UK Employment Law Update, October 2013

Welcome to the latest issue of the Steptoe & Johnson UK Employment Law Update.

These Employment Law Updates are aimed at providing information on recent developments and what the regulatory changes mean for you in practice, in managing workplace issues on a proactive basis.

To achieve our objectives and to continuously improve the Updates, we would be pleased to receive feedback from you. Please e-mail any comments or suggestions which you may have relating to the Updates to employmentgroup@steptoe.com. We look forward to hearing from you.

1. Update on law reform

   Fees for employment tribunal appeal tribunal claims came into effect on 29 July 2013 but following an application for judicial review brought by UNISON in the High Court a hearing took place on 22 and 23 October 2013 as to the lawfulness of the introduction. UNISON has confirmed that the hearing went part-heard and will resume on 4 November 2013. The Ministry of Justice has undertaken to re-fund any tribunal fees paid if the fee scheme is found to be unlawful. A new fee remission structure came into force on 7 October 2013. In order to qualify for fee remission an applicant will need to be in receipt of certain state benefits or have a low gross household monthly income. In addition, a new disposable capital test is being introduced. Those over 61 will not be required to pay any fee if their disposal capital is now less than £16,000 and they meet the low income test. Those under 61 with £8,000 or more disposable capital will be required to spend up to half their disposable capital on fees. This system will apply across all courts and tribunals. With the abolition of third party harassment, with effect from 1 October 2013, under the Enterprise and Regulatory Form Act 2013, Claimants who are harassed by third parties will no longer be able to rely on the protections from harassment under section 40 of the Equality 2010 Act and will have to rely on the general liability for discrimination and normal harassment provisions in the Act. Employees who suffered third party harassment before 1 October 2013 were able to pursue their employer who could be held liable if the harassment had happened on at least two previous occasions and their employer knew about it and had not taken reasonable steps to prevent it. Employees will therefore still have a remedy where their employer knowingly places the employee in a situation in which they are subjected to sexual, racial, homophobic or other harassment because of a protected characteristic. The most straightforward ways are for an employee to bring a claim for harassment or a claim for direct detrimental treatment or indirect discrimination. The abolition of the three strike rule may therefore make it easier rather than harder for employees to sue. 2. National minimum wage

   The National Minimum Wage rate has increased for workers aged 21 and over with effect from 1 October 2013. The rate is now £6.31 an hour.

   Employers failing to pay the National Minimum Wage can be publicly named with effect from 1 October under the revised enforcement scheme, in an attempt to prevent businesses from underpaying workers. Coupled with the strengthened enforcement scheme the BIS has produced guidance on calculating the minimum wage to remind employers of their legal obligations. You can find that here.

3. Business immigration

   Key changes take effect from 1 October 2013:

   Holders of Tier 2 intercompany transfer visas will no longer have to meet an English language requirement if they are extending their visas beyond 3 years. Tier 2 general migrants who earn more than £152,100 per annum will be permitted to hold more than 10% of their shares in their UK sponsor or its overseas group. The list of permitted business visitor activities will be expanded to allow visitors to carry out internal audits for group companies and attend corporate training. The audit must be conducted on a short term one-off visit and the training has to be for the purpose of the visitor's employment overseas. Tier 4 students who have completed UK degrees will be permitted to undertake a corporate internship which directly relates to their degree for up to 12 months under the Tier 5 government authorised exchange category. UK Visas and Immigration in partnership with the Greater London Authority has launched a 3 month pilot with effect from 23 September 2013 to provide online support to SMEs who need to recruit skilled international employees to help build their business. A toolkit of information has been made available through the GLA website.

