BHW Employment Law

NewsletterAutumn 2013

Welcome to the Autumn 2013 edition of the BHW Employment Law Newsletter.

It seems that despite Government rhetoric to leave employment law alone, the Ministers can’t help themselves from dabbling in the area!

We have therefore collated information on the most important changes to help keep you up to date.

Page 3 provides a summary on the changes which will be coming into force in relation to the Transfer of Undertaking (Protection of Employment) Regulations 2006, known as TUPE.

We have also included an article on auto enrolment of pension schemes to make sure you have enough time to become compliant with the rules in this regard, this can be found on page 4.

Meanwhile, the controversial topic of people’s right to express their religious belief and how this impacts on society is a familiar story in the media. We have therefore included an article on how to avoid confrontation on this point, which can be found on page 5.

Our case round up can be found at page 6 of this issue, where we provides a brief update on the way in which holiday entitlement should be calculated and the difference between a restrictive covenant and a

restraint of trade clause. While page 7 provides a quick update in relation to other legislative changes.

On special request, we have also included in this issue a meet the team section at the back of the Newsletter. If you have any more ideas on how we can format the Newsletter to make it more useful for you please do not hesitate to contact me or one of the team who will be happy to assist.

If you have any questions relating to the articles featured in the Newsletter or would like advice on a particular query you may have, please do not hesitate to contact me to discuss further.

Laura Allanson Head of Employment 0116 281 6237 laura@bhwsolicitors.com

Editor Laura Allanson. Articles produced by Laura Allanson, Katie Stephenson and Claire Bell.

Inside this issueChanges to TUPE 3

Pension Auto Enrolment: are you ready? 4

The veil and you: What are your obligations as an employer? 5

Case round up 6

Legislation update & Employment Tribunal Statistics 7

Meet the team 8

BHW Employment Law

Newsletter

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They say their aim is to ‘remove unnecessary gold-plating to the TUPE Regulations and remove unfair legal risks to companies carrying out transfers.’ There is currently no implementation date for when the provisions will come in but the Department for Business, Innovation & Skills (BIS) aim to have the new Regulations before Parliament by December 2013 and there will be transitional and saving provisions and improved TUPE Guidance.

This is part of a number of measures that the Government has brought in to increase the flexibility that employers can exert over their work force. The aim of these measures is to ensure a more efficient labour market which will enable us to compete more effectively in Europe. Although the changes have been much heralded, the reforms are not as far reaching as those initially proposed by the Government. However, the proposed changes contain a number of positive amendments for employers.

The main changes are:-

1. Collective AgreementsThe transferor will be able to renegotiate terms of a collective agreement, one year after the transfer. If the changes are in relation to an economic, technical or organisational reason, then any changes cannot be any less favourable to employees.

TUPE will include express confirmation that a ‘static approach’ will apply to terms derived from collective agreements. This provides welcome clarification following the Court of Justice of the European Union (CJEU) decision to use the ‘dynamic approach’ in the case of Alemo-Herron and Others v Parkwood Leisure Ltd CJEU.

This case was about whether clauses in employment contracts, which oblige an employer to follow determinations of a third party in setting pay are binding on a transferee employer. In this case the CJEU had said the transferee could not be bound by post-transfer collectively agreed terms if it is unable to be involved in the negotiating process.

2. RedundanciesBIS have confirmed that the location of a workforce can be within the scope of an economic, technical or organisational reason entailing changes in the workforce. This means that any genuine place of work redundancies will not be deemed to be automatically unfair. Unfortunately, the Government has decided not to allow the transferor to rely upon the transferee’s ETO reason in respect of pre-transfer dismissals of employees.

3. Service Provision Changes There will be a minor amendment to ‘service provision change’ to show that activities must be fundamentally or essentially the same. This reflects

the position that we had got to under recent case law but the Government considers that it may not be generally appreciated that this is the position.

4. Micro- BusinessesMicro-businesses will be able to inform and consult directly with employees where there are no Unions or existing employee representatives are in place

5. Employee Liability Information The time limit for providing the employee liability information will increase from 14 to 28 days.

