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Employment Law Article

Reduced working hours

Increasingly the news is filled with dire financial forecasts, warning that businesses of all sizes are at risk. Many organisations are re-assessing their business plans and planning for the worst, reducing their overheads and considering the long term future of the business. One option which has been attracting headlines nationwide is to ask employees to reduce their hours, to ease the pressure on cash flow and strengthen the business in turbulent economic conditions. To many employers this is preferential to having to make redundancies, by allowing every employee to carry on working. However making such a decision opens your business to a range of potential legal problems.

The employer cannot force an employee to reduce their contractualworking hours – the employee has a contract and is entitled to rely on the terms of that contract, irrespective of the effect that this will have upon the employers business. The contract can be varied by agreement only. Of course if an employee refuses to reduce their working hours, the employer must consider the alternative options available to them, such as redundancy or restructuring, but such action cannot be used to force the employee into accepting reduced working hours.

If the employer chooses to overrule any objections raised, and insists that all employees reduce their working hours, they should be prepared for the ramifications. Employees may decide to enter a formal grievance, as the employer has broken the contract of employment. This is regarded as a breach of contract and exposes employers to the risk of constructive dismissal claims from employees. New compensation limits that came into force on 1^st February 2009 now mean that the maximum award an Employment Tribunal can make in a case for constructive dismissal is £76,700 illustrating how expensive incorrectly handled money saving ideas can be!

It is worth bearing in mind that if an employee lodges their grievance but continues to work under protest they will still be able to sue for the difference in wages. Such employees would have six years from the date of the breach of contract in which to commence legal proceedings. As an employer, this can be an expensive liability to have outstanding for such a period of time.

Even employers who have the contractual right to vary their employees working hours,puttingthem on ‘short-time’ when work is unavailable, must act cautiously to avoid the pitfalls of the statutory scheme in which employees on short-time working may become eligible to claim a redundancy payment.

To minimise such risks, it is recommended that employers seek legal advice and consider a ‘cards on the table’ approach before taking any action in relation to employee working hours or variation of contractual terms.

Not only would this allow employers to consider all the options available to them, and the implications of these decisions, but the overall cost to the business of obtaining professional advice is likely to be much less than that incurred dealing with protracted legal proceedingsand potential damages.

The ‘cards on the table approach’ will allow a full and frank exchange of ideas and give employees a clear indication as to why the employer wishes to alter working hours and how long they anticipate this step will be necessary for.This will maintain the working relationship and minimise the risk of any animosity arising, as the employee’s will see that the decision is being considered as a necessity rather than simply a cost saving exercise. In addition, employees may also be able to offer additional cost-saving suggestions that employers may not have considered and provide a positive input into maintaining the longevity of the company.

Newsletter articles

March 2009 - Reduced working hours – can I put my staff on a shorter working week?

Increasingly the news is filled with dire financial forecasts, warning that businesses of all sizes are at risk. Many organisations are re-assessing their business plans and planning for the worst, reducing their overheads and considering the long term future of the business. One option which has been attracting headlines nationwide is to ask employees to reduce their hours, to ease the pressure on cash flow and strengthen the business in turbulent economic conditions. To many employers this is preferential to having to make redundancies, by allowing every employee to carry on working. However making such a decision opens your business to a range of potential legal problems.

The employer cannot force an employee to reduce their contractual working hours – the employee has a contract and is entitled to rely on the terms of that contract, irrespective of the effect that this will have upon the employers business. The contract can be varied by agreement only. Of course if an employee refuses to reduce their working hours, the employer must consider the alternative options available to them, such as redundancy or restructuring, but such action cannot be used to force the employee into accepting reduced working hours.

If the employer chooses to overrule any objections raised, and insists that all employees reduce their working hours, they should be prepared for the ramifications. Employees may decide to enter a formal grievance, as the employer has broken the contract of employment. This is regarded as a breach of contract and exposes employers to the risk of constructive dismissal claims from employees. New compensation limits that came into force on 1^st February 2009 now mean that the maximum award an Employment Tribunal can make in a case for constructive dismissal is £76,700 illustrating how expensive incorrectly handled money saving ideas can be!

