Employment Law Titles ~ Summer 2006


Age and Sex Equality – Lords Ruling
For several years, attempts have been made on behalf of older employees to persuade the Employment Tribunal (ET) that the provisions of the Employment Rights Act 1996 (ERA) which prevent an employee over 65 from claiming compensation for unfair dismissal and/or statutory redundancy pay are sex discriminatory and unlawful.
In the long-running case of Rutherford & another v DTI, the ET originally backed a claim by two pensioners that the upper age limit amounts to indirect sex discrimination because more men than women over the age of 65 continue to work.
Following an appeal by the Department of Trade and Industry, the Employment Appeal Tribunal (EAT) reversed this decision. Although the original case was supported by extensive statistical analysis, the EAT decided that the Tribunal had selected the wrong pool of workers for comparison when concentrating on a selected age band. A comparison with the workforce as a whole showed that the law as it stands does not have a disparate impact on men compared with women. The EAT also held that the provisions of the ERA reflect a legitimate aim of social policy unrelated to discrimination based on sex.
The Court of Appeal upheld the EAT’s decision.
Having examined the statistical arguments put forward in the case, the House of Lords has now dismissed a further appeal, confirming that the upper qualifying age is lawful.
This decision is bad news for those with similar claims who were waiting for the outcome of this case. The Employment Equality (Age) Regulations, due to come into force on 1 October 2006, will remove the upper qualifying age for unfair dismissal and redundancy and will give employees the right to request to work beyond the national default retirement age of 65, or any other retirement age set by their employer. The employer will have a duty under the Regulations to consider the request.
Contact <<CONTACT DETAILS>> if you would like advice on discrimination issues in the workplace.
Age Discrimination – Are You Ready?
There are currently 20 million people aged 50 and over in the UK and the figure is expected to reach 27 million by 2030.
On 1 October 2006, the Employment Equality (Age) Regulations come into effect. This new legislation makes it unlawful to discriminate on the grounds of age in employment and vocational training, unless this can be objectively justified. It prohibits direct discrimination, indirect discrimination, harassment and victimisation on age grounds.
Specifically, the Regulations will:
  • introduce a national default retirement age of 65 (to be reviewed in 2011). Compulsory retirement below 65 will be unlawful, except where retirement at a younger age can be objectively justified;
  • remove the current upper age limit for unfair dismissal and redundancy rights;
  • introduce a duty for employers to consider an employee’s request to continue working beyond the normal retirement age; and
  • impose a requirement that employers give written notification to employees at least six months in advance of their intended date of retirement and notify them of their right to request to continue working.
However, the new legislation will also have far reaching effects on many aspects of employment. The Advisory, Conciliation and Arbitration Service has published useful guidance for employers on the new Regulations. This covers the following areas:
  • recruitment, selection and promotion;
  • training;
  • pay, benefits and other conditions;
  • bullying and harassment; and
  • retirement.
The guidance recommends that employers have an age profile of their workforce to enable them to determine whether remedial action is necessary, such as planning for a number of retirements due to take place around the same time, rectifying an obvious age imbalance in the workforce or ensuring that equal access is given to training and other opportunities. The guidance can be found at http://www.acas.org.uk/media/pdf/s/3/Age_and_the_Workplace.pdf.
Employers are responsible for the actions of their employees so if you need to bring about a culture change in your organisation, the time to act is now. Policies and procedures should expressly prohibit all forms of discrimination on the grounds of age. Staff should be in no doubt that harassment on the grounds of age will not be tolerated. There will be no upper limit to the compensation payable if an employer is found guilty under the new legislation.
The new laws may well mean that behaviour currently tolerated within the workplace could in future give rise to a discrimination claim by an employee. We strongly advise any employer who has not yet done so to draw up an age equality policy. In doing so, it is sensible to consult with your workforce or their representatives. Make sure all staff are aware of the policy and provide any training necessary for its implementation. If you would like assistance in reviewing your employment rules and procedures, including those relating to recruitment, retirement and staff benefits, to ensure that these comply with the Regulations, please contact <<CONTACT DETAILS>>.
Changes to the Immigration Laws
New Measures to Tackle Illegal Working
The Immigration, Asylum and Nationality (IAN) Act 2006 received Royal Assent on 30 March 2006. This will replace and repeal the Asylum and Immigration Act 1996. The Government will begin introducing provisions within the Act in June 2006, with full implementation not expected until 2008.
As well as introducing new measures giving the Government enhanced powers to tackle illegal working and to strengthen the UK’s borders, the IAN Act imposes new civil penalties of up to £2,000 per employee on those who employ a person aged 16 or over who is either subject to a condition preventing them from accepting the employment or who does not have current leave to enter or remain in the UK. It also provides for a new criminaloffence of employing a person knowing that they are not legally entitled to work in the UK, with a maximum penalty of two years' imprisonment and/or an unlimited fine.
Separately from the IAN Act, in February 2005 the Home Office published a five-year strategy for asylum and immigration entitled ‘Controlling our borders: making immigration work for Britain’. This announced the intention to introduce a new points system for managing the flow of people applying to work or study in the UK. Following consultation, the scheme was again announced in March 2006, together with a ‘Command Paper’ entitled ‘A Points-Based System: Making Migration Work for Britain’.
