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JUNE 2010

Employers and their Human Resources advisers face constant difficulties in trying to avoid the potential pitfalls posed by current employment law. This bulletin addresses, in a practical way, some issues commonly dealt with by Human Resources departments and gives realistic guidance on how to reduce the risk of employment related litigation in these areas. It includes a Legal Update and then FAQ’s.

LEGAL UPDATE

Equality Bill

After over four years of consultation and progress through Parliament, the Equality Bill received Royal Assent on 8 April 2010, with the majority of its provisions planned at that time to come into force in October 2010. The Bill’s aim is to harmonise existing discrimination laws and to promote equality.  It is potentially the most important piece of employment legislation due to come into force this year. It remains to be seen whether the new Coalition Government will make any amendments to or delay its implementation.

Latest - The proposed implementation date of October 2010 has this week disappeared from Government websites. The explanation was that the stages of implementation are being considered. Watch this space……….. We will provide updates on it through to October and plan a training seminar in the Autumn.

Fit notes

Sick notes have now been replaced with “fit notes”. These allow an employee’s doctor to indicate whether an employee is fit for work and suggest ways in which the employer can facilitate an employee’s return to work. Employers will now need to evaluate the employee’s fitness for work in light of these suggestions.

Statutory maternity, paternity and adoption pay

As at 4 April 2010, statutory maternity, paternity and adoption pay rose from £123.06 to £124.88 a week.

The Government has also announced it will not go ahead with the planned extension of statutory maternity pay from 39 to 52 weeks. The Government had planned to implement this policy by April 2010 but it has now been postponed indefinitely.

Additional Paternity Leave

It was announced by the Labour Government that, for children due on or after 3 April 2011 (or, in the case of adoption, notification of a match on or after 3 April 2011), the last 6 months of the mother’s maternity leave could be transferred to the father or her partner to take as paternity leave.  Part of that paternity leave would be paid, at the same rate as statutory maternity pay, if it is taken during the mother’s 39 week statutory maternity pay period. The new Coalition Government has announced that it “will encourage shared parenting from the earliest stages of pregnancy”.  The positions of the Liberal Democrats and the Conservatives prior to the election differed in the detail of how they envisaged flexible parental leave working, so it is unclear as to how this will work in practice. Employers should ensure that their policies relating to maternity and paternity leave remain updated to incorporate any changes.

National minimum wage

New national minimum wages rates will take effect from 1 October 2010. These will be £5.93 for workers over 22 (from £5.80), £4.92 for workers aged between 18 and 21 (from £4.83) and £3.64 for workers who are 16 and 17 (from £3.57).

New ACAS Code of Practice

A new ACAS Code of Practice on Time Off for Trade Union Duties and Activities came into effect on 1 January 2010. This replaces the previous guidance issued in 2003.

Time off for training

From 6 April 2010, employees working in organisations with 250 or more employees, have been entitled to apply for unpaid time off to participate in work-related training, subject to meeting various prescribed conditions. This is very similar to the present right to request flexible working for child care or adult dependents. The right to request unpaid time off for training will be extended to apply to all organisations, from April 2011.

FAQ’S

Q: I want to change the pay structure for all of my employees. There is a clause in the staff handbook which says I am allowed to make changes to their terms and conditions of employment. Can I go ahead and impose these changes with immediate effect?

If the employees’ contracts of employment incorporate the staff handbook (i.e. the contract makes specific reference to the terms and conditions of the staff handbook being contractual terms), it may be possible for an employer to make unilateral changes to the terms and conditions, even where such changes are to pay.

The recent Employment Appeal Tribunal (EAT) case of Bateman and others v Asda Stores Ltd found that Asda was entitled to make unilateral changes to its employees’ contracts, including changes to pay and work structure.  Asda wished to harmonise the pay and work structure of its employees across all of its stores.  Although most employees agreed to the new regime, some did not and six employees brought a claim for unauthorised deductions from their wages.

The staff handbook stated that Asda “reserved the right to review, revise, amend or replace the contents of this handbook, and introduce new policies from time to time reflecting the changing needs of the business…” The EAT found that Asda’s staff handbook was incorporated into the contracts of employment. Asda was therefore permitted to make unilateral changes to both the pay and work regimes as the wording in the staff handbook was sufficiently wide to cover those matters.

It is important to note, however, that whether or not you can make such changes will depend entirely upon the facts of the situation. In Asda’s case, only one of the claimants contended that she suffered any loss of pay as a result of the new regime.  Great care should be therefore taken before making any unilateral changes as you may run the risk of various claims, including constructive dismissal, breach of contract and/or unlawful deductions from wages. A better approach would be to consult with the employees prior to making any changes to their pay and seeking their express written agreement to the change.

Q: My marketing assistant is refusing to work on an advertising campaign which promotes civil partnerships. She says that it is contrary to her Christian beliefs. As an employer, how do I handle this?

Employers should always be sensitive to their employees’ religious beliefs but this does not mean that they should simply stand by whilst that employee effectively discriminates against another protected group.

The recent EAT case of London Borough of Islington v Ladele held that disciplining a Christian registrar who refused to perform civil partnership ceremonies due to her religious beliefs was not discrimination on the grounds of religious beliefs. This decision was followed by the EAT case of McFarlane v Relate Avon Ltd which held that it is not discriminatory to dismiss an employee who refused to provide psycho-sexual counselling to same sex couples due to religious beliefs.

