UK Employment Law Update - June 2013

Welcome to the latest issue of the Steptoe Employment Law Update.

The Employment Law Updates are aimed at providing snapshot information on recent developments in UK employment law and also a brief practical insight in managing workplace issues on a proactive basis.

1. Coming into force

   Changes to whistleblowing laws come into effect on 25 June 2013. There will be a requirement that the disclosure must in the Claimant worker's reasonable belief to be in the public interest. There will no longer be the need for the disclosure to be made “in good faith”. Instead Tribunals will have the power to reduce any compensation awarded by up to 25% if the disclosure was not made in good faith. Employers will also be vicariously liable if their employees victimise a whistleblowing colleague subject to their statutory defence of having taken all reasonable steps to prevent the detrimental treatment. However, this provision is not yet in force. The two year qualifying period for claiming unfair dismissal where the main reason for dismissal is the employee's political opinions or affiliations will also be removed with effect from 25 June 2013, for all terminations effective after that date. Following the Enterprise & Regulatory Reform Act 2013 receiving Royal Assent on 25 April 2013, commencement dates are still awaited for confidential termination negotiations and caps on the compensatory award, which are expected to be in place in late Summer 2013.

2. Tax residency rules

   The new Statutory Residence Test rules apply from 5 April 2013. Employers of mobile employees should familiarise themselves with the new tests.

3. Collective consultation

   With effect from 6 April 2013 the minimum consultation period where an employer proposes 100 or more redundancies with 90 days fell from 90 to 45 days.

   The minimum period of notice which should be given to the Secretary of State on Form HR1 before the first redundancies take place has also been reduced from 90 days to 45 days.

   Employers are also reminded that the fixed term contracts which will expire naturally on the planned termination dates will not be included in assessing whether or not collective consultation is required. However where fixed term contracts are coming to an end prematurely because of a redundancy situation, then the fixed term employees will count towards the threshold for collective consultation.

4. Statutory sick pay, maternity pay

   After 6 April 2013 the weekly rate of statutory sick pay is £86.70 and after 7 April 2013 the prescribed weekly rate of statutory maternity pay, paternity pay and adoption pay is £136.78.

5. Employment Tribunal fees

   The Employment Tribunals and the Employment Appeal Tribunal Fees Order 2013 will come into effect on 29 July 2013. Only claims made to the Employment Tribunal on or after that date will attract fees. Fees will be payable when a claim is presented to an Employment Tribunal and following notification of listing for the final hearing. Employers should note they may be liable for fees where there is an application for a dismissal of an action following a withdrawal of £60 or where there is a counterclaim as part of the response to an employee's contract claim of £160.

6. Traineeship programme

   The Government has published details of a new programme which will allow 16-19 year olds to undertake work placements. This will begin in August 2013 with each traineeship lasting up to 6 months. Employers will lead delivery of the programme. The traineeships will conclude with a guaranteed interview with the work placement host either for a position or a reference to develop the trainee's CV.

7. Employee shareholders

   The new employee shareholders employment status will be implemented in Autumn 2013. There are a number of administration hurdles to be overcome by an employer and it remains to be seen how many will seek to persuade any employees to take on this new status. An agreement that someone will become an employee shareholder will be invalid unless prior to entering into the contract the individual has received advice from an independent advisor, for which the employer has to pay the reasonable costs, whether or not the employee then accepts the role. If the employee does not receive independent advice about agreeing to become an employee shareholder then he or she would be an ordinary employee. There will also be a 7 day cooling off period during which an employee can withdraw their acceptance of the contract if they change their mind.

8. Minimum wage increase

   Minimum wage rates will increase with effect from 1 October 2013. The new rates are as follows:

   Standard rate £6.31 an hour for workers aged 21 and over. For workers aged between 18 and 20 the new rate is £5.03 an hour. The young workers' rate is £3.73 and the rate for apprentices will rise to £2.68 an hour.

