Tag Archive: Changes

Zero hours contracts: new consultation launched

Alan Chalmers, a Partner in our Manchester office, comments: Regulation of the labour market is always a political issue, and in the protracted run-up to the 2015 General Election the regulation of zero hours contracts seems set to be a particular focus for all the main political parties. In June, the Government announced that it would be taking action to ban the use of exclusivity clauses in zero hours contracts. The proposed ban forms part of the Small Business, Enterprise and Employment Bill and it is intended to protect zero hours contract workers against the situation where they may be contracted to work for one employer, receive no or very little work in any given period but be prohibited from seeking other employment to supplement or provide an income. It is thought that the ban on exclusivity will benefit around 125,000 zero hours contract workers who are estimated to be tied into such exclusivity clauses. The proposed ban comes following a period of widespread concern over the prevalence and misuse of zero hours contracts. Several types of further regulation have been mooted but are not included in the draft Bill, including requiring more transparency from employers about the nature of zero hours roles, a non-binding Code of Practice on the use of zero hours contracts, protection from detriment similar to the protection for fixed term employees and part time workers, entitlement to be notified of a permanent role and prohibitions on the circumstances in which an employer can reduce hours. There is particular concern that some employers may be using reductions in hours as a form of disciplinary sanction, or in order to reduce redundancy costs.

The difficulty with any potential restrictions on zero hours contracts, including the exclusivity ban, is how to ensure enforceability without unduly restricting the labour market.  Any attempt to restrict abuse runs the risk of being either too easily circumvented or so restrictive that it interferes with legitimate use.

 As drafted, the proposed ban on exclusivity will apply to any contract under which there is no certainty that any work will be made available to the worker. This could easily be circumvented by employers offering one hour fixed contracts with additional flexible hours, or by simply failing to provide further work to a zero hours worker who undertakes work for another employer. The Government has now issued a consultation paper seeking views on how to tackle the potential for such avoidance. The consultation paper suggests that this might include imposing financial penalties on employers if employees are treated detrimentally as a result of taking another job.

The abuse of zero hours contracts is a real problem. However, what the draft legislation and consultation paper highlight is that it is very difficult to do anything meaningful about ‘bad’ zero hours contracts without undermining the valuable flexibility provided by ‘good’ zero hours contracts. Zero hours contracts have a valuable role in the labour market, offering significant benefits for both employers and employees when used properly. Employers benefit from a bank of trained staff to respond to fluctuations in demand, and many employees find zero hours contracts useful in helping them to balance work with other commitments such as family or study. There are undoubtedly circumstances in which use of exclusivity clauses where there is no corresponding duty on the employer to provide work causes significant unfairness and hardship to employees. Conversely, however, some employers have good reasons for exclusivity clauses. Workers on zero hours contracts may be highly skilled or trained for a job which has specialist requirements and employers need to ensure that they will be available when needed.

Further regulation of zero hours contracts seems likely given the high political profile which they currently enjoy. Ahead of whatever approach this or any subsequent government decides to take, there are sensible voluntary steps which employers could take to ensure responsible use of zero hours contracts, such as ensuring there are sufficient safeguards in place to prevent managers capriciously changing hours and being clear as to the terms and effect of what a zero hours contract means for the employee before he or she signs up to an arrangement. Employers who take steps to pre-emptively adopt some of these measures may find themselves in a position of being best placed to attract and retain skilled workers who are happy with the flexibility of a zero hours arrangement.

Permanent link to this article: http://www.dlapiperbeaware.co.uk/zero-hours-contracts-new-consultation-launched/

Early conciliation: what does it mean for employers?

Gurpreet Duhra, partner in our Sheffield office comments: Early conciliation (EC) has been available to claimants since 6 April 2014 but will be mandatory in respect of claims presented on or after 6 May 2014. Whilst employers could be forgiven for assuming that EC will have limited impact, particularly given the significant decline in claims since the introduction of fees, it is important that managers are prepared for the initial call from Acas to avoid prejudicing the employer’s position in any subsequent negotiations or litigation.

The mandatory EC procedure involves four steps:

Step 1: A prospective claimant who wants to institute relevant proceedings must provide prescribed information to Acas either by completing the EC form online or by telephoning Acas.

Step 2: An early conciliation support officer (ECSO) will make initial contact with the prospective claimant. The ECSO will explain the EC process, take some details from the prospective claimant and check that they wish to proceed with conciliation. As long as they do, the prospective claimant’s information will be sent to a Concilation Officer (CO).

Step 3: The CO will then contact the prospective respondent and enquire whether the prospective respondent is willing to participate in EC. If so, the CO must try to promote a settlement between the parties within the EC period of one calendar month from the date on which the prospective claimant made initial contact with Acas. The EC period may be extended once, by up to 14 days, if the CO believes settlement may be imminent.