The scheme will consist of a five tier framework and applicants will be directed to the category that is most appropriate for them. These are as follows:
  • highly skilled individuals to contribute to growth and productivity;
  • skilled workers with a job offer to fill gaps in the UK labour force;
  • limited numbers of low skilled workers needed to fill specific temporary labour shortages;
  • students; and
  • youth mobility and temporary workers. These will be people allowed to work in the UK for a limited period of time to satisfy primarily non-economic objectives.
For each tier, applicants will need sufficient points to obtain entry or leave to remain in the UK. Points will be awarded for ‘attributes’, which predict a migrant’s success in the labour market, and for ‘control factors’, which relate to whether someone is likely to comply with the conditions of their leave. All but the most highly skilled immigrants will require a sponsor (normally their employer) who will be responsible for ensuring that a migrant worker complies with the rules of their entry to the UK and returns home at the end of their stay. The Command Paper can be found at http://www.homeoffice.gov.uk/documents/command-points-based-migration?view=Binary.
Further consultation on these proposals will take place with interested parties. The points-based system will then be phased in by tier. As the IT requirement will be significant, this is likely to take some time.
For employers, an important issue is how to avoid committing a criminal offence under the asylum and immigration laws whilst at the same time ensuring that recruitment practices do not discriminate against individuals and so fall foul of the Race Relations Act 1976.
Any person who believes they have been discriminated against on grounds of race, colour, ethnic or national origin or nationality has the right to take their case to an employment tribunal. If their complaint is upheld, there is no upper limit to the amount of compensation the employer can be ordered to pay.
The current Home Office guidance on preventing illegal working makes it clear which original documents employers are required to see and contains advice on how to avoid discrimination when preventing illegal working. This is available on the Immigration and Nationality Directorate website at http://www.ind.homeoffice.gov.uk. Revised guidance will be issued to accompany the new Act.
The best way to make sure that you do not discriminate is to treat all job applicants in exactly the same way at each stage of the recruitment process. Have clear, written recruitment procedures and check regularly that they are being followed. An employer can be held responsible for discriminatory action by employees if he or she does not take steps to prevent it happening.
Changes to Immigration Rules for Indefinite Leave to Remain Applications
On 3 April 2006, important changes were made to the existing immigration rules relating to applications for permission to remain in the UK. The qualifying period for settlement (the amount of continuous time that has to be spent lawfully in the UK in order to qualify for Indefinite Leave to Remain) has been increased from four years to five years for individuals who are in the UK within an employment or business category or under the UK Ancestry provisions. In addition, the maximum initial period of leave which can be issued in respect of most employment or business categories (except for work permit holders, retired persons of independent means, domestic workers and self-employed lawyers) has been increased to two years. Subsequent applications to extend this initial period may be issued for a further period of up to three years.
Freedom of Movement of Citizens of the European Economic Area
Asylum and immigration rules which can make it a criminal offence to employ someone not entitled to work in the UK do not apply to citizens of countries in the European Economic Area (EEA).
On 30 April 2006, The Immigration (European Economic Area) Regulations came into force. These implement EU Directive 2004/38. Measures include:
  • the introduction of a permanent right of residence for EEA nationals and their family members which generally applies after a continuous residence period of 5 years;
  • the introduction of an initial right of residence period not exceeding 3 months which is no longer conditional on the EEA national being a worker or self-employed; and
  • the inclusion of civil partners as family members for the purpose of the Regulations.
The Worker Registration Scheme
Ten states joined the EU on 1 May 2004. These were Cyprus, the Czech Republic, Hungary, Latvia, Estonia, Lithuania, Malta, Poland, Slovakia and Slovenia. Under transitional arrangements introduced on 1 May 2004, the new Accession State Worker Registration Scheme was introduced for new workers from these countries, excluding Malta and Cyprus, planning to work in the UK for more than one month. The scheme restricts the right of those workers to certain benefits until they have been working in the UK for a continuous period of 12 months.
Workers from these eight new member states are generally required to apply to the Home Office for a registration certificate, authorising them to work for that employer, within one month of starting work. Applications for registration are the responsibility of the individual worker and a registration fee of £70 is payable. Employers should, however, ensure that the individual is provided with a letter on company paper confirming the date on which he or she started working, as the worker will need this when applying for registration. The employer should keep a copy of the worker’s completed application form, as evidence that the request for registration has been made within one month of that person starting work for them, and retain a copy of the valid Worker Registration Certificate.
It is a criminal offence, with a maximum fine of £5,000, to continue to employ a worker from one of these eight countries without the necessary registration certificate.
In April 2006, the Government confirmed that it will continue to operate the Worker Registration Scheme after 1 May 2006 in order to monitor the numbers of nationals from the new member states coming to work in the UK and their impact on the labour market.
Please contact <<CONTACT DETAILS>> if you would like more detailed information or individual advice on any of the matters mentioned above.
Court of Appeal Rules on ‘Unforeseeable Risk’ Case
The Court of Appeal has ruled against arguments put forward by the Health and Safety Executive (HSE) in its prosecution of Hatton Traffic Management (HTM) Ltd. following the death of two workers in an accident on the A66, near Scotch Corner. The men were killed when the equipment they were using came into contact with an overhead electricity cable.