Following this line of thinking, you should be within your rights to discipline your marketing assistant if she continues to refuse to work on the required advertising campaign. However, before you embark on such a process, you should try and resolve the situation informally by discussing the issues with her. Alternatively, you may perhaps want to consider whether to move her to a different project.

Q: I am defending a claim of discrimination submitted by my former Finance Director. He is trying to claim “stigma damages” – what are these and are they likely to be awarded to him?

“Stigma damages” are claimed by employees who argue that because they have brought a claim against their employer, it has tainted their reputation in the industry/profession in which they work, so it makes it much more difficult for them to obtain suitable employment elsewhere. Consequently, they argue that they will suffer greater loss of earnings and should be compensated for this.

Awards for “stigma damages” are, in principle, possible. However, the Court of Appeal recently held that such losses are recoverable only where the employee can show compelling evidence that they have been prejudiced in the labour market by virtue of bringing proceedings.

Therefore, whilst stigma damages are in theory recoverable, your former Finance Director will need to show compelling evidence that he has been prejudiced and therefore unable to find alternative employment by virtue of his bringing his claim against you.

Q: One of my senior sales managers has resigned. I want to put him on “garden leave” during his notice period as I have evidence that he intends to go and work for my competitor. I do not have a “garden leave” clause in his contract of employment but can I impose it anyway?

The general position is that an employer must provide its employees with work unless there are express provisions in their contract of employment to the contrary, such as a “garden leave” clause. Failure by an employer to allow an employee to work their notice period could therefore amount to a fundamental breach of contract, which could bring the contract immediately to an end i.e. the employee could treat themselves as having been constructively dismissed.  The employer would not then be able to rely on any post-termination restrictions contained in the contract, such as non-compete, and non-solicitation clauses.

However, in the recent case of Standard Life Health Care Ltd v Gorman and others, the Court of Appeal has taken a different approach that could be of assistance to employers in certain circumstances where there is no express garden leave clause. In this case, six sales team managers attempted to resign with immediate effect from Standard Life in order to join a competitor. There was evidence that the employees had started to assist the competitor even before they submitted their resignations.

Standard Life did not accept the resignations and instead suspended the managers pending investigation into the alleged breach of contract, claiming that they had breached their duty of good faith. A dispute ensued and the case ended up in the Court of Appeal. The Court held that as employees have a reciprocal obligation to act with good faith and loyalty, the employer is no longer obliged to provide work for that employee if they have breached this obligation.

Although the decision in the above case is potentially helpful to employers who are concerned about its employees working for competitors, it is still recommended that the contracts of employment, particularly those of key employees, contain an express garden leave clause. This is especially important where employees need to be at work to receive remuneration (for example, to earn commission) as there is an even greater argument that their employer is obliged to provide them with work.

If you have firm evidence that your senior sales manager intends to work for a competitor, you may be able to suspend him on the grounds that he is acting in bad faith.  However you should proceed with caution because, if you get it wrong, there may be adverse consequences for you, such as claims for breach of contract and constructive dismissal.

Q: My receptionist insists on wearing a necklace with a large cross on it, saying that is part of her religious beliefs. Our uniform policy makes it clear that no jewellery should be worn. Can I insist that she removes it?

The recent Court of Appeal case of Eweida v British Airways plc dealt with this very issue. Ms Eweida insisted upon wearing a Christian cross visible over her uniform contrary to British Airways’ uniform policy.  BA had a rule that prohibited the wearing of any visible item around the neck.  Items considered “mandatory” religious items, such as the Sikh turban and the Jewish skull cap, could be worn visibly if they could not be concealed.

Ms Eweida continued to wear her cross over her uniform, despite being warned not to do so and was eventually she was sent home by BA. BA offered Ms Eweida an alternative role which did not require her to wear a uniform so that she could continue to wear her cross.  Ms Eweida rejected this offer and claimed that BA had indirectly discriminated against her on the ground of her religion or belief by preventing her from wearing her cross over her uniform.

The Court of Appeal found that there was no evidence that anyone other than Ms Eweida was disadvantaged by BA’s uniform policy because of their religion and belief.  Further, it drew a distinction between items that must be worn to follow a particular faith and those which are a merely desired (rather than required). In this case, the Court found that the wearing of the cross was Ms Eweida’s personal preference and not a requirement of her practising Christianity.

However, it should be noted that Ms Eweida has applied for leave to appeal to the Supreme Court and the Justices are currently considering her application.

On the basis of the decision above, whether or not you can require your receptionist to remove her necklace will depend upon whether the cross is a requirement of her following her particular faith or her merely personal preference.  If it is the latter, you can insist that she does not wear the necklace in such a way that it is visible over her uniform.

Alison Downie
Head of Department & Partner

If you would like any further information about the issues raised in this newsletter, or any other aspect of employment law, please contact Alison Downie (adownie@gdlaw.co.uk), or any other member of Goodman Derrick LLP's employment team on 0207 404 0606.

This guide is for general information and interest only and should not be relied upon as providing specific legal advice.