Wright, Johnston & Mackenzie Solicitors

The Equality Act

The Act sets out new rules on the treatment of individuals and discrimination. It is designed to make the law on discrimination simpler by bringing together nine pieces of legislation.

There is now a basic framework of protection against direct and indirect discrimination, harassment and victimisation in the provision of services and public functions, in premises, at work and in applying for employment, in relation to the provision of education, in relation to associations and in the provision of transport.  These provisions do not only apply to employers, they apply also to people on your premises, people to whom you are providing services and people who apply for jobs.

There is a wider definition of indirect discrimination in relation to all protected characteristics.  The Act provides protection against people who are discriminated against because they are, or are perceived to be, “associated with” someone who has a protected characteristic (for instance, someone who is disabled).  This means that there is now protection for people such as carers.

Employers have a duty to take reasonable steps to avoid a disadvantage to a disabled person where a provision, criterion or practice or a physical feature of premises places that person at a substantial disadvantage in comparison with a non-disabled candidate. Employers also have a duty to provide an auxiliary aid in circumstances where, without one, a disabled person would be at a substantial disadvantage.

It will now be more difficult for disabled people to be unfairly screened out when applying for jobs because the new Act severely restricts the circumstances in which employers can ask job applicants questions about their health or any disability.

Practical Implications: As a result of the Act, there will now be areas of your company’s current policies and procedures that will need to be reviewed and updated to ensure that they comply with the law.  The WJM Employment team can help you update your policies and procedures and help train your staff on how to implement them.

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Achieving a fair redundancy process

The Employment Tribunal (ET) in County Print v Page set the authority for the proposition outlined below:

Mr Page had worked at the printing business for 23 years as an estimator.  He had been selected from a pool of three employees for redundancy.  The system used for determining redundancy had been a points scoring matrix system and he was selected as a candidate for redundancy.  When his concerns were raised, the response was that his employers felt the scores had been reasonable and appropriate.

The Employment Tribunal decided that fair consultation in a redundancy exercise involves giving an employee an explanation for his or her scoring and a meaningful opportunity to comment on the scores.  Employees should have sufficient information to understand their scores and an opportunity to challenge them.  If there has been a fair opportunity for an employee in the redundancy pool to challenge the scores given to him or her, then it would be difficult for a Tribunal to interfere.

Where ther is a finding of unfair dismissal it has always been possible to argue that any financial award should be reduced, on the basis that had a fair procedure been followed the employee would have been dismissed in any event. This is often referred to as a Polkey reduction. 

In the Page case, the ET held that employers seeking to use a Polkey line of argument for a reduction in the award must rely on “cogent evidence”, rather than simply arguing that there was a percentage chance of dismissal. In other words to succed with this argument the employer has to produce hard evidence to show that had a proper procedure been followed the dismissal would have happened in any event.

The Employment Appeal Tribunal (EAT) observed that it was “completely fallacious” to say that as the claimant was in a pool of three, there was a one-in-three chance of dismissal, even on similar scores.

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Maternity Leave Changes and the EU

The Pregnant Workers Directive 92/85/EC requires EU Member States to ensure that employed pregnant women and new mothers are guaranteed income during a 14 week maternity leave period at a rate at least equivalent to that to which they would be entitled if off work sick. 

The European Parliament voted on 20th October 2010 in favour of plans to increase the current 14-week period to 20-weeks.  A compromise “18-week” suggestion was rejected.

At the same time, the Parliament has voted to extend the requirement for compulsory maternity leave from two to six weeks and for paternity leave pay to be at full rate of pay for two weeks. The Parliament’s proposals will now pass to the Council of Ministers.

Given the controversial nature of the proposals it is likely that there will be pressure from Member States to ensure that they are amended before they are formally adopted - and it is even possible that they may be rejected. 

It can also be argued that the proposals could be counter-productive in that raising the amount of fully paid maternity leave from 14 to 20 weeks may drive private business away from women of child-bearing age.

We will keep you informed of developments in this legislation as time moves on.

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Failure to consult and conform under TUPE

Employers of people employed in a business which is being sold or transferred require to consult with those employees affected. This involves providing certain information in relation to the affect of the transfer on the employees. In Todd v Care Concern, the company had only provided its employees with limited information regarding affect of the transfer and had also failed to arrange for the election of ‘appropriate representatives’ as required by the Regulations. The ET awarded maximum compensation.

The EAT found the Tribunal was wrong in awarding maximum compensation in circumstances where the measures requiring consultation were of very limited significance and some, although inadequate, information had been given.

The EAT held that the normal 13 week pay award should be the starting point, only if there has been a complete failure on the part of the employer to engage in the information/consultation process. 

Nor should an award of 13 weeks’ pay be the starting point for failing to inform and consult in situations where the employer has done something, albeit not everything, to comply with the statutory obligations. An award of 7 weeks pay was substituted.

Practical implications: it is easy to fall foul of TUPE regulations if you are selling or buying a business which has employees. Consulting our specialist Employment team along with our corporate team could help keep you out of the Employment Tribunal.

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The Bribery Act

The long awaited reform of the law on bribery has finally taken place. Until now the law on bribery and corruption amounted to a patchwork of different offences, some common law, some under statute.  A draft Bill was produced in 2000 but failed to progress after the suggested measures were deemed too conservative. In 2008, the Law Commission of England published its report and the UK Bribery Act (“the Act”) received royal assent in April 2010.

The Act, which will not come into force until April 2011, has been described as one of the toughest anti-corruption measures in the world.

Businesses and their employees will now have to operate ethically within the new zero tolerance Act. Employers will need to be aware of the wide ranging provisions of the Act and how it can impact on what might have been previously acceptable practices.

The Act repeals all old statues in their entirety and the common law offences of bribery in both Scotland and England.  It has created four new offences:

• Requesting or receiving a bribe
• Offering or giving a bribe
• Bribing a foreign public official
• Failure by a commercial organisation to prevent a bribe being paid on its behalf.

Aside from the standalone offence of bribing a foreign public official, the new offences apply equally in the public sector and the private sector.

To a large extent the reform has been driven by concerns over corrupt practices in international business transactions. The Act assumes a wide territorial jurisdiction, particularly in relation to the new corporate offence.  The implications are far reaching and a foreign company carrying on any part of its business in the UK could be prosecuted for failure to prevent bribery even when the bribery takes place outside the UK.

There is no doubt that hospitality, gifts and the like are covered by the Act and, in certain circumstances, their provision could lead to prosecution. The Government is aware of this problem yet proposes to do no more than leave this tricky issue to the courts.  Unsurprisingly, this approach has come under some criticism and leaves businesses in an unsatisfactory position when it comes to deciding what hospitality might reasonably be offered to clients.

One of the main concerns for any business is the corporate offence of failing to prevent a bribe being paid on its behalf.  The offence is not restricted to bribery or corruption by employees and can extend to agents working on behalf of the company. 

Penalties are severe for both individuals and companies, with the prospect of unlimited fines and an increase in the maximum prison sentence for individuals being increased from 7 years to 10 years. 

Practical implications: Companies should be should be reviewing their anti-corruption policies to ensure satisfactory procedures are in place ahead of the new Act coming into force in April 2011.  Employees should be made aware of the wide-range of the new Act and guidelines set by employers for offering and receiving of hospitality and gifts. HMRC guidelines may provide a good starting point.

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Without Prejudice Negotiations

As a general rule, “without prejudice” or “off the record” negotiations taking place between parties to a legal action are not admissible as evidence in Court. 

It is in the public interest that people who are in dispute with each other should have the ability to speak entirely freely when trying to resolve the issues which are dividing them, without fear that what they say might later be used against them in court if they fail to reach a settlement. 

In Oceanbulk Shipping v TMT, both sides had entered without prejudice negotiations. The negotiations resulted in a settlement for the outstanding sums due to paid to Oceanbulk by TMT.  Oceanbulk then raised a court action against TMT in relation to an alleged breach of the settlement conditions. 
Oceanbulk attempted to rely on statements made during the negotiations. TMT argued that the use of these statements was precluded under the without prejudice rule. 

The High Court ruled that details of the without prejudice negotiations were admissible.  On appeal to the Court of Appeal, the High Court’s decision was overturned and the majority of the Court of Appeal held the evidence was not admissible.

In TMT’s appeal to the Supreme Court, the original decision of the High Court was unanimously upheld, overturning the decision of the Court of Appeal. The law is therefore that details of without prejudice discussions can, in limited circumstances, be admissible. In its judgment, the Supreme Court acknowledged that the without prejudice rule was much wider than it had been in the past.

There are some narrow exceptions to the without prejudice rule e.g. the ‘interpretation exception’.  This exception argues that were it not for the without prejudice rule, the facts communicated between parties would be admissible as an aid to the construction of settlement agreement resulting from the negotiations. 

In this case, the Court decided that justice demanded that the interpretation exception should be recognised.

Practical implications: The lesson for employers and employees is clear: if a dispute goes to an Employment Tribunal, it is only in very exceptional circumstances that the Tribunal will hear evidence of what went on in “without prejudice” negotiations.

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Significant Changes of Contract: Pay Reductions

Employers wishing to impose significant changes in a contract of employment can do so by dismissing on notice and offering to re-employ on the new terms. An employee who does not agree to significant adverse changes that are imposed this way, is entitled to resign and bring a constructive dismissal claim. This may also generate a claim for unfair dismissal or breach of contract or both. 

As a general rule, compensation (if any) awarded in this type of situation will be less than it might otherwise have been. The reduction in compensation is on the basis that, by rejecting the offer of continued or renewed employment, the employee has not done everything that he or she could reasonably be expected to do to mitigate his or her loss. Additionally the loss is usually measured as the difference in pay where pay has been reduced.

However, a recent case has shown that employers must not just assume that compensation will be reduced in such circumstances.

A Mr Banks won a constructive unfair dismissal claim against his then employer, Bloxwich Fencing Ltd.  Bloxwich appealed to the EAT. One ground for appeal was that the Tribunal had not reduced the compensation it awarded for the unfair dismissal to take account of the fact that Bloxwich had offered to re-engage Mr Banks, albeit on worse terms than those on which he had previously been employed. Bloxwich argued that this showed that Mr Banks had failed to take reasonable steps to mitigate his loss and, therefore, compensation should be reduced.

The EAT dismissed this argument. The EAT found that on the facts of this particular case relations between Mr Banks and Bloxwich Fencing had deteriorated to such an extent that it had been open to the original Tribunal to conclude that it was not reasonable to expect Mr Banks to go back to work for them. That was enough to dispose of the employer’s argument.

This case was decided on its own particular merits but employers who act unreasonably, such as to undermine the obligation of trust and confidence run the risk of failing to get a reduction in compensation.

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