It is worth bearing in mind that if an employee lodges their grievance but continues to work under protest they will still be able to sue for the difference in wages. Such employees would have six years from the date of the breach of contract in which to commence legal proceedings. As an employer, this can be an expensive liability to have outstanding for such a period of time.

Even employers who have the contractual right to vary their employees working hours, putting them on ‘short-time’ when work is unavailable, must act cautiously to avoid the pitfalls of the statutory scheme in which employees on short-time working may become eligible to claim a redundancy payment.

To minimise such risks, it is recommended that employers seek legal advice and consider a ‘cards on the table’ approach before taking any action in relation to employee working hours or variation of contractual terms.

Not only would this allow employers to consider all the options available to them, and the implications of these decisions, but the overall cost to the business of obtaining professional advice is likely to be much less than that incurred dealing with protracted legal proceedings and potential damages.

The ‘cards on the table approach’ will allow a full and frank exchange of ideas and give employees a clear indication as to why the employer wishes to alter working hours and how long they anticipate this step will be necessary for. This will maintain the working relationship and minimise the risk of any animosity arising, as the employees will see that the decision is being considered as a necessity rather than simply a cost saving exercise. In addition, employees may also be able to offer additional cost-saving suggestions that employers may not have considered and provide a positive input into maintaining the longevity of the company.

EMPLOYMENT LAW UPDATE

01/02/2009

New Increased Compensation Limits effective from 1st February 2009

The Employment Rights (Increase of Limits) Order 2008 has introduced the following increases:-

The maximum ‘week's pay’ limit for the purposes of calculating, among other things, statutory redundancy payments and the basic award for unfair dismissal increases from £330 to £350;

The maximum compensatory award for unfair dismissal increases from £63,000 to £66,200;

Guarantee pay increases from £20.40 per day to £21.50 per day;

The minimum basic award increases from £4,400 - £4,700 in cases where the dismissal was unfair by reason of trade union, health and safety, employee representative or occupational pension trustee.

The new rates only apply to dismissals on or after 1 February 2009.

Beware the refusal of a request for flexible working!

A recent decision by the Employment Appeal Tribunal in the case ofShaw v CCL Ltd 2008 shows the importance of an employer considering all available options for flexible working. CCL Ltd committed an act of discrimination against Mrs Shaw when they refused her request to return to work on a part-time basis after her maternity leave. This discrimination amounted to a breach of the implied term of trust and confidence entitling her to resign and claim unfair constructive dismissal.

Are heterosexuals protected against discrimination?

Harassment under Reg 5(1) of the Employment Equality (Sexual Orientation) Regulations 2003 occurs where, “on grounds of sexual orientation” a person engages in unwanted conduct that has the purpose or effect of violating another person’s dignity, or creating an intimidating, hostile, degrading, humiliating or offensive environment for him or her.

In English v Thomas Sanderson Limited 2008 EWCA Civ 1421 the Court of Appeal held that the Employment Equality (Sexual Orientation) Regulations 2003 did protect Mr English, a heterosexual against homophobic banter from his work colleague. It did not matter that Mr English was not gay; his tormentors did not perceive him to be gay and Mr English knew that his tormentors did not perceive him to be gay.

Protection to those who are associated with a disabled person

In the recent case of Coleman v Attridge Law 2008 an Employment Tribunal ruled that a person who is associated with a disabled person is protected by the Disability Discrimination Act 1995 from less favourable treatment and harassment. In this case Mrs Coleman made a claim for constructive unfair dismissal on the grounds that she was harassed and suffered less favourable treatment as a result of being the primary carer of her disabled son. The allegations included that she was called ‘lazy’ when she sought to take time off to care for her son, she was refused flexible working hours and abusive and insulting comments were made about her and her son. As an employer you should now be considering your Equal Opportunities/harassment policies to ensure they reflect this change.“

Watch This Space!

April showers don’t just bring May flowers. April also brings a flood of new employment legislation. Look out for our April e:newsletter which will include details on:-

Replacement of the compulsory dispute resolution procedures

Changes to the right to request flexible working;

Increases in statutory sick pay, maternity and adoption pay and paternity pay;

Changes to minimum statutory holiday entitlements.

If you are affected by any of the above situations or if you would like to discuss any employment law problem affecting you or your business, please contact either Gillian Markland or Lorna Pratt on01904 520600.