An EC certificate must be issued where:

  • It is not possible to contact the parties;
  • The parties do not wish to participate in EC;
  • Settlement is not achieved within the prescribed period; or
  • The CO considers that settlement is not possible.  

The EC certificate will give the prospective claimant a unique reference number which they will have to include on their ET1 should they go on to present a claim. Without that reference number, the tribunal will reject the claim (except in the minority of cases where EC is not required).

What is the impact on employers?

There is no requirement on either party to engage with conciliation. If either the claimant or the respondent does not want to enter into discussions, the CO will simply issue the EC certificate. In many cases employers may consider that there is little incentive to enter into settlement negotiations until the employee has paid a fee to institute tribunal proceedings. However, there are potential benefits of settling a claim early, particularly where the claimant is unrepresented.

Employers should bear in mind the following considerations:

Do managers need training? A line manager may be the first contact that Acas makes with the employer. It is vital that anyone within the organisation who is contacted by Acas about an employment dispute understands the importance of dealing with the initial contact properly. The informal approach from Acas should be treated as seriously as employers would take a formal legal communication regarding a potential claim. Ensure that any managers who may be the initial recipient of the Acas call are aware of their responsibilities.  The initial recipient of the call should also be reminded to keep the issue confidential and not to discuss the details of the dispute with anyone else;

Give managers clear guidance on who will deal with EC. It is important that the individual who receives first contact from Acas about EC passes the details of the dispute on to whoever has responsibility for managing any subsequent tribunal claim. Individuals without appropriate authority and training should not attempt to resolve the issue themselves. Acas is allowing some larger organisations to register a national contact for the purposes of EC. For more information contact ECcontactsList@acas.org.uk;

Do not discount the option of settlement without first considering the merits. An unreasonable rejection of the possibility of settlement discussions could potentially lead to cost implications in the future. Relevant factors when assessing the merits of conciliation include: the likely strength and value of the claim; the potential legal costs and management time of defending a claim; the ease with which the issue could be resolved informally; and any damage to the organisation’s reputation that could result from lengthy and public tribunal proceedings;

Obtain as much information on the allegations from Acas as possible to make an informed assessment of whether the claim has any merits. Early investigation of the background to the allegations will also assist the organisation to respond comprehensively and accurately if the claimant does put in an ET1; 

Do not feel that you have to respond to all allegations immediately. Take time to consider your position before responding on allegations made and if necessary take legal advice on next steps including:

  • How to obtain further information on the allegations to allow you to determine the merits of any potential case;
  • The timing of any settlement and whether settlement is appropriate before a claim has been issued. As a result of the new fee regime, claimants are likely to want to explore settlement before issuing a claim whereas respondents are more likely to favour a ‘wait and see’ approach in order to see if a claimant is serious enough about their case to ‘put their money where their mouth is’. However, early settlements can be cheaper for employers and positions may become more entrenched once the fee has been paid;
  • The terms and nature of any settlement package offered.

Mark any internal correspondence regarding potential settlement as “without prejudice” to try and avoid it being disclosable in any future tribunal proceedings. Anything communicated to an Acas officer in connection with the performance of their functions is not admissible in evidence in tribunal proceedings unless the person who communicated it to the officer gives their consent.

Ensure that no one in the organisation reacts to contact from Acas by taking negative action against the worker(s) or employee(s) concerned eg refusing to give a reference. Depending on the type of allegations raised, this could lead to further claims (e.g. victimisation or whistleblowing).

Calculate the time limit: the EC regime includes a complicated process for recalculating the time limit for presenting the claim. The time limit is extended by the period between ‘Day A’ when the claimant contacts Acas, and ‘Day B’ when the EC certificate is deemed to have been issued, but may be extended further if this results in there being less than a month between Day B and the time limit expiring. There is significant potential for error and if the claimant fails to present the claim in time, the employer may be able to challenge its acceptance by the tribunal.

Ultimately in many cases employers may consider that there is little value in engaging in early conciliation. However, following the guidelines outlined above may prevent that decision from backfiring and creating increased legal risk for the employer.

Permanent link to this article: http://www.dlapiperbeaware.co.uk/early-conciliation-what-does-it-mean-for-employers/

December 2013’s review of the year

Sandra Wallace, Partner and Employment group head, highlights the most important legislative and case law developments from 2013 and identifies the key cases to watch out for in 2014.   Remember to use our On the horizon legislation tracker to keep up to date with the further changes to legislation which are expected in 2014 and beyond.