HTM appealed on two points of law, relating to whether the ‘foreseeability’ of events and the actions of employees can be used as defences in such cases. The HSE argued that employers should be required to take reasonable steps to prevent unforeseeable risks and that negligent actions on the part of employees were irrelevant in determining the guilt of the employer.
The Court of Appeal ruled that employers should not be found negligent on health and safety grounds when employees are ‘acting outside their remit’.
This is an important decision which will be welcomed by those with health and safety responsibilities. However, the HSE has indicated that it will invite the House of Lords to consider the issues in order to provide definitive guidance.
Says <<CONTACT DETAILS>>, “When carrying out risk assessments employers should always consider how and when accidents might happen and keep evidence that these questions have been addressed and appropriate training on how to avoid potential risks has been provided. Whilst the assessments should take into account the likely effects of human behaviour, it is uncertain how employers could defend themselves against a claim resulting from a genuinely unforeseeable risk and it is hoped that clarification is provided on this aspect of the law.”
Dismissal of BNP Bus Driver Not on ‘Racial Grounds’
The Court of Appeal (Serco Ltd. v Arthur Redfearn) has overturned the decision of the Employment Appeal Tribunal (EAT) that a bus driver who was a member of the British National Party (BNP) was dismissed on racial grounds.
Mr Redfearn worked for Serco Ltd. as a driver and escort for disabled adults and children in the Bradford area. There had been no complaints about his work or his conduct but in May 2004 an article appeared in a local newspaper identifying him as a candidate for the BNP in forthcoming elections. As a result, the union UNISON wrote to Serco expressing concern, bearing in mind the BNP’s political agenda. 70 to 80 per cent of Serco’s customers were Asian as was 35 per cent of its workforce. The company also received representations from the GMB union and from employees concerned for their personal safety and that of the company’s property in the event of any retaliatory action on account of Mr Redfearn’s views.
On 15 June 2004, Mr Redfearn was duly elected as a local councillor for the BNP and was dismissed by Serco on 30 June as the company feared that his continued employment would present a health and safety risk to its employees and passengers. It was also concerned that its reputation might suffer as a result of its association with the BNP with the possible loss of its contract with the council.
Mr Redfearn was not entitled to bring a claim of unfair dismissal because he had not been employed for the requisite 12 months, so he instead brought a claim of discrimination contrary to the Race Relations Act 1976 (RRA).
The Employment Tribunal rejected the claim and so Mr Redfearn appealed to the EAT. He argued that he had been discriminated against on racial grounds as the BNP only has white members and the decision to dismiss him was discriminatory because it had been partly based on the race of the majority of the passengers he carried. Serco argued that Mr Redfearn was not dismissed on grounds of race but on health and safety grounds, arguing that the only relevance to race was that the political views of members of the BNP could provoke strong reactions from those opposed to its policies.
The EAT overturned the decision of the ET and criticised it for not putting a wide enough construction on the phrase ‘on racial grounds’ as used in the RRA’s definition of direct discrimination. It held that the ET had failed to address the question as to ‘whether racial grounds had a significant influence on the outcome’.
The Court of Appeal has now overturned the EAT’s ruling. It agreed that the decision to dismiss Mr Redfearn included racial considerations, but it did not follow automatically that he had been dismissed on racial grounds. He was treated less favourably not because he was white but because of a particular ‘non-racial characteristic’ shared by him with a tiny proportion of the white population, that is membership of a party such as the BNP. The dividing line of colour or race was not made by Serco but by the BNP, which defines its own membership in terms of colour or race. Properly analysed, Mr Redfearn’s complaint was one of discrimination on political grounds, which falls outside the anti-discrimination laws.
Lord Justice Mummery held that to allow Mr Redfearn’s claim would turn the policy of the race relations legislation upside down. It would mean that any less favourable treatment brought about because of concern about the racist views or conduct of a person in a multi-ethnic workplace would constitute race discrimination, which would be at odds with the aim of the RRA.
Says <<CONTACT DETAILS>>, “The ET was criticised by the Court of Appeal for not having carried out a more detailed scrutiny of the evidence for the dismissal on health and safety grounds. In circumstances such as this, employers are advised to seek advice to ensure that their actions can be justified.”
DTI Consultation on Dispute Resolution Procedures

The Department of Trade and Industry has issued a consultation document which is mainly a tidying up exercise proposing regulations to extend the jurisdictions to which the dispute resolution procedures apply so that they cover legislation introduced after the Employment Act 2002 gained Royal Assent. The three jurisdictions are:
·        the Information and Consultation of Employees Regulations 2004;
·        the European Public Limited-Liability Company Regulations 2004; and
·        the Occupational and Personal Pension Schemes (Consultation by Employers and Miscellaneous Amendment) Regulations 2006.
The consultation paper can be found at http://www.dti.gov.uk/files/file29156.pdf.
The consultation closes on 11 August 2006.
The paper does confirm, however, that the Government is committed to undertake a review of the dispute resolution procedures themselves and that this is expected to start in late 2006.


Employers Warned to Take Hearing Damage Seriously
The Royal National Institute for the Deaf (RNID), the charity which represents 9 million deaf and hard of hearing people in the UK, has joined with the TUC in issuing a warning to employers and employees to take the new Control of Noise at Work Regulations seriously.