TUPEThe Department for Business Innovation and Skills (BIS) has recently released their response to the Government’s Consultation on the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE).

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The scheme has been set up to make employers provide a scheme which then takes positive action by an employee to opt out, to try and introduce a culture of saving.

A recent study stated that 27% of medium sized companies were now drawing up plans to implement the scheme as those with between 160 -250 staff will be required to have the scheme in place by April 2014.

The Pensions Regulator’s survey found that attitudes were generally supportive of the policy with 80% of medium employers believing ‘automatic enrolment [was] a good idea for workers’. Most people would agree with this. After all there are 7 million people in the UK around 20% of which are not saving for a pension. We are therefore heading for a crisis if definitive action is not taken by the government who, one way or the other will end up footing the bill.

So who is eligible?There are two main categories of worker for which the employer duties apply:

Pension Auto Enrolment:

are you ready?The date by which your company needs to have

auto enrolment in place for its employees will depend on the number of people on the

Payroll. The initiative started in October 2012 for Companies

employing over 120,000 employees and is due to finish

in February 2018.

Whichever category your workers fall into you need to make sure you do not fall foul of the provisions, as failure to comply could result in your receiving a hefty fine. For further advice on the subject please do not hesitate to contact our Employment team on 0116 281 6237.

1. Jobholders

a) Eligible jobholders: Aged between 22 and state pension age and working, or ordinarily working, in the UK. They must have qualifying earnings payable by the employer, in the relevant pay reference period, that are above the earnings trigger for automatic enrolment (currently £9,440 pro rata over the relevant pay reference period which is usually the payment period). If these criteria are met then the employer must automatically enrol them into a pension scheme and pay minimum contributions to the scheme.

b) Non-eligible jobholders: These are workers who are not eligible for automatic enrolment but can choose to opt in to a pension scheme and benefit from an employer contribution. They will be aged between 16 - 75 years old, work or ordinarily work in the UK; have qualifying earnings payable by the employer in the relevant pay reference period that are above the lower earnings level for qualifying earnings (currently £5,668 pro rata over the relevant pay reference period).

2. Entitled workers

These are called entitled workers because they are ‘entitled’ to join a pension scheme but the employer does not have to make any contribution. They are aged between 16 and 74, are working or ordinarily working, in the UK and do not have qualifying earnings (i.e. less than £5,668 pro rata over the relevant pay reference period).

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In particular, the issue of wearing a headscarf (khimar), face-veil (niqab) or the head-to-toe garment (jilbab) in schools, hospitals and other public places seems to be a particularly topical issue.

The competing rights involved were recently highlighted by Birmingham Metropolitan College’s U-turn on its previous decision to ban face veils along with hoodies and caps, on the grounds of security.

Let’s begin by anchoring down the principle to a situation you may have to deal with. Let’s say you have a receptionist who has recently converted to Islam, one day turns up in a jilbab. Customers have since refused to deal with your receptionist on the basis they cannot see her face. As a result you are losing customers. What can you do? Your employee is likely to argue that she is wearing the jilbab as a public manifestation of her religion. However, the right to freedom of religious expression is not absolute. This means there are exceptions to the rule. For example, if you can prove that allowing your employee to wear the jilbab is counter to public

safety, public order, health or morals or for the protection of the rights and freedoms of others. As your employee is a receptionist, none of these exceptions are likely to apply.

Let’s consider however, a Doctor who wears the jilbab, what is the situation then? There is currently no national guidance on the issue. However, Professor Carol Baxter, Head of equality, diversity and human rights at NHS has said that all medical professionals should ensure that there are no ‘barriers to effective communication between

staff and patients.’

Hospitals could therefore argue that removing the jilbab during working hours is a genuine and proportionate occupational requirement. This has led to some Hospitals, such as Bradford Teaching Hospitals NHS Foundation Trust, introducing a ban on the full face veil which has been in place since 2009.

The issues here are complex and highly emotive. We pride ourselves on being a country which is known for tolerance and religious freedom. Any deviation from this should therefore be approached with caution. The practical advice is therefore to review each situation on its own facts. Where a compromise cannot be reached, it is best to seek legal

advice. You could also try and be proactive and try and prevent

the issue by having the relevant uniform policies in place. This is something BHW Solicitors can draft for you, to suit your business needs.