Important Information

The information and opinions contained in this/these newsletter/s is provided for general information purposes only and are not intended to be construed or interpreted as legal or other professional advice.

Whilst IngramsProtect endeavours to ensure that the content of this/these newsletter/s is accurate and up to date, certain inaccuracies or mistakes may arise from time to time. Although IngramsProtect will correct any inaccurate information as soon as it is brought to its attention, IngramsProtect will accept no responsibility for any loss or damage resulting from reliance on any of the information contained herein, furthermore no claim can be brought against IngramsProtect in respect of any such inaccurate information or mistakes.

November 2008

Childcare Vouchers

Many employers provide childcare vouchers in return for an employee relinquishing part of their salary. But what happens to childcare vouchers during maternity leave?

When an employee agrees to forego part of their salary in return for a non-cash benefit such as childcare vouchers this constitutes a permanent variation to the employee’s contract of employment.

An employee is entitled to the same benefits of all terms and conditions of employment during Ordinary Maternity Leave (OML) and, from 5 October 2008, during Additional Maternity Leave (AML). The employee should therefore continue to receive the benefit of childcare vouchers during OML and AML despite the fact the employee is receiving a reduced salary or SMP. Employers should not deduct the value of the vouchers from SMP, even with the employee’s consent as this is not allowed by statute.

Employers could face the possibility of a sex discrimination claim should they stop providing vouchers or attempt to fund the cost of the vouchers by requiring the employee to repay the value by other means.

“This is yet another example of how difficult it is for employers to keep up to date with the constant changes in employment law. This is where IngramsProtect can help.” Gillian Markland, Head of Employment Law.

National Minimum Wage

As from the 1^st October 2008 the national minimum wage was increased to:

Main (adult) workers aged 22 and over: £5.73 per hour

Workers aged 18-21 (inclusive): £4.77 per hour

16- and 17-year-olds (above compulsory school leaving age): £3.53 per hour

One company recently had to pay over £11,000 to two ex-employees as compensation for paying them below the NMW. They were also fined for not keeping adequate records and for making false entries. This is a stark warning to employers that fail to pay the NMW.

Employers’ Liability Insurance

The Employers’ Liability (Compulsory Insurance) (Amendment) Regulations 2008 came into force on 1 October 2008. Employers no longer have to display their liability certificate at each place of business, provided the certificate is available to the relevant employees electronically e.g on the staff Intranet. This does mean however that all employees must have access to a computer. In addition, the Regulations provide that employers are no longer required to keep their liability insurance certificates for 40 years.

Annual leave and Maternity

Under the Working Time Regulations an employee continues to accrue statutory holiday during both ordinary and additional maternity leave. However the regulations do not give the employee the right to carry over holidays to another leave year. An employee may lose their right to holiday where the leave year comes to an end whilst they are on maternity. Employers should ensure that employees make arrangements to take holiday before or after maternity leave as statutory holiday cannot be taken at the same time as maternity leave. It is of course open to the employer to allow an employee to end their maternity leave early and take holiday. Contractual holiday will also now continue to accrue throughout OML and AML.

Changing Terms and Conditions of Employment

Following the recent case of Darby & Another v Law Society of England and Wales (2008) employers wishing to change terms and conditions of employment should do so with caution. A change to an employee’s terms and conditions of employment including a change in benefits may result in an employee being deemed as 'dismissed' leaving employers open to a risk of a constructive dismissal claim. It is essential to take great care in the wording of any correspondence between employer and employee as regards to a change of terms. An employer should avoid using such phrases as “take it or leave it” if they want to avoid the possibility of facing a claim for constructive dismissal.

“This case just shows how easily an employer can find himself facing a claim for constructive dismissal. If in doubt seek early advice from the IngramsProtect team” says Lorna Pratt.

Agency Workers

The Fixed-Term Employees (Prevention of Less Favourable Treatment) (Amendment) Regulations 2008 which amended the 2002 regulations saw the introduction from 27^th October 2008 of an entitlement to Statutory Sick Pay (SSP) for agency workers on contracts of less than three months.

EMPLOYMENT LAW UPDATE - OCTOBER 2008

From 1^st October 2008 the Companies Act 2006 changes director’s duties to include:

· the duty to avoid conflict of interest;

· the duty not to accept benefits from third parties;

· the duty to declare to other directors any interest in a proposed transaction or arrangement.