Under the Regulations, which came into effect on 6 April 2006, limits on exposure to noise levels have been tightened up in order to provide improved protection for workers from one of Britain’s most serious occupational diseases. The noise level at which workers are required to have hearing protection available has been reduced to 80dB(A) and the level at which they will be required to wear hearing protection has been reduced to 85dB(A). Hearing protection must ensure that average exposure levels never exceed 87dB(A).
It is estimated that excessive noise in the workplace has caused half a million people living in Great Britain to suffer deafness or other ear difficulties. The threat of noise-induced hearing loss is often not taken seriously and the effects are not immediately obvious. If protective measures are taken, it is totally preventable.
The RNID and the TUC have called on employers to lower or eliminate employees’ exposure to noise in the following ways:
  • replace old machinery with newer, quieter equipment;
  • when purchasing new equipment, make sure you obtain information on noise levels before you buy;
  • investigate with the supplier ways of ensuring that equipment makes as little noise as possible;
  • reduce noise from equipment by changing how it is mounted or installing silencers or enclosures;
  • maintain equipment regularly;
  • keep noisy machinery in a separate area;
  • make sure employees spend as little time as is necessary in a noisy environment or create a noise-reduced enclosure for employees; and
  • reduce reverberations by the use of sound absorbing materials.
Says <<CONTACT DETAILS>>, “Noise induced hearing loss is irreversible. Employers who fail to take steps to comply with the Noise at Work Regulations are warned that they could face a barrage of compensation claims from employees.”
Female Transsexuals and Pension Rights
Following the recommendation of the Advocate General, the European Court of Justice (ECJ) has ruled (Richards v Secretary of State for Work and Pensions) that it was contrary to the Social Security Equal Treatment Directive for a male-to-female transsexual to be refused a retirement pension before the age of 65 when under UK law a woman is entitled to receive a state pension at the age of 60.
Sarah Richards was born a male but underwent gender reassignment surgery in 2001. In 2002 she applied to have her state pension paid at the age of 60. The Department for Work and Pensions refused on the grounds that she was still a male and would therefore have to wait until the age of 65. Ms Richards appealed to the Social Security Appeal Tribunal and the Social Security Commissioner, who referred the question to the ECJ.
The action complained of in this case occurred before April 2005, when the Gender Recognition Act 2004 came into force. The Act gives transsexual people who make a qualifying application the right, from the date of recognition, to marry in their acquired gender, to be given a birth certificate recognising their acquired gender and to obtain the same social security benefits as anyone else of that gender. The ruling will therefore only apply to female transsexuals who applied for but were denied a pension at age 60 before the Act came into force.
In another recent case, a woman named Linda Grant, who was born a male, has won her claim for payment of state pension denied to her until she reached the age of 65.
Forthcoming Changes to Family Friendly Legislation
The Work and Families Bill provides the power to introduce measures intended to give more choice to families balancing work and caring responsibilities.
Statutory Maternity and Adoption Pay and Leave
The period of statutory maternity pay will be extended from six to nine months for employees with an expected week of childbirth on or after 1 April 2007. The extension to 39 weeks is a step towards the Government's ultimate goal of one year's maternity pay for all new working mothers. In addition, there will be no qualifying period necessary for an employee to be entitled to additional maternity leave.
Further measures include:
  • the extension of the notice period, from 28 days to 8 weeks, which an employee must give her employer if she intends to return to work earlier than the end of her additional maternity leave;
  • the introduction of a new provision entitling employers to make reasonable contact with an employee who is on maternity leave; and
  • the introduction of ‘keeping in touch’ days to enable mothers to go into work for a limited number of days during their statutory pay period without losing statutory payments for that week or ending their leave.
The legislation will remove the small employers’ exemption in order to clarify that an employee has the right to return to the same or a similar job regardless of the size of the organization.
The changes made to the maternity leave regulations will be mirrored in the case of adoption leave for parents of children expected to be placed for adoption on or after 1 April 2007.
Paternity Leave
Measures include the introduction of new paternity leave for fathers or the partners of adopters, enabling them to benefit from leave and statutory pay during the first year of their child’s life if the mother has decided to return to work.
Flexible Working
The existing provisions, which apply to parents of young and disabled children, will be amended to extend the right to request flexible working arrangements to those with caring responsibilities for adult relatives. The revised flexible working regulations will apply from April 2007.
Says <<CONTACT DETAILS>>, “It is as yet unclear how some of these proposed measures will work in practice. For example, how is an employer faced with a request from a male employee for paternity leave, to be taken in place of the maternity leave allowance not being used by the mother of the child, expected to verify the facts?”
Gangmaster Licensing
The Department for Environment, Food and Rural Affairs (DEFRA) has announced its proposed timetable for the introduction of new laws designed to protect vulnerable workers from exploitation by rogue employers.
After 1 October 2006, it will be an offence under the Gangmasters (Licensing) Act 2004 to provide workers to the agriculture and horticulture industries and to the food packaging and processing industry without a licence. From 1 December 2006 it will be an offence to use an unlicensed labour provider. The law will apply to the provision of both permanent and temporary contract labour. The new offences are punishable by a maximum penalty of ten years’ imprisonment.
