Employment Law – October 2011

Posted on October 30, 2011

Clare JonesA few statistics

A few statistics to round things off! Not very encouraging ones unfortunately.

Tribunal awards: average age discrimination awards proved to be higher than for other forms of discrimination – £30,289 for the year ending 31 March 2011. Age discrimination has overtaken race discrimination to become the third most frequent type of discrimination claim. Disability claims attracted the second highest average award – £14,137 – and disability and sex discrimination cases were also the most common types of discrimination claims accepted by employment tribunals.

The highest award in a discrimination case this year was a £289,167 payout for sex discrimination. (This has now been topped by BT who paid out £290,000 to a telesales worker who sexually harassed by her manager. And another record has just been broken – a Birmingham employment tribunal awarded record costs of £100K against a claimant whose case they considered to be vexatious and misconceived – Smith v Pertemps Investments.)

  • Inflation: the Office of National Statistics (ONS) reports that CPI rose to 4.5% in August, while the RPI increased to 5.2%.
  • Pay increases: the latest Income Data Services analysis found that wage rises are failing to keep pace with inflation as average increase across all sectors remained steady at 2.5% in August. CIPD research (summer 2011 Employee Outlook) found that 58% of employees have received a pay freeze since January 2011.
  • Unemployment: the ONS also reported the biggest rise in unemployment for two years, increasing by 80,000 in the three months to July, to hit 2.51 million.

Employment law update

National Minimum Wage (NMW)

Just a reminder that the NMW has now increased as follows:

  • adult rate (for those aged 21 and over): £6.08 per hour
  • youth rate (18-20): £4.98 per hour
  • rate for those aged 16 and 17-year-olds: £3.68 per hour
  • apprentices not otherwise covered by the NMW: £2.60 per hour
  • the maximum amount that can be offset where accommodation is provided is now £4.73 per day

The new rates should be paid for the first “pay reference period” that starts on or after 1 October. So if a weekly-paid employee works Monday 26 September – Saturday 1 October inclusive, the new minimum rates do not apply to that week; they first apply to the pay week starting on Monday 3 October.

Whilst on the subject of the NMW, new guidance on the Business Link website confirms that those on work experience placements and interns are entitled to be paid the NMW unless the employer can demonstrate that they are volunteers or unless a specific exemption applies. The guidance confirms that entitlement to the NMW does not depend on job titles, the type of work undertaken, the description of work (for example “unpaid” or “expenses only”) or the relevant profession or business sector. What matters is firstly whether the person meets the statutory definition of “worker” (ie someone who is engaged under a contract of employment or otherwise to provide work or services personally under a contract that is clearly not self-employment), and whether they are then a volunteer or whether specific exemptions apply to them.

The guidance includes a checklist for employers, and gives further information on “volunteers” and “voluntary workers” and on the various exemptions that apply to those who are actually workers. Those exempt include:

  • students working on short-term placements (not exceeding one year) as part of a UK-based further or higher education course
  • individuals undertaking work experience who are still of compulsory school age
  • participants in specified government schemes (including arrangements made under the Jobseekers Act 1995) or programmes
  • those involving voluntary work for a charity
  • those involving work shadowing, rather than genuine work tasks

Voluntary workers (in other words, those employed by a charity, voluntary organisation, associated fund-raising body or statutory body) are exempt from the NMW if they do not receive monetary payments (other than reimbursement of expenses incurred in the performance of their duties) or benefits in kind (other than reasonable subsistence or accommodation).

Pay for interns has become a political issue. According to the CIPD 2010 learning and talent development survey, 63% of employers pay their interns at least the minimum wage, with 92% of this group paying over and above this level out of choice. However, the graduate advice site Graduate Fog has launched a “Pay your interns” campaign, intended to “name and shame” companies that fail to pay interns the National Minimum Wage (NMW). And politicians have been personally caught up in the debate as many offer unpaid placements themselves.

Finally, the National Minimum Wage (Amendment) Regulations 2011 deal with accommodation in colleges and universities. Many colleges and universities provide student accommodation and, quite separately, employ the students in part-time jobs, eg as student mentors or in the college bar. Higher Education and Further Education Institutions are now exempted from the NMW accommodation offset rules where they provide accommodation to a worker who is enrolled on a full-time course with that institution. The regulations define the specific courses in England, Wales, Scotland and Northern Ireland that qualify for this exemption.

For more information on the NMW or work experience contact us or click here. For the actual amendment regulations, see here.

Tribunal claims – future increase in the qualifying period for unfair dismissal

Chancellor George Osborne has announced two important changes, intended to reduce the number of employment tribunal claims and boost the economy.

As from 6 April 2012

  • the qualifying period for unfair dismissal will be increased from one year to two years
  • fees will be introduced for tribunal claims. Consultation will commence at the end of November, but unconfirmed reports suggest that the fees will commence in 2013 and will be phased, as follows:
    • upfront fee of £150 – £250 when lodging ET1
    • further fee of £1,000 payable by claimant when the hearing is listed
    • higher fees if the claim is for over £30,000
    • fee will be refunded if the claimant wins, forfeited if loses
    • fees to be waived for those with no money

The most recent statistics from the tribunals, show that whilst the number of unfair dismissal and redundancy pay claims has fallen slightly, claims under the Part Time Workers (Prevention of Less Favourable Treatment) Regulations almost trebled and age discrimination claims rose by 32%.