From 27^th October 2008 regulations have come into force providing that agency workers on contracts of less than 3 months are not excluded from SSP.

From 1^st April 2009 the right to statutory paid holiday increases from 24 to 28 days (including bank holidays).

What’s on the horizon for 2009?

Right to request flexible working

It is anticipated that the right to request flexible working for children up to the age of 16 will come into force during April 2009. At present carers can only request flexible working in respect of children under 6 or, if the child is disabled, under 18. Consultation closes on 18^th November 2008.

Time off for training

The Government is currently consulting on a right for employees to request time off for training. The proposal is based on the right for employees to request flexible working. As such, the employers will be able to reject a request for good business reasons. The Government has also confirmed that employers will not have to pay an employee’s salary during any training or the cost of training. Consultation closed on10th September 2008.

If you would like any advice or assistance in amending or drafting your contracts of employment and staff handbooks, please contact either Gillian Markland or Lorna Pratt on 01904 520600 or alternatively visit www.ingramsprotect.co.uk for more information on our all inclusive employment law package.

EMPLOYMENT LAW UPDATE

SEPTEMBER 2008

Employers now responsible for third party harassment.

The Sex Discrimination Act 1975 (Amendment) Regulations 2008 came into force on 6^th April 2008 and perhaps the most significant change made is to allow employees to claim against employers for harassment or other acts of discrimination committed against them at work by a non employee third party.

Under the new provisions an employer will be liable if it knows that harassment by a third party relating to sex has occurred on at least 2 prior occasions and fails to take reasonably practicable steps to protect employees from such harassment. So, employers can potentially be liable for harassment of their staff by clients, customers or suppliers.

Gillian Markland of Ingrams Solicitors says “Although harassment must have occurred on at least 2 occasions it is not necessary for it to be the same perpetrator in each individual incident”.

In addition, the behaviour complained of does not need to be directed at the employee who makes the complaint, it will be sufficient in appropriate cases for the employee to witness another person being harassed, provided this has the purpose or effect of violating the employee’s own dignity or of creating an intimidating, hostile, degrading, humiliating or offensive environment for the employee.

The Maternity and Parental Leave etc. and the Paternity and Adoption Leave (Amendment) Regulations 2008.

Changes have been made to maternity and adoption leave regulations. The main changes come into force on 5^th October 2008 and will apply to all employees due to adopt or give birth on or after 5^th October 2008.

The main changes include :

· Terms and conditions of employment, except remuneration, will continue during Additional Maternity Leave (AML) and Additional Adoption Leave (AAL) (as they already do under Ordinary Maternity Leave and Ordinary Adoption Leave).

· Continuous service will accrue during AML and AAL.

· Protection from detriment provisions extended to protect employees asserting these new rights under AML or AAL.

At the moment, pension contributions must be maintained whenever an employee is receiving statutory or contractual maternity (or adoption) pay. The Regulations do not change this.

Lorna Pratt of Ingrams Solicitors states “It is important that employers now address these changes by updating their maternity and adoption leave policies.”

National Minimum Wage

Comes into force on 1^st October 2008

* Workers aged 22 and over – rate will increase from £5.52 to £5.73

* Workers aged 18 to 21 – rate will increase from £4.60 to £4.77

* Workers aged 16 and 17 – rate will increase from £3.40 to £3.53

August 2008

EMPLOYMENT LAW UPDATE

Can you believe an applicant’s CV?

It is accepted that many job applicants exaggerate in their CV, but where is the line drawn between exaggerating and lying?

As an employer, you want to appoint the best candidate for your business, but you are also under certain obligations to make checks on that candidate. For example, employers are now under an obligation to check that candidates have the right to work in the UK (see www.bia.homeoffice.gov.uk).

There are basic checks that should always be made, such as checking references and academic qualifications. When it comes to the latter, simply asking to see original certificates will usually be proof enough. You may also consider checking a candidate’s criminal record. A check at the Criminal Records Bureau can reveal any disclosable convictions. This is a legal requirement where the candidate will be working with children and vulnerable people.

Doing these basic checks will not only ensure you employ the right candidate, it will also minimise your recruitment costs and ensure that you avoid falling foul of immigration legislation.

Offering redundant employees alternative employment.