The veil and you: What are your obligations as an employer?

The controversy surrounding people’s rights to manifest their religion through dress is never too far from the spotlight of the press.

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Case round-up

Holiday entitlement

Clarification has recently been received by the Employment Tribunal in the case of Neal v Freightliner Ltd in relation to how to calculate a worker’s pay while on holiday.

Workers are entitled to 5.6 weeks’ pay holiday a year. If a worker is working regular hours this is a fairly straightforward calculation. The difficulty comes if the worker’s hours are not stable. This is because the Employment Tribunal has found that an employer should take a worker’s overtime payments into account when calculating their holiday pay. This means an employer needs to calculate what the worker is entitled to under their contract of employment and also calculate and incorporate any non-guaranteed, voluntary overtime.

This potentially means that a worker may recover several years of underpayments as a breach of contract claim. Before you panic, remember that Employment Tribunal claims currently incur an issue and hearing fee. In the majority of cases it is therefore unlikely to be proportionate for a worker to bring a claim for holiday pay alone. In addition the decision is in the process of being appealed to the Employment Appeal Tribunal.

Restrictive covenant or restraint of trade?

Is a restrictive covenant that prohibits a former employee from approaching his ex-employer’s customers to solicit business from them for six months post-termination, if the former employer could still do business with them an unreasonable restraint of trade?

No, says the Court of Appeal in Coppage v Safety Net Services.

The Appellant was a former key employee of the Respondent security company in Birmingham. He was made redundant and worked in competition with his former employer. The former employer sued the ex-employee for damages and won. The Appellant appealed unsuccessfully.

The key question was whether or not the restrictive covenant was unenforceable as an unreasonable restraint of trade. The Court of Appeal held that the restraint period of six months was a powerful factor in the overall reasonableness of the clause. While acknowledging that these cases are highly sensitive to the facts, Sir Bernard Rix noted that the purpose of the restrictive covenant was to place a key employee who was the ‘face’ of a business ‘out of bounds’ for a strictly limited period, to counter the diversion of customers who would have been realistically available to the former employee through his employment.

Employers should be reminded that restrictive covenants must be carefully drafted and will only be found to be reasonable if they are intended to protect a legitimate business interest.

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The National Minimum Wage has increased as follows:

• the adult rate increased by 12p to £6.31 an hour

• the rate for 18-20 year olds increased by 5p to £5.03 an hour

• the rate for 16-17 year olds increased by 4p to £3.72 an hour

• the apprentice rate increased by 3p to £2.68 an hour

• the accommodation offset increased from the £4.82 to £4.91

Third party harassment provisions have been repealed. This means that the rules that previously made an employer liable if an employee was harassed by a third party (such as a client or supplier) no longer apply.

Shareholder votes on executive pay - Shareholders will have a binding vote on the reward levels of senior executives every three years. Under the new rules directors who sign off high remuneration payments, which have not been approved by shareholders, will be personally liable for the payout unless they can demonstrate they acted in an honest and reasonable way.

Auto-enrolment staging date - It is one year since employers started auto-enrolling staff into pension schemes and from 1st October companies with between 800 and 1,249 employees need to enroll anyone who does not already have a pension into a workplace scheme.

Legislation update

Employment Tribunal Statistics

The first indications of the impact of fees are coming through. The Ministry of Justice has published the statistics for the number of employment tribunal claims received between July and September 2013.The normal monthly ‘average’ is 17,000 claims received each month.In June 2013 there were 25,000 receipts, and a further 17,000 in July. This is more than likely due to people lodging their ET1s before fees were introduced on 29th July 2013.

In August 2013 there were 7,000 receipts. In September 2013, there were 14,000 - hardly

different from the historic monthly average of 17,000 and inevitably still affected by those issued pre-July. However, the statistics do suggest a substantial drop in the number of single, as opposed to multiple, claims lodged in September 2013.

A note of caution: these figures do not include ET1s lodged in August