, stating that the scheme was both directly and indirectly discriminatory.

Decision
The Tribunal focused on the issue of justification and found that Imperial's scheme was a proportionate means of achieving legitimate aims including:

• encouraging and rewarding loyalty;
• protecting older employees against employment market disadvantage; and
• encouraging voluntary redundancies.

As a result, the Tribunal considered that the scheme was not discriminatory.

Ms MacCulloch appealed on the basis that "it cannot be assumed that, because the scheme in broad terms achieves certain business objectives, this necessarily establishes the justification for those differentials". The EAT decided that although the tribunal had considered the aims were legitimate, they had not properly considered whether they were proportionate.
 
The case was remitted to the same Tribunal to reconsider whether the potentially discriminatory aspects of the scheme were proportionate.  The Tribunal restated its initial decision and concluded that the scheme was a proportionate means to achieving a legitimate aim.

In making this decision, the Tribunal gave weight to the acceptability of the scheme by the workforce and considered statistics which the Claimant sought to rely on.  These statistics were intended by the Claimant to rebut the view that older workers find it more difficult to find work than younger ones.  However, the Tribunal dismissed these and instead relied on their own experience of the difficulty older workers have in finding work. 

Comment
Employers who deviate from the statutory schemes will be relieved to hear that contractual redundancy schemes can be justified.  Employers should however, be aware that the exemption provided in the Regulations for contractual schemes relates only to schemes which replicate the multipliers and age bands used to calculate the statutory redundancy payments.

Legislation

Equality Bill given Royal Assent - Equality Act 2010

The Equality Act has two main purposes:

1. to harmonise discrimination law; and
2. to strengthen the law to support progress on equality. 

The Act re-states the existing discrimination legislation and seeks to adopt a single approach where appropriate. the Act also contains a number of important changes to the law:

Defining Discrimination 

The Act:

• harmonises the definition of indirect discrimination across all "protected characteristics" ie. age, disability, gender reassignment, marriage and civil partnership, race, religion or belief, sex and sexual orientation;
• imposes a single objective 'justification' test to replace the different tests currently used.  Employers will now have to show that its conduct is a 'proportionate means of achieving a legitimate aim' which is a much higher threshold than the present test;
• makes employers explicitly liable (in some circumstances), for harassment by third parties in the workplace; and
• makes specific provision for claims of combined discrimination, based on a combination of no more than two "protected characteristics".

Discriminating lawfully 

The Act:

• introduces an "occupational requirement" defence across all protected characteristics, and removes the job specific "genuine occupational qualifications" in sex, gender reassignment and race cases; and
• extends the concept of positive action to allow employers to recruit or promote someone from an under-represented group - but only where they have a choice between two or more equally-suitable candidates.

Disability 

The Act:

• introduces 'discrimination arising from disability' and 'indirect discrimination' to replace the old concept of 'disability-related discrimination'; and
• outlaws employers' pre-employment health enquiries unless they are made for prescribed reasons.

Equal pay and contract terms 

The Act:

• introduces explicit provisions on indirect discrimination in equal pay cases, reflecting current case law;
• limits the enforceability of contractual "pay secrecy" clauses; and
• introduces a power to require large employers to report on their gender pay gap.

Enforcement 

The Act:

• strengthens enforcement by enabling tribunals to make recommendations that benefit the wider workforce, not just the claimant, even where the recommendation is no longer relevant for the individual claimant e.g. where the individual has left the employer.

Public Sector duties 

The Act:

• places a new duty on the certain public authorities to consider "socio-economic disadvantage" when taking strategic decisions about how to exercise their functions;
• replaces the public sector race, gender and disability equality duties with a single unified duty covering all strands; and
• creates a power for the Government to issue secondary legislation to require public bodies to report significant inequalities in gender pay, ethnic minority employment and disability employment.

Most of the provisions of the Act will come into effect from October 2010.  The Public Sector equality duty however, will not come into effect until April 2011.

Additional Paternity Leave

Fathers will be entitled to up to six months' paternity leave as a result of new legislation which came into force on 6 April 2010. 

The new legislation provides that mothers of children due on or after 3 April 2011 are entitled to transfer some of their statutory maternity leave to the father - up to a maximum of six months.  This paternity leave can be taken at any time from 20 weeks after the birth of the child and, if the leave is taken during the mother's statutory paid maternity period (during the first 39 weeks), the father will be entitled to receive statutory paternity pay at the same rate as paid maternity leave.  Any additional leave taken by the father after the initial 39 week period however, up to a maximum of six months, will be unpaid.

Comment
For potential parents this new legislation is extremely beneficial as:

• it allows fathers to be more involved in their child's upbringing;
• provides flexibility as to when the mother can return to work; and
• assists those couples where the mother earns the higher salary.

Although the adverse impact on businesses is initially hard to see as statutory paternity pay will be refunded to the employer, small businesses will temporarily lose some of their workforce, which they wouldn't have done previously. and this will leave them seeking appropriate cover for those employees' absence.

In addition, the government has decided that a 'self-certification' scheme is suitable for implementing the new legislation, where the father and mother complete a declaration certificate.  Although HMRC will be conducting compliance checks (and sanctions, in the form of financial penalties will be imposed) there is potential for the system to be abused - by employees claiming paternity pay when the mother has not actually returned to work, for example.  In order to minimise the potential for abuse, businesses may find themselves with increased administrative obligations, such as verification checks.

The Government have stated that guidance will be produced before 3 April 2011 to help businesses further understand their obligations under the new regulations.

Ashfords LLP is regulated by the Solicitors Regulation Authority.  The information in this note 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.  Links to other sites and resources provided by third parties are included for your information only.  We have no control over the content and accept no responsibility for them.