 

2013 LEGISLATION ROUND UP

Employment Tribunals

1 February Cap on a week’s pay for statutory awards increased from £430 to £450
  Unfair dismissal compensatory award increased from £72,300 to £74,200
25 June In political affiliation cases the two year unfair dismissal qualifying period no longer applies
29 July One year cap on unfair dismissal compensatory award introduced
  Protection of settlement negotiations from admissibility in unfair dismissal tribunal proceedings introduced
  Introduction of fees regime for employment tribunal claims and new tribunal rules
  Compromise agreements renamed ‘settlement agreements’
7 October New fee remission system in force for employment tribunal fees

Family friendly

8 March Parental leave increased from 13 to 18 weeks
7  April Statutory maternity, paternity and adoption pay rates increased from £135.45 to £136.78 per week

Whistleblowing

25 June Amendments to whistleblowing legislation to remove good faith requirement and introduce public interest test
1 November

Close of call for evidence on further whistleblowing reform

Redundancy

1 February Cap on a week’s pay for statutory redundancy payments increased from £430 to £450
6 April Period of required collective consultation for 100+ redundancies reduced from 90 to 45 days

Employment status

1 September Employee shareholder status introduced

Discrimination

25 June Obligation for the Government to make an order outlawing caste discrimination came into force
1 October Repeal of third party harassment provisions from Equality Act 2010

 

 

2013 CASE LAW ROUNDUP

 Redundancy

USDAW and others v WW Realisation 1 Ltd and others This case involves the redundancy consultation obligations arising out of the closure of Woolworths and Ethel Austin stores between 2008 and 2010.   The EAT ruled that the words “at one establishment” in the UK’s collective redundancy legislation should be disregarded for the purposes of any collective redundancy involving 20 or more employees. This potentially results in employers needing to collectively consult whenever they propose to make 20 or more redundancies in a 90 day period, regardless of where the employees are based.  This case is however being appealed to the Court of Appeal.

Working time

Neal v Freightliner Ltd

 

An Employment Tribunal held that a freight worker was entitled to have overtime payments and shift premiums included in the calculation of his holiday pay as they were intrinsically linked to the performance of the tasks he was required to carry out under his employment contract.  This case is being appealed to the EAT.

Employee competition

Coppage and anor v Safety Net Security Ltd The Court of Appeal upheld an order that a former company director pay at least £50,000 following a breach of his post-termination restrictive covenants which prohibited solicitation of any customers of his former employer for a period of six months following termination.
Vestergaard Frandsen SA v Bestnet Europe Ltd The Supreme Court held that a former sales manager was not liable for misuse of confidential information.  The manager had not acquired information while working for Vestergaard and had no implied knowledge of the misuse of information by her new employer.

Transfer of undertakings

Alemo-Herron and others v Parkwood Leisure Ltd

Considering the status of collective agreements following a TUPE transfer, the ECJ decided that under the Acquired Rights Directive it is impermissible for UK courts to adopt a “dynamic” rather than a “static” interpretation.  Where transferring employees’ contracts provide that their terms are to be determined in accordance with collective agreements, the transferee cannot be bound by terms which are collectively agreed after the transfer if it is unable to be involved in the negotiating process.

Crystal Palace FC Ltd v Kavanagh & Ors

In a case which arose out of the dismissal of employees of the company which owned Crystal Palace football club when it went into administration, the Court of Appeal held that the employees were dismissed by the administrator shortly before the business was sold for a valid “economic, technical or organisational reason”. The administrators needed to reduce the wage bill in order to continue running the business and avoid liquidation.

Discrimination

Lockwood v Department of Work and Pensions

The Court of Appeal held that a severance scheme, which paid higher payments to older employees on the basis that they needed more of a cushion than younger employees, was objectively justified.

Cox v Essex County Fire and Rescue Service

In this disability discrimination case, the EAT decided that although the employee had advised that he was suffering from bipolar disorder, the absence of a definite diagnosis meant that the employer did not know, and could not have reasonably been expected to know, that the employee was disabled.

Croft Vest Ltd & Ors v Butcher

The EAT held that an employer who refused to pay for an employee with work-related stress and depression to have private psychiatric counselling and cognitive behavioural therapy breached its duty to make reasonable adjustments.

KEY CASES FOR 2014

 Redundancy

USDAW v Ethel Austin Ltd (in administration) and another case

 

The Court of Appeal will consider whether the words “at one establishment” in the UK’s collective redundancy legislation should be disregarded for the purposes of any collective redundancy involving 20 or more employees. (NB. this is the Woolworths case  – see above for EAT decision).
Lyttle and others v Bluebird UK Bidco 2 Ltd In an application from a Northern Ireland employment tribunal to the ECJ, clarification is sought as to the meaning in the UK’s collective redundancy legislation of the term “establishment” and whether the duty to collectively consult is triggered when 20 or more employees are dismissed at a particular establishment or across the whole of the employer’s business.