Applications for most licences can now be made to the Gangmaster Licensing Authority. The annual licence fee is on a scale from £250 to £4,000 depending on the annual turnover of the business. The fee levels will be reviewed after one year.
It is proposed that licensing will commence in the shellfish gathering industry on 1 October 2006 and that the law making it an offence to supply or use labour in this industry without a licence will be introduced in April 2007.
Certain activities which would otherwise be covered are excluded from the licensing requirements. For example, licences will not be needed by those supplying labour to retailers, caterers or wholesalers. Also excluded are the short-term loans of workers between farms, the supply of individual specialist farm workers and the supply of labour to process non-farm products which include an agricultural component, such as cosmetics. A full list of the excluded categories can be found in the Gangmaster Licensing (Exclusions) Regulations 2006 at http://www.opsi.gov.uk/si/si2006/20060658.htm.
The Gangmasters (Licensing) Act does not contain a definition of ‘gangmaster’ but applies to specific types of work. It could therefore apply to employment businesses and agencies which supply workers to the food packaging and processing industry. If you are in any doubt as to whether your business will require a licence under the new regime, please contact <<CONTACT DETAILS>> for advice.
Health and Safety Guidance for the Catering Industry
The Health and Safety Executive has published new guidance for the catering industry to help combat back pain and manual handling injuries, which are amongst the most common occupational ill health problems in the UK. Many of the jobs undertaken by kitchen staff can cause back pain or upper limb injuries unless proper safeguards are introduced.
The guidance offers practical information on good manual handling techniques and lifting aids that will be useful to any section of the hospitality industry. It also offers specific information for kitchen staff on significant risk areas such as pot washing, dishwashing, preparing food, storage and cleaning. The information can be downloaded from the HSE website at http://www.hse.gov.uk/pubns/cais24.pdf.
Holidays – Pay in Lieu
The European Court of Justice (ECJ) has ruled that the practice whereby an employer provides pay in lieu of minimum paid holiday leave not taken is unlawful, even if the holiday year in question has expired and the allowance was carried forward to the next year.
Reference was made to the ECJ in the course of proceedings in the Dutch courts as to whether the practice was contrary to article 7(2) of the Working Time Directive.
The Netherlands government had argued that where an employee has not made use of his or her minimum leave entitlement in one year, that entitlement does not count as part of the minimum entitlement to paid leave for the following year, as this will have its own separate minimum entitlement. Therefore, compensation could be provided in respect of the unused entitlement from a previous year.
The ECJ was of the view that the harmonisation of the laws on working time across the European Union is intended to guarantee better protection of the health and safety of workers by ensuring that they are entitled to paid annual leave and adequate work breaks. The possibility of receiving compensation in lieu of the minimum period of annual leave carried forward could provide an incentive for workers not to take their holiday and this would be incompatible with the objectives of the Directive.
It is only where the employment relationship is terminated that article 7(2) allows payment in respect of holiday not taken.
In Brief
Employers’ Liability Insurance and Temporary Workers
Businesses that employ seasonal and part-time staff are reminded that the law requires them to carry adequate employers’ liability insurance (ELI) to cover temporary staff. Sole traders who work alone are not required by law to carry ELI but if they take on extra staff, they must be sure to arrange cover. Even if those working for you do so on a voluntary basis, ELI may be necessary, depending on the extent of your responsibility for their supervision and the terms of your contract with them. If you are in any doubt on this matter, we can advise you.
Injury to Feelings
The Employment Appeal Tribunal (EAT) has handed down its judgment in an appeal concerning the level of the award made for injury to feelings in a sex discrimination case (Corus Hotels plc v Woodward).
In autumn 2004, Ms Woodward applied for a job as a receptionist with Corus Hotels. Following the breakdown of her marriage, she was responsible for the care of her 12-year-old son and she wished to return to the job market.
The interview was conducted in a ‘crassly sexist manner’. The first question Ms Woodward was asked was whether she had any children and there were numerous references to her personal circumstances. She was left with the impression that the interviewer, a Mr Rushton, was trying to dissuade her from interest in the post. He told her he would let her know about the job, but that she should not stop looking for work. Ms Woodward was not, however, informed that her application had been unsuccessful.
Ms Woodward succeeded in her claim of sex discrimination at the Employment Tribunal (ET) and was awarded £5,000 for injury to feelings and £525 for loss of earnings.
Corus Hotels appealed against the award for injury to feelings, claiming that it was too high.
The EAT found that in determining the level of the award the ET had been incorrect to take into account the fact that Corus Hotels plc is a large organisation. In addition, although the ET had been correct to take into account the ‘complete failure’ of the equal opportunities policy within the company when making its finding of liability, an award for injury to feelings is compensatory, not punitive, so must not include an element which is intended to punish the employer.
The EAT therefore substituted an award of £4,000 for injury to feelings.
Says <<CONTACT DETAILS>>, “Ms Woodward found another job shortly after her interview with Corus hotels, otherwise the loss of earnings claim would have been higher. There was therefore no evidence that she had suffered a loss of confidence, as a result of her treatment, which impaired her ability to find alternative work. Employers should make sure that all stages of the recruitment process are carried out in a way that does not discriminate directly or indirectly on grounds of sex, marital status, ethnic origin or race, religion or belief, sexual orientation, gender reassignment or disability. We can advise you with regard to all such matters.”