With regard to compensation, the median award for unfair dismissal was £4,591. The highest award for unfair dismissal was £181,754. This is in excess of the statutory cap and it is likely that the dismissal was related to a complaint of whistleblowing or health and safety. The highest award for discrimination was £289,167 (sex) compared with £729,347 (disability) in 2009-2010.

The statistics also reveal a slight increase in the number of appeals received by the EAT, while the number of appeals disposed of at a full hearing fell by comparison with 2009-2010.

Changes to the shortage occupation list for foreign workers

The “shortage occupation list” affects Tier 2 applicants (skilled individuals with a job offer) who wish to work in the UK. To be on the list, the job must require skills that are in short supply and it must be “sensible” to recruit those skills from outside the EEA. Contact us if you need more information.

Despite CIPD research showing that the proportion of employers planning to recruit migrant workers has risen to a new high, the government’s chief immigration adviser said there was “no evidence” that the UK’s immigration cap is damaging the economy: only 8,900 skilled workers from outside the EEA came to Britain in the 12 months to June 2011 (fewer than half the 20,700 workers allowed under the cap).

For more information on employing foreign workers do contact us.

Guidance on social networking

ACAS has recognised the impact of social networking on employment matters – it estimates that almost six out of 10 workers now use social media at work, either on their computers or mobile phones, and that looking at personal-interest webpages, ‘tweeting’ or blogging costs the UK economy up to £14bn per year. As a result it has produced a guide to help employers manage the impact of social networking on managing performance, recruitment, disciplinary and grievance issues, bullying, defamation, data protection and privacy.

There is also a section on drawing up a Social Networking Policy, including practical tips and an explanation of the legal considerations involved.

New requirements for mergers and acquisitions

The UK Takeover Panel has introduced some changes to the takeover code, which impose a strict timetable of 28 days between a bidder being identified and the requirement to make or withdraw a bid, and require companies to publicise any approach they receive. Employee representatives will be given the right to a formal response in the bid process and any statements about the bidders’ operational plans that affect employees (such as site closures or likely job losses) will be considered binding for a period of at least 12 months.

The changes mean that HR is likely to be involved in the process at a much earlier stage than previously, as employee representatives will hear about acquisition plans at an earlier stage, enabling them to ask questions and gain meaningful promises. The changes are now in force.

Making it easier to take on apprentices

The Government has announced new measures to make it easier for employers to take on large numbers of apprentices. Firms that are contracted directly with the Government to train apprentices will benefit from simplified payment, reporting and assessment requirements and reduced paperwork by using more electronic processes. The move comes in response to the recommendations of a review led by the Employer Reference Group, the CBI and large companies, including BT and TUI Travel. For more details about apprenticeships contact us.

End of default retirement age

The statutory retirement procedure, which enabled employers to retire employees on reaching the age of 65, was abolished back in April, but (provided that notice was given before April) allowed the enforced retirement of anyone who reached the age of 65 by 1 October 2011. So as from next month, we no longer have a default retirement age.

Employees covered by the transitional arrangements (those who reach the age of 65 on or after 1 October 2011 AND who have been given notice of dismissal under the statutory procedure prior to 6 April 2011) may continue to work until 5 October 2012. For the rest of us, hopefully most employers will by now have notified their staff of whether they intend to retain an employer-justified fixed retirement age or not.

Employers who have retained a contractual retirement age need to be able to justify that the chosen age is a necessary and proportionate means of achieving a legitimate aim. In particular, they should focus on why it is necessary to maintain that particular age; what evidence they have to show that maintaining a particular age is necessary; and whether dismissal is the only means necessary of achieving the intended aim.

As the government contemplates bringing the planned increase in state pension age to 67 forward by 10 years: working longer appears to be the order of the day (at least for those of us still in employment!) A report in “The Guardian” on 10 September suggested that the increase in state pension age to 67 may now be introduced by 2026, rather than 2036.

Perhaps unsurprisingly, employers are claiming that the abolition of the default retirement age is adversely affecting the employment prospects of younger people. A report by lawyers Norton Rose (“A Retirement Revolution – Life After the Default Retirement Age”) found that 46% expect the removal of the DRA to have a negative effect on their hiring strategy, with 22% agreeing that they will have to directly reduce their hiring of less experienced staff. The latest labour market statistics from the Office for National Statistics revealed that youth unemployment rose by 78,000 over the quarter to July 2011 to reach 973,000.

In August we reported on the latest tribunal statistics and the large (30.8%) increase in age discrimination claims last year – note that the statistics covered the period up to March, so before the removal of the DRA. The statistics relating to compensation awards showed that age discrimination claims have the highest median award of all the different grounds of discrimination, at £12,697. The average award for age discrimination claims is much higher – £30,289 for the year ending 31 March 2011, Expect a further increase in such claims – especially since employers seem to have done little to train their managers on this!

For further advice on retirement do contact us.