Under the Employment Rights Act 1996 a redundant employee who unreasonably refuses a suitable alternative role forfeits their right to a redundancy payment.

The issue for employers therefore is: What is a suitable alternative? In the recent case decision of Commission for Healthcare Audit and Inspection v. Ward, an Employment Tribunal ruled that amongst the factors to take into account is the employee’s perception of the role when they are asked to make a decision.

It is therefore critical that employers communicate effectively with redundant employees and make clear exactly what the alternative role involves, and the reasons why it is a plainly suitable alternative rather than a marginally suitable alternative.

As with all cases of this type it is for the employer to show that a refusal is unreasonable, and therefore putting the employee in an informed position is essential.

Employees to be given time off to train

On 18^th June 2008 the Government launched a new consultation process on whether employees should be given the right to time off for training purposes. The consultation will remain open for 3 months, and if implemented it is expected that new measures would be implemented in 2010.

The scheme would work in much the same way as requests for flexible working time. It is proposed that only those employees with 26 weeks service would be eligible and, as with requests for flexible working time, employers with a sound business reason would have the right to turn down a request.

The Government has not set any limits on the time taken off for training, and it is proposed that this be agreed between the employer and the employee. The consultation paper also suggests that remuneration arrangements are also agreed between the employer and employee, with the suggestion of paid leave or alternative working arrangements to accommodate training.

Gillian Markland of Ingrams Solicitors believes that this scheme could be of great benefit to employers. “A fully trained workforce is likely to improve the employer’s end product, and therefore the long term benefits could far outweigh the short term costs of allowing employees time off”

Health and Safety

With the Corporate Manslaughter Act becoming law on 6^th April 2008 all employers must now be aware of their responsibilities under Health and Safety Legislation. All employers owe a duty of care to their employees, and with the new offence of “corporate manslaughter” being introduced by the Act this is a duty all employers should take very seriously, warns Lorna Pratt of Ingrams Solicitors.

A company will be found guilty of the new offence if the way it manages its activities amounts to a gross breach of its duty of care which results in a person’s death. All firms should therefore ensure that they put in place procedures that comply with current health and safety legislation, and keep these under regular review.

Any company found guilty under the Act could face an unlimited fine, and the Court could also order the details of the offence to be made public, causing further damage to the business’ reputation.

July 2008

EMPLOYMENT LAW UPDATE

Can controlling shareholders also be employees?

In the case of Clarke v Clarke Construction Initiatives Ltd the Employment Appeal Tribunal (EAT) confirmed that a Tribunal had been entitled to find that a majority shareholder of the company was not also an employee. They identified three categories where there may be no employment contract:

Where the contract is entered into for some ulterior purpose;
Where the company itself is a sham;
Where the parties do not conduct their relationship in accordance with the contract.

Applying the above guidelines, the Employment Appeals Tribunal in Neufeld and A&N Communications In Print Ltd and anor (In liquidation) held that the majority shareholder (90%) was an employee of the business. They took into account the fact that he did not overpower the views of the other directors; although he received dividends and was guarantor this was not inconsistent with his being an employee; he conducted himself in accordance with his contract of employment (even though he did not take full holiday entitlement and worked very long hours); and the absence of a written contract did not undermine his case as the other directors did not have one either. In the circumstances therefore, he could claim a redundancy payment, notice pay and holiday pay from the Secretary of State for Trade and Industry (now Business, Enterprise and Regulatory Reform) when the business became insolvent.

Employers must take care when dismissing employees suffering from ill-health

A decision by the Employment Appeal Tribunal in the recent case of The Governing Body of Hastingsbury School –v- Clarke reminds employers to investigate any ill-health issues before deciding to dismiss. In this case the Claimant was dismissed before the employer had obtained and considered medical evidence which resulted in the EAT upholding the Tribunal’s view that the dismissal had been unfair as no reasonable employer would have dismissed without at least taking steps to investigate further. Gillian Markland, Head of Employment, says: “This case once again shows that employers should not rush into dismissing someone on the grounds of ill-health without first obtaining medical evidence.”