Licensing Security Guards
On 20 March 2006 it became illegal to work as a contracted-in security guard, in England and Wales, without a Security Industry Authority (SIA) licence. It is also illegal to provide or use security guards who do not have the appropriate licence. This applies to those working in the security, public space surveillance CCTV, close protection and cash and valuables in transit sectors. Security guards working at licensed premises and places of regulated entertainment (door supervisors) have been required to have an SIA licence since April 2005.
It is the responsibility of the individual to obtain the licence but the employing company must check to make sure that any guards they have working for them are properly licensed. The consequences for failing to obtain a licence or contracting-in or supplying unlicensed staff are:
  • summary conviction at a Magistrates’ Court with a maximum penalty of six months’ imprisonment and/or a fine of up to £5,000; or
  • trial on indictment at the Crown Court with an unlimited fine and/or up to five years’ imprisonment.
The cost of applying for a 3-year licence is £190. Further information can be found at
Says <<CONTACT DETAILS>>, “No employee carrying out guarding activities defined as licensable under the Private Security Industry Act should be allowed to work without a licence. A last minute rush to secure licences before the deadline has caused a backlog in processing applications which has left some individuals and security firms exposed. Organisations which contract in security services should check with their supplier to ensure that all staff have an SIA licence. If your security firm has an employee who fails to meet the licence test, take care. We can advise you on what action to take to ensure that there is no infringement of that person’s employment law rights.”
Minimum Wage – Employees’ Gas and Electricity Payments
HM Revenue and Customs (HMRC) have won a test case, which dealt with the operation of the National Minimum Wage legislation, in the Employment Appeal Tribunal (EAT).
The employer, Leisure Employment Services Ltd. (part of the Butlins Group), provides seasonal workers for the company’s holiday resorts. Accommodation is sometimes available for those workers, on request and subject to availability. The practice was that those who occupied this accommodation were required to sign an agreement with the company stating that they would pay a standard £6 per fortnight for gas and electricity. This was normally taken as a deduction from salary.
HMRC had issued enforcement notices against Leisure Employment Services alleging that the workers who were charged for the utilities were as a result being paid less than the minimum wage. The company was successful in an appeal against the notices to the Employment Tribunal. HMRC then took the case to the EAT.
The issue for the EAT to decide was whether the employer was entitled to treat the £6 deduction as part of the employee’s wages even though the employee actually received less than the minimum wage after the deduction had been made.
The EAT ruled that as the workers were under an obligation to pay a particular sum of money in order to be permitted to use the accommodation on offer, the amount they paid was in respect of the provision of living accommodation. However, the company had already taken full advantage of the maximum deduction that can be made from the minimum wage where an employer provides accommodation. The appeal was allowed and the enforcement notices therefore stand. However, leave was given to appeal because the case raised important points of law which have so far not been considered by the Court of Appeal.
Says<<CONTACT DETAILS>>, “This was a complex case on account of the nature of the National Minimum Wage Regulations 1999. The judge stressed that the legislation should take a strong line to ensure that the minimum wage is paid but expressed some sympathy with the employer in this case as the arrangement did not seem unreasonable. The amount deducted was likely to be quite a lot less than the actual cost of the gas and electricity used but had the company left it to the employees to pay their bills directly to the utility companies, it would not have fallen foul of the legislation.”
New Guidance on the Meaning of ‘Disability’
On 1 May 2006, new official guidance on matters to be taken into account when determining whether a person is a disabled person for the purposes of the Disability Discrimination Act 1995 (DDA) came into effect. The revised guidance takes into account changes made by the Disability Discrimination Act 2005, which extended protection under the DDA to those diagnosed with progressive forms of cancer, HIV and multiple sclerosis and which increased protection for those suffering from mental illness, removing the requirement that the condition must be a clinically well-recognised illness. The guidance uses examples to illustrate the definition of disability.
Although the guidance does not have the force of law, the DDA requires that when deciding whether a person is disabled, employment tribunals are obliged to take into account any aspect of it that appears to be relevant.
The previous version of the guidance will continue to apply in the case of claims for disability discrimination that occurred before 1 May 2006.
The revised guidance can be found at http://www.drc.org.uk/the_law/legislation__codes__regulation/guidance.aspx.
New Minimum Wage Rates Announced
With effect from 1 October 2006 the adult rate of the minimum wage will rise from £5.05 to £5.35 per hour and the youth rate, for workers aged 18 to 21, will be increased from £4.25 to £4.45. The Government has also accepted the recommendation of the Low Pay Commission that the rate for workers aged 16 and 17 years should increase from £3.00 to £3.30.
The Government has also announced that it will:
  • accept the recommendation that salary sacrifice schemes, including those for childcare vouchers, should not count towards the minimum wage;
  • consider the recommendation that the Low Pay Commission review the apprenticeship exemptions in 2008;
  • take into account the recommendation that enforcement should be stepped up in sectors that employ migrant workers when considering sectors for targeted enforcement action in the future; and
  • update the guidance for accommodation offset to make it as clear and comprehensive as possible.