Working time

Lock v British Gas Trading Limited and others The ECJ will consider whether the holiday pay of a worker, who receives basic pay and sales-related commission, should be more than just basic pay, even though during holiday periods they are not undertaking work that would entitle them to commission.
Neal v Freightliner Following the Employment Tribunal in 2013 (see above), the EAT will consider if holiday pay must be calculated in a way which takes account of pay for voluntary overtime.

Discrimination

Z v A Government Department & the Board of Management of a Community School;    CD v ST There are currently two cases before the ECJ which will consider whether an mother who has a child via a surrogacy arrangement has pregnancy and maternity rights under EU law.
FOA on behalf of Karsten Kaltoft v Billund Kommune The ECJ will consider whether discrimination on grounds of obesity is prohibited by EU discrimination law.

Gallop v Newport City Council

 

Judgment is awaited in this case in which the Court of Appeal has considered if an employer’s lack of knowledge prevents the duty to make reasonable adjustments arising where the employer relied on advice from an occupational health adviser that an employee was not disabled for discrimination purposes.

Mba v Mayor and Burgesses of the London Borough of Merton

Judgment is awaited in this case in which the Court of Appeal has considered whether or not an employer’s requirement that all care workers work some Sunday shifts indirectly discriminated against a Christian residential care worker who strongly believed that Sunday should be a day of rest.

Employment law reforms

R (on the application of UNISON) v Lord Chancellor

 

Judgment is awaited in this case in which the High Court heard an application by UNISON claiming that the introduction of employment tribunal fees is in breach of EU law and contrary to the principle of access to justice.    A similar application to the Scottish Court of Session has been stayed pending the outcome of the High Court case.

R (on the application of Compromise Agreements Ltd) v Secretary of State for Business, Innovation and Skills

An application has been made for judicial review of the statutory cap of one year’s salary in unfair dismissal cases. The application is based on the premise that older people are more likely to be out of work for more than a year and therefore would be eligible to more than a year’s compensation were it not for the new cap.

Permanent link to this article: http://www.dlapiperbeaware.co.uk/december-2013s-review-of-the-year/

October’s key changes in employment law

Nicholas Jew, a Partner in our Birmingham office comments: One of the less welcome employment law reforms implemented by the Coalition government has been the decision to do away with the practice that new employment law is implemented only in April and October. However, despite the legislative free-for-all of the past few months, there are still some key employment law changes which will be coming into force on the traditional date of 1 October:

Abolition of third-party harassment

The Enterprise and Regulatory Reform Act 2013 (ERRA 2013) will repeal the third party harassment provisions in section 40(2) to 40(4) of the Equality Act 2010 (EqA 2010). Claimants who are harassed by third parties after 1 October 2013 will have to rely on the “normal” harassment provisions in section 26 EqA 2010, or seek to establish liability under the Protection from Harassment Act 1997. The definition of harassment in section 26 of EqA 2010 provides that harassment can occur where conduct is “related to” a protected characteristic. This means that employees may be able to argue that an employer’s inaction in the face of third-party harassment was itself unwanted conduct “related to” a protected characteristic that violated their dignity or created an intimidating, hostile, degrading, humiliating or offensive environment for them. However, this will be a high threshold and it is unlikely there will be many successful claims.

Directors’ remuneration

ERRA 2013 introduces a new voting and disclosure regime for the remuneration of directors of quoted companies. These companies will be required to implement a directors’ remuneration policy which is subject to binding shareholder approval, by way of ordinary resolution, at least once every three years. Shareholder approval will be required if the directors wish to change the policy within that three year period or the annual report on remuneration was not approved at the last accounts meeting.

National minimum wage

The national minimum wage (NMW) rates will increase. The standard adult rate (for workers aged 21 and over) will rise to £6.31 an hour (up from £6.19). The development rate (for workers aged between 18 and 20) will rise to £5.03 an hour (up from £4.98).The young workers rate (for workers aged under 18 but above the compulsory school age who are not apprentices) will rise to £3.72 an hour (up from £3.68).The rate for apprentices will rise to £2.68 an hour (up from £2.65). The accommodation offset will rise to £4.91 a day (up from £4.82).

The NMW will also now apply to agricultural workers

In addition, on 7 October 2013 a new single fee remission scheme for all courts and tribunals users will come into force. Under the new scheme, an applicant’s disposable capital and gross monthly income will both be assessed to determine whether they are eligible for a fee remission.

No further legislative changes have been confirmed as being implemented in 2013, although more detail on the proposed changes to TUPE in early 2014 should be forthcoming shortly.

Permanent link to this article: http://www.dlapiperbeaware.co.uk/octobers-key-changes-in-employment-law/

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