4. Directors' remuneration reporting

   From 1 October 2013 the way in which directors of public companies should seek shareholder approval of their remuneration policy and loss of office payments to directors has changed. These measures will only apply to quoted companies and not AIM listed companies or foreign companies registered in the UK. These will apply to financial years ending on or after 1 October 2013. The key changes are that shareholder approval of the remuneration policy will be binding on the Company and will provide increased oversight. At least once every three years the directors' remuneration reports must contain a forward looking policy on director remuneration which will be subject to a vote at the AGM and which must be passed in order to become effective.

   On 2 October 2013 the Financial Reporting Council published a consultation document seeking views on whether, in light of the new directors reporting and voting framework, changes to the UK Corporate Governance Code are required. Feedback is sought on extending the clawback provisions and what happens when a significant minority of shareholders vote against the directors' remuneration report. The deadline for responding to the consultation is 6 December 2013.

5. Employee shareholders

   The Government has produced guidance on employee shareholder status which came into force in September 2013. The guidance sets out the issues, rights and actions, the need for independent legal advice and the effect of an employee shareholder's agreement. Guidance has also been published by HMRC on the CGT and income tax treatment of employee shareholder shares. Copies of the guidance are available here and here.

   There is little evidence of this scheme being much used so far.

6. Health and Safety

   As from 1 October 2013 the Health and Safety (First Aid) Regulations 1991 were amended to remove the requirement for HSE to approve first aid training and qualifications. Guidance has been provided on the regulations to help businesses put in place appropriate arrangements for the provision of first aid. Copies of the guidance are available here.

   The Reporting of Injuries, Diseases and Dangerous Occurrences Regulations 2013 (RIDDOR) also came into force on 1 October 2013. This relates to the notification, record keeping of work related deaths, serious accidents, industrial disease and near misses. Under the new regulations employers are required to notify incidents to the HSE "by the quickest practical means without delay" and send a report within 10 days of the incident. See the HSE website here.

7. Looking ahead

   The Government has announced that section 16 of the Enterprise and Regulatory Reform Act 2013 will come into effect in April 2014. This gives the tribunals the power to order an employer who loses before a Tribunal to pay a financial penalty of up to £5,000 to the Secretary of State where the employer's breach has aggravating features. The fee is halved if it is paid within 21 days. The minimum threshold for a penalty will be £100.

   It is intended to encourage businesses to have greater regard to what is required of them in law. Aggravating features will include malice or negligence. It will be for the Tribunal to decide whether to impose a penalty taking into account any factors it considers relevant.

8. Proposed changes to TUPE 2006

   The Government has responded to the consultation on TUPE and the proposed changes are likely to come into force in January 2014. These proposed changes have not yet been published but are expected to include:

   allowing the renegotiation of terms derived from collective agreements up to one year after the transfer provided the change is no less favourable to the employee. a static approach to the transfer of terms derived from collective agreements. (See note on the Alemo-Herron case at item 12). allowing changes in the location of the workforce following a transfer to fall within the scope of an ETO reason to prevent genuine change of place of work redundancies from being automatically unfair. allowing consultation which begins pre-transfer to count for the purposes of complying with collective redundancy rules provided the parties agree and where the transferee has carried out meaningful consultation. allowing microbusinesses to inform and consult directly with affected employees where there is no recognised independent trade union nor any existing appropriate representatives. bringing forward the deadline by which employee liability information has to be provided to 28 days before the transfer. The Government decided not to do away with the service provision change rules but the activities carried on after the change in service provision must be "fundamentally or essentially the same" as those carried on before for the service provision change to be caught by TUPE.

   There will be transitional and saving provisions to allow employers a lead-in period to plan future transfers in line with the new rules.

9. International Jurisdiction of the Tribunals

   - Brussels 1 Regulation

   Powell v OMV Exploration & Production Ltd [2013] WL 5336117

   Mr Powell worked for OMV 3 weeks in 4 in Dubai, spending the fourth week as "rest time" at his home in the UK. His contract with OMV was subject to Manx law. OMV had no place of business in the UK and it was administered from Austria. The Tribunal Judge held that OMV was domiciled in Austria and as Mr Powell...