Last year, HM Revenue and Customs (HMRC) adopted a new approach to tackling non-payment of the minimum wage. Specific employment sectors are now selected in an effort to target offenders and enforce the rules. In 2006 the main focus is on cash-based businesses, including service industries such as hotels and restaurants. In addition, HMRC intends to focus on the amount paid to home workers and the pay of female workers.
NHS to Recover Costs for Injuries at Work
On 1 October 2006 new Injury Cost Recovery legislation is due to come into effect. The Injury Costs Recovery scheme is being expanded to enable the NHS to claim back from employers, through their employers’ liability insurance (ELI), the cost of treating an employee who is injured in the workplace. The move is intended to encourage employers to take steps to prevent workplace accidents and to ensure that negligent employers pay the full cost of their actions.
The NHS is expected to recover costs of around £150m a year. The forthcoming change in the law is expected to increase the cost of ELI by up to 8 per cent for small- to medium-sized businesses.
Employers are advised to ensure compliance with health and safety laws. Risk assessments must be up to date and the correct preventative measures in place. Risk assessments should be reviewed at least on an annual basis and should be revised if circumstances change in any way. The outcome of your risk assessments and any corrective action, including training given, should be recorded.
Businesses with more than five employees must have a written health and safety policy and must make sure that it is communicated to all employees. Appropriate health and safety training must be provided for all employees and should be included as part of the induction process. Employers should carry out checks to ensure that the training is effective and that correct procedures are being followed.
If you would like advice on how health and safety law affects your business, contact <<CONTACT DETAILS>>.

Normal Retirement Age and TUPE
The Court of Appeal has ruled (Cross & Gibson v British Airways plc) that when a business transfer takes place to which the Transfer of Undertakings (Protection of Employment) Regulations (TUPE)apply, the normal retirement age that existed beforehand does not transfer under section 5 of the Regulations.
Michael Cross and Carole Gibson were employed by British Caledonian Airways (BCal) Ltd. at Gatwick Airport as a pilot and a cabin services director respectively. In 1988, the company was taken over by British Airways plc (BA) and they continued to work for BA in those same capacities.
When they worked for BCal, Mr Cross and Mrs Gibson had been entitled to continue working until the age of 60, when they could retire on full pension. BA, however, had a policy requiring its flying crew to retire at age 55.
Shortly after the transfer, Mr Cross signed a new contract with BA, which provided for a compulsory retirement age of 55. A year later he was promoted and transferred to Heathrow Airport. Had he not already accepted BA’s retirement policy, he would have been required to do so at that time.
Mrs Gibson also signed a new contract shortly after the transfer of the business. She subsequently changed to part-time work and towards the end of her employment with BA she also showed an interest in early retirement, in response to a general invitation from the company. However, she later withdrew this application after considering the terms being offered.
Many years after the original business transfer, BA required Mr Cross and Mrs Gibson to retire at age 55, in accordance with its policy. Even though they had earlier agreed to the lower retirement age, they maintained that they were entitled to continue working until the age of 60 and that they had been unfairly dismissed. Their argument was that their acceptance of the change in retirement age was negated by TUPE Regulation 5 which states that on the completion of the relevant transfer, ‘all the transferor’s rights, powers, duties and liabilities under or in connection with any such contract, shall be transferred …. to the transferee…’.
Mr Cross and Mrs Gibson maintained that their contractual retirement age at BCal was also their normal retirement age there and that under the TUPE legislation both transferred with them to BA, thus freezing their BCal normal retirement age on and after the transfer.
The question for the Court of Appeal was whether, at the time of their respective retirements, Mr Cross and Mrs Gibson were protected by those Regulations (read with section 109 of the Employment Rights Act 1996) from unfair dismissal.
The Court ruled that a ‘normal retirement age’ is not the same as a ‘contractual retirement age’ and is not one of the ‘rights, powers, duties and liabilities’ capable of being transferred under TUPE. It is not capable of being frozen at the moment of transfer but is determined by the normal retirement age for those in the position of the employee in question at the time of his or her dismissal.
As Mr Cross and Mrs Gibson had reached the normal retirement age of 55 at BA, they were not entitled to claim unfair dismissal.
Part-time Workers and Bank Holidays
Four of the UK’s statutory bank holidays always fall on a Monday. This has often resulted in part-time workers who do not work on Mondays feeling that they are being treated less favourably than full-time workers if the latter benefit from an additional day’s paid holiday. The Employment Appeal Tribunal (EAT) recently ruled (McMenemy v Capita Business Services) that a part-time worker who didn’t work on Mondays was not entitled to pro-rata time off or pay in lieu in respect of those bank holidays which always fall on a Monday.
Mr McMenemy applied to work part-time so that he could fulfil his child care responsibilities. It was agreed that he would work on Wednesday, Thursday and Friday of each week. He was not allowed time off in lieu when public holidays fell on a Monday although full-time workers in his team who did normally work on a Monday were given the day off.
Capita Business Services operated on a seven day a week basis so a comparable full-time worker could work a five day week which excluded Mondays. Indeed, one of Mr McMenemy’s colleagues had for a while worked full-time Tuesday to Saturday and it had been made clear to him that when he worked those days he was not entitled to time off in lieu if he missed a Monday bank holiday. The contracts of both full-time and part-time workers provided that they were entitled to take public holidays only when they fell on a normal working day.