Distinction between ordinary and additional maternity leave to be removed

Proposals have been put forward in the draft Maternity and Parental Leave etc and the Paternity and Adoption Leave (Amendment) Regulations 2008 which will give the same rights to employees on additional maternity leave (AML) as those on ordinary maternity leave (OML). This would apply to women whose expected week of childbirth (EWC) begins on or after 5 October 2008. There are to be similar distinctions between the rights of employees on ordinary adoption leave and additional adoption leave are also removed.

This means that women on AML will be entitled to the same benefits of all the terms and conditions of employment which would have applied if they had not been absent. In addition their seniority and pension rights will also be unaffected by their absence.

The reason behind these changes are as a result of the High Court's decision in Equal Opportunities Commission v Secretary of State for Trade and Industry 2007 ICR 1234 which held that the Sex Discrimination Act 1975 did not fully implement the UK Government's obligations in respect of sex discrimination under European law.

Can a redundant employee unreasonably refuse the offer of alternative employment?

In the case of Ward –v- Commission for Healthcare Audit and Inspection an employee refused the offer of alternative employment and made a claim for a redundancy payment. The Employment Appeal Tribunal held that the employee was reasonable in rejecting the offer as the suitability was “marginal rather than overwhelming “. Lorna Pratt, Legal Executive, says: “This case highlights that any offers of alternative employment must be suitable for the particular employee and key factors include pay, nature of duties, status, hours and place of work.”

If you are affected by any of the above situations or if you would like to discuss any employment law problem affecting you or your business, please contact either Gillian Markland or Lorna Pratt on 01904 520600.

June 2008

CONTRACTS OF EMPLOYMENT

We cannot over emphasise the importance of an employer providing an employee with a written contract of employment. Not only is it a legal requirement for employers to provide a minimum written statement of particulars but a more detailed written contract offers enhanced protection for an employer.

The contract of employment is a legal agreement between an employer and an employee setting out the basis of their working relationship.

It is a legal requirement for an employer to provide a statement of particulars within 2 months from the start of employment. This must include:

names of the parties;
date employment began (including any continuous service);
place of work;
job title;
rate and intervals of pay;
hours of work;
holiday, pension, sickness provisions;
grievance and disciplinary procedures;
if not a permanent position, the expected date when it is to end;
any collective agreements;
notice periods; and
confirmation as to whether an employee is required to work outside the UK.

Failure to provide such a statement could render an employer liable to pay compensation and face an Employment Tribunal claim at which the Tribunal will determine what particulars ought to have been included in the s.1 statement. In addition, it will be an uphill struggle to try and convince an Employment Tribunal that you are a reasonable and fair employer if you have not issued any such particulars.

It is in the interests of an employer to provide a more detailed contract including additional clauses. Such clauses could deal with, for example, restrictive covenants which are used to prevent employees from competing or from going to a competitor for a specified period following their employment. Such a clause could be highly important if a key member of staff leaves your business. Further clauses could include recovery of training fees, commission structure and garden leave clauses.

If you would like to discuss any aspect of contracts of employment, or employment law in general, please contact Gillian Markland or Lorna Pratt at Ingrams Solicitors on 01904 520600.

November 2008

Childcare Vouchers

Annual leave and Maternity

Changing Terms and Conditions of Employment

Employers now responsible for third party harassment.

The Sex Discrimination Act 1975 (Amendment) Regulations 2008 came into force on 6th April 2008 and perhaps the most significant change made is to allow employees to claim against employers for harassment or other acts of discrimination committed against them at work by a non employee third party.

Gillian Markland of Ingrams Solicitors says “Although harassment must have occurred on at least 2 occasions it is not necessary for it to be the same perpetrator in each individual incident”.

The Maternity and Parental Leave etc. and the Paternity and Adoption Leave (Amendment) Regulations 2008.

Can controlling shareholders also be employees?

Employers must take care when dismissing employees suffering from ill-health

Distinction between ordinary and additional maternity leave to be removed

CONTRACTS OF EMPLOYMENT

We cannot over emphasise the importance of an employer providing an employee with a written contract of employment. Not only is it a legal requirement for employers to provide a minimum written statement of particulars but a more detailed written contract offers enhanced protection for an employer.

The Sex Discrimination Act 1975 (Amendment) Regulations 2008 came into force on 6^th April 2008 and perhaps the most significant change made is to allow employees to claim against employers for harassment or other acts of discrimination committed against them at work by a non employee third party.