9. Redundancy

   ACAS has published new guidance on “How to handle collective redundancy”. It includes a sample selection matrix and redundancy agreement, guidance on the election of the roles and responsibilities of employee representatives. Click here for a copy of the guidance.

   Promise to pay enhanced redundancy terms enforceable Allen and ors v TRW Systems Ltd, UKEAT/0083/12 In 1999 a redundancy policy was agreed at TRWS's plant. This was operated in 2001 and 2008 and 2009. The employee handbook referred to the policy which stated thatin the event of redundancies the redundancy policy will be implemented. A copy can be obtained from the HR department. The employees' contract referred to the handbook but not to the redundancy policy. In 2008 TRWS's HR manager wrote to all employees giving a guarantee that the redundancy policy would remain in its place until the end of the next pay deal in December 2010. This was restated again in March 2009 but TRWS closed the plant in 2010 without making enhanced redundancy payments under the policy and a number of employees including Mr Allen brought claims for breach of contract, arguing that the redundancy policy which provided for generous severance payments was apt for incorporation as an express term of each employer's contract or alternatively that it was incorporated by implication. The Tribunal disagreed and the Claimants appealed to the EAT. The EAT held that the handbook was capable of being a source of contractual obligation and that the Tribunal had adopted too narrow an approach. Enhanced redundancy terms are a widely accepted feature of remuneration packages and this was equally relevant when considering whether a term has been incorporated into a contract of employment by implication. The fact that the policy had been followed on previous occasions albeit differently did not help TRWS nor that they had made it clear to employees previously that it was under no contractual obligation to make the payments under the policy. The EAT remitted the case to be considered by a new tribunal. Key points: If policy is intended to be discretionary this should be made clear both in the policy and in any contractual terms referring to it. An employee's statement of terms and conditions and the handbook itself should make it clear what the status of the handbook is, either contractual, enforceable or non-contractual and therefore non-enforceable. Redundancy situation where replacement recruited Malekout v Ahmed and others (t/a The Medical Centre) UKEAT/0556/12 M worked as a practice manager of a medical practice. He was responsible for all non-clinical administration matters. When M invited his colleagues to discuss his current employment as he had received a job offer, the partners were anxious not to be left without a practice manager and therefore hired K to assume responsibility for some of M's duties. The partners then told M that it would be in his interests if his employment ended. During a period when M was on sick leave before he left, the practice undertook a restructure. M was dismissed for redundancy two weeks later. Unsurprisingly M brought several claims including age discrimination, that he had been dismissed because of protective disclosures and that he had not been dismissed for redundancy. His claims failed but the Tribunal then went on to consider whether his dismissal was due to redundancy. The Tribunal found that at the time he was dismissed the practice had two managers, M and K and as it only needed one in the future there was a diminishing requirement. So his dismissal was for redundancy. There was however no genuine redundancy consultation and he had been unfairly dismissed. The Tribunal then went on to decide that as it was inevitable that his shortcomings would have been exposed at some stage, his compensation should be reduced by 100% due to the inevitability of his termination in any event. The EAT dismissed his appeal at a preliminary hearing. It held that when the practice found it had two people in the post for effectively one job and there was only the need for one, this was a diminution in the requirement for employees to carry out the work of a particular kind and it was therefore a redundancy situation reality. The EAT also upheld the Tribunal's decision to reduce M's compensation by 100%. In reality this was a capability situation but the practice had engineered its own redundancy scenario to dismiss M who was a poor performer. Key point: Employers should not rely on this case in similar circumstances without more in the hope of achieving the same result. Appropriate representatives Kelly and another v Hesley Group Ltd UKEAT0339/12 Hesley employed 300 staff and wanted to change their contracts. The majority of the workforce accepted the new terms by January 2011. However 32 had not. It was apparent that jobs might be lost if employees did not agree the changes. Hesley advised the employees that it would enter into collective consultation in respect of its proposals to terminate their contracts and offer them re-engagement on new terms. There was no trade union recognised for collective...