The Employment Tribunal had found that although Mr McMenemy suffered a detriment it was not because he worked part-time but simply because he did not work on Mondays. Not all full-time workers benefited from Monday bank holidays. Mr McMenemy appealed but the EAT confirmed the original decision.
Says <<CONTACT DETAILS>>, “The decision reflects the circumstances in this case and it might well have been different had all the full-time workers worked the standard five-day week. On the subject of bank holidays, employers should note that the Government has now published a consultation paper outlining proposals to ensure that all workers get to take paid leave for bank holidays in addition to their statutory four weeks annual leave. If you would like individual advice on any aspect of holiday entitlements, we can help you.”
The consultation paper can be found at http://www.dti.gov.uk/employment/holidays/index.html.
Proportionate Damages for Mesothelioma Sufferers – Government to Act
Last month, the House of Lords ruled that where a worker contracts mesothelioma after having been exposed to asbestos by more than one employer, responsibility for the damages payable should be apportioned amongst all those responsible, according to the degree to which they contributed to the chance of the worker contracting the disease. The judgment was made in the joined cases of Barker v Corus (UK) plc, Murray v British Shipbuilders (Hydrodynamics) Ltd. & others and Patterson v Smiths Dock Ltd. & another.
In the first of these, widow Sylvia Barker, of Holywell, Flintshire, was awarded £152,000 in the High Court for the death of her husband Vernon, who died in 1996, aged 57, having been exposed to asbestos dust by more than one employer during his working life.
The High Court had found Corus (UK) 100 per cent liable for Mr Barker’s illness and subsequent death. This followed the 2002 decision, in Fairchild v Glenhaven Funeral Services Ltd., that where several employers could be liable for exposing a worker to asbestos, the claimant could seek full compensation from any of them, even though he could not prove which exposure had caused the disease. This decision ensured that victims of mesothelioma could receive their full entitlement to compensation even if some of the former employers had since gone out of business or were uninsured.
The House of Lords ruling would mean that victims of mesothelioma could not receive full compensation unless they were to sue all the employers who had exposed them to asbestos fibres. As mesothelioma can take 40 years to develop, it can be very difficult to trace the insurers of those former employers that have ceased to trade.
The Government has now announced that it intends to amend the Compensation Bill in order to reverse the decision of the House of Lords.
Rolled Up Holiday Pay
Following the March 2006 judgment of the European Court of Justice on the legality of rolled up holiday pay, the Department of Trade and Industry (DTI) has now updated its guidance on the Working Time Regulations to reflect the judgment.
In effect, the practice is now essentially considered to be unlawful and employers are advised to renegotiate contracts involving rolled up holiday pay for existing employees/workers as soon as possible so that payment for statutory annual leave is made at the time the leave is taken. However, where an employer has already given rolled up holiday pay in relation to work undertaken, and the payments have been made in a transparent and comprehensible manner, this can be offset against any future leave payments made at the proper time.
Only employers who have paid rolled up holiday pay in a way which was not transparent and clear to the employee are at risk of financial exposure as a result of this ruling.
The DTI guidance can be found at http://www3.dti.gov.uk/er/work_time_regs/.
Sexual Orientation Discrimination
In one of the first major claims under the Employment Equality (Sexual Orientation) Regulations 2003, which came into force in December 2003, the former global head of equity trading at HSBC bank has lost his £5 million claim that he was dismissed because he was gay.
Peter Lewis was dismissed from his job on the ground of ‘gross personal misconduct’, three months after joining HSBC, following an alleged incident of sexual harassment at the bank’s gym.
Although the Employment Tribunal (ET) found that HSBC had not discriminated against Mr Lewis when dismissing him, it did find that he had been less favourably treated than a heterosexual employee would have been as regards the initial investigation into the complaint.
A remedies hearing will take place at a later date if the parties fail to reach an agreement on the settlement terms.
In reaching its decision, the ET examined the bank’s investigation process in great detail. Investigations of allegations of this nature should be handled with great care to ensure that they do not inadvertently discriminate on the grounds of sexual orientation. Staff training should be considered in order to avoid the danger that pre-conceived ideas as to gay and lesbian stereotypes influence the behaviour or language of those carrying out the investigation process.
Statutory Grievance Letters – Further Guidance
Under the statutory rules for dealing with grievances at work, which came into force in October 2004, the Employment Tribunal (ET) will not hear a complaint which has not first been raised in a letter to the employer. The grievance must relate to the subsequent claim and the claim must relate to the grievance raised.
Cases to date have shown that there is considerable flexibility as regards the form in which a grievance may be validly raised. It may be raised in a letter of resignation, it may be raised by a solicitor in communication with the employer’s solicitor or it may even be raised after a dismissal has taken effect. It doesn’t matter if the letter raises other complaints or issues. Where the standard grievance procedure is being used, there is no obligation on the employee at this stage to set out the basis of the claim.
Further guidance on what constitutes a grievance letter has been given by the Employment Appeal Tribunal (EAT) in two further cases.
In Arnold Clark Automobiles v Stewart & another, the EAT held that a letter claiming financial compe

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