UK Employment Newsletter: December 2009

December 9, 2009

Welcome to the December 2009 edition of the McGuireWoods London LLP quarterly Employment Newsletter, providing you with an update on new and proposed employment legislation and a summary of recent employment cases which are likely to be of interest to you.

The Equality Bill

The Equality Bill, which was published on 27 April 2009, aims to consolidate all existing discrimination legislation and add new employment and equality protections. On 7 July 2009, the Bill passed the Committee stage of the House of Commons with relatively few amendments.

Below is a summary of the key elements of the Equality Bill published on 27 April 2009.

  • Consolidation of all discrimination and equality legislation into one act.
  • Prevention of discrimination and harassment by reason of a perception that someone has a protected characteristic or by reason of a person’s association with someone with a protected characteristic.
  • Broadening of the ability of employers to take positive action in recruitment to ensure greater equality in the workplace.
  • Extension of protection in cases of discrimination to circumstances when a person has a combination of protected characteristics.
  • Increase in the transparency of gender pay.

We will keep clients updated on the progress of the Bill through Parliament and will provide a separate newsletter regarding the impact of the Equality Bill once its final wording has been decided and its implementation agreed upon.

Additional Paternity Leave and Pay

On 24 September 2009, the Government announced proposals to introduce additional paternity leave and pay entitlements to fathers whose children are due on or after 3 April 2011. It is proposed that fathers will be able to take up to six months’ leave during the second six months of a child’s life provided that this is taken instead of the mother taking maternity leave during that period. This leave will be paid at the statutory maternity rate (currently £123.06 per week) if taken during a period when the mother would have been entitled to statutory maternity pay. It is proposed that these new measures will enable greater flexible working and will minimise burdens on businesses by allowing childcare to be split between parents.

Fit Notes

Doctors’ “Sick Notes” will be replaced by “Fit Notes” from April 2010. The Department for Work and Pensions has launched a public consultation regarding the design of the new medical certificates, which will place more emphasis on what employees are able to do, rather than what they cannot do, during a period of sickness. It is hoped that the new “Fit Notes” will discourage sickness absence and will help employees to return to work after sickness absence by alerting employers to any practical steps that could be taken to encourage employees to return to work.

Accordingly, once the new “Fit Notes” come into effect, employers who fail to take action as a result of any such suggestions made by an employee’s doctor, may find it more difficult to defend disability discrimination claims and argue why the “reasonable adjustments” suggested by the doctor were not adopted to enable the employee to return to work.

Sickness During Holidays

Following its important decision in Stringer v HMRC early this year (which is authority for employees’ entitlement to accrue holiday during sick leave), the European Court of Justice (ECJ) has decided another important holiday entitlement case under the Working Time Directive. The case of Pereada v Madrid Movilidad concerned the question of whether employees who are ill during periods that they had booked off work as holiday, can re-classify that absence as sickness leave so that they are able to take the holiday at a later date.

As mentioned in the “Fit Notes” section above, whilst doctors continue to provide “Sick Notes” which are relatively easy to obtain, employers will be concerned about employees seeking to abuse this new entitlement by reclassifying holiday as sickness leave to enable them to take more leave from work. However, this is less likely to be a concern when “Fit Notes” are introduced.

Default Retirement Age of 65

The High Court has handed down their judgment in what has become known as the Heyday default retirement age litigation, in which Age Concern challenged the default retirement age of 65 provided by the Employment Equality (Age) Regulations 2006. The Court found against Age Concern and upheld the default retirement age. Shortly before judgment was given, the Government announced that it will review the default retirement age in early 2010. The default retirement age of 65 remains in place for the time being but may well be raised in the next few years. On 28 October 2009, the Department for Work and Pensions commenced a consultation in relation to the default retirement age which will close on 1 February 2009. We will keep clients updated on developments.

Increase to Weekly Wage Maximum for Compensation Purposes

In the 2009 Budget, the Government announced proposals to increase the maximum weekly wage for the purpose of calculating statutory redundancy entitlements from £350 to £380. This increased limit applied from 1 October 2009 and will now apply to all types of compensation which are calculated by virtue of the weekly wage limit, namely the basic award in unfair dismissal and to calculate statutory redundancy entitlements. The Government has made it clear that the increase in October 2009 is a special case and that the usual February increase will not take place in 2010. Therefore, the next increase will not take place until February 2010.

National Minimum Wage Increases

On 1 October 2009, the national minimum wage increased as follows:

  • £5.80 for workers aged 22 and over
  • £4.83 for workers aged 18 to 21
  • £3.57 for workers aged 16-17 (provided that they are above compulsory school age)

The Government have also announced that from October 2010, the highest level of the national minimum wage shall apply to workers aged 21 and over.

Costs Against Employees in the Employment Tribunal

Only when a party to Employment Tribunal (ET) proceedings has acted “vexatiously, abusively, disruptively or unreasonably” can the other party recover their costs incurred in bringing or defending that claim. Usually this is narrowly construed and costs are rarely awarded. However, two recent cases could result in it being easier to obtain costs against employees who are found to have lied to the ET.

In the first of these cases, Daleside Nursing Home Limited v Matthew (February 2009), a nursing home employee, Mrs Matthew, brought a claim for race discrimination alleging that her manager had used obscene racial language when referring to her. The Employment Appeal Tribunal (EAT) found that the ET’s finding that it did not believe that the alleged racial language had been used meant that it had found that Mrs Matthew had lied. It held that lying would always amount to unreasonable conduct and, accordingly, it made an order for Mrs Matthew to pay a proportion of her employer’s costs.

This finding has been confirmed in the case of Dunedin Camore Housing Association Limited v Donaldson (July 2009). In this case, Donaldson asserted that she had not disclosed details of a compromise agreement in breach of its confidentiality clause and that, therefore, her employer’s refusal to pay the sums in the compromise agreement amounted to breach of contract. The ET found that Donaldson had breached the confidentiality clause on two occasions. The EAT held that as Donaldson had not approached the case honestly and reasonably, she was ordered to pay a proportion of her ex-employer’s costs.

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