Employment Update - December 2009

Friday 18th December 2009

Employment News

The Pre-Budget Report

On 9 December 2009, the Chancellor announced a package of measures with important implications for employers. These include:

• a new 50% top rate of tax will apply to employees with an income of over £150,000 per annum;
• pensions relief will also be limited for anyone whose annual salary is over £130,000;
• the personal allowance on Income Tax will be frozen during 2010-11, and there will be no change to the higher rate threshold (so that income tax will continue to be paid at 20% on income up to £37,400, and then at 40% up to £150,000);
• Employers' National Insurance Contributions ('NICs') will increase by 0.5%, which is a rise from 12.8% to 13.5%;
• for Class 1 (employee), Classes 1A and 1B (payments by employers on benefits) and Class 4 (self-employed) workers, NICs will increase from 8.5% to 9.5% on earnings between the primary threshold and upper earnings limits;
• in addition, for Classes 1 and 4, the additional rate for NICs on earnings over the upper thresholds will go up to 2% from 1%;
• workers with salaries of less than £20,000 will not face a rise in NICs; and
• public sector pay settlements are to be capped at 1% for two years from 2011.

Combating 'bogus' Employment Tribunal claims

A lawyer has compiled a list of around 30 repeat 'bogus' claimants by searching lists of Employment Tribunal hearings.  Without the cost implications associated with bringing claims in the County Court, it would appear that serial litigants are trying their luck and bringing claims in Employment Tribunals. One prolific claimant was involved in 150 cases, boasting to have settled many of those claims for sums of between £500 and £2,000.  It is believed that serial litigants could potentially earn up to £60,000 per year simply because employers are being pressurised into settling rather than attracting negative press coverage.

The findings have led to calls for information about claims to be more freely available. However, the Tribunals Service is reluctant to publish details on the internet and believes the current system of handling claims in isolation to be satisfactory.

Reporting on gender pay gaps

An enquiry by the Equality and Human Rights Commission (the Commission) has revealed a gender pay gap of 55% in the financial services sector, against a 28% UK average. As a result, the Commission is keen for employers in the sector to publish pay audits annually.

In any event, the Government would like employers from all sectors to report on pay gaps on a voluntary basis.  However, the Government has included provisions in the Equality Bill which may, if implemented, compel employers to report pay gaps.

The Commission have devised a 'toolkit' which sets out its recommendations for carrying out an audit. Broadly, it encourages employers to include all staff; to collect pay data including benefits; and where gaps are identified, to devise an action plan to tackle them. However, employers should be mindful that if a gender pay gap is identified and they subsequently do not attempt to resolve it, then it may leave them exposed to the risk of sex discrimination claims.

Case law

Test case on the Disability Discrimination Act 1995 - compulsory building alterations

In the case of Royal Bank of Scotland Group Plc v Allen [2009] EWCA Civ 1213, the Court of Appeal ruled that a branch of the bank was required to carry out £200,000 worth of alterations in order to allow a wheelchair user to fully access its services. Although this case does not relate directly to the employment provisions of the DDA, it is relevant to employers, many of whom will be service providers.

Facts

David Allen, a wheelchair user, opened an account at the bank's Sheffield branch, which is a listed building with access via sets of steps. There is no other method of entering the building. When Mr Allen complained, the bank suggested he use alternatives such as internet and telephone banking, or another branch.

Following this, Mr Allen issued proceedings in the County Court, claiming that RBS had breached its duty to make reasonable adjustments under s.19 and 21 of the DDA. The bank had discounted two possible methods of improving access: one due to disruption and the other because it would have resulted in the loss of an interview room. The Court found that the bank had breached its duty, and ordered it to install a lift, and pay compensation of £6,500 to Mr Allen for injury to feelings.

RBS appealed the injunction forcing them to improve access to their branch. It argued that the judge should have considered the cost and disruption of the changes; the suggestions made to Mr Allen; and its improvements to the access of most of its other branches. RBS also asserted that the judge had wrongly applied the test of having to take reasonable steps to alter, remove or avoid a feature which limits access, or to provide a reasonable alternative if this cannot be done, as set out in s21(2) of the DDA.

Decision

The Court of Appeal upheld the County Court's decision. It found that the bank had not taken reasonable steps to provide access to the branch. The alternative ways of providing the service suggested by RBS would only have been reasonable alternatives had there been no practical way of providing wheelchair access. In this case, the bank had only argued disruption and inconvenience, rather than the expense of the works. RBS had also acknowledged that the access scheme was feasible, but had provided no persuasive evidence as to why it could not carry it out.

Comment

The case shows that employers should be mindful of the potential risks of failing to make their services accessible, both in terms of legal action and damage to their reputation. This case also sets a precedent, as it is the first time that the County Court has issued an injunction forcing a business to make its services accessible. Accordingly, businesses need to be aware of the potential costs involved in breaching the DDA. Therefore, businesses under a duty to make reasonable adjustments would be advised to assess any potential difficulties users have accessing their services.

School loses race discrimination case

In the case of R (on the application  of E ) (Respondent) v Governing Body  of  JFS [2009] UKSC 15, a Jewish school has been found by the Supreme Court to have broken race discrimination laws by refusing to admit a boy whose mother had converted to Judaism. The school did not regard the pupil as ethnically Jewish because it did not recognise the mother's conversion.

Facts

The school had an admissions policy of only admitting children recognised as Jewish according to criteria set by the Chief Rabbi, when oversubscribed. The pupil, known as M, was refused a place at the school, because his mother had been converted by a method not approved by the Office of the Chief Rabbi, and this was not therefore recognised under the school's policy. However, the boy's father was Jewish by descent.

The boy's father brought two claims for judicial review: one alleging that the school's policy was discriminatory and the other against the School's Adjudicator for rejecting his complaint about the unlawful admissions policy. The case was brought to the Supreme Court after the Court of Appeal ruled that the school's requirement for the pupil's mother to be Jewish by descent or conversion was based on her ethnicity. Therefore it was discriminatory and in breach of s. 1 of the Race Relations Act 1976.

Decision

A majority of 9 justices ruled that the school had breached the Race Relations Act 1976 in discriminating against pupils on the grounds of their ethnic origins. However, the remaining 3 justices dissented, holding that it was a religious requirement rather than discriminatory.

Comment

This case highlights the close link between ethnicity and religious belief, but the impact of this case has yet to be tested on schools of other religions. Faith schools should now be aware of the importance of ensuring that their admissions policies are based on factors such as religious observance or community activities, rather than ethnic origins. However, this does not mean that Jewish faith schools cannot give preference to Jewish children, but that they must be wary of how they draw up their criteria.  

Pensions auto-enrolment: are you prepared?

The Department for Works and Pensions will be introducing a pensions auto-enrolment scheme between October 2012 and October 2016, starting with large and medium sized employers. The details of the scheme are still being considered, but it is likely that employers will need to make changes to their current arrangements in order to comply with the new requirements.

This would be a good time for employers to look at their schemes to review whether they are compliant. Companies should check pension entitlements in the employment contracts of their staff, as the new scheme may have an impact on pension benefits. In addition, under the Pensions Act 2008, agency workers may be included under this new scheme, so employers may also be faced with having to make contributions towards their pensions.

Ashfords Employment Team would like to wish all of our subscribers a very Merry Christmas and a Happy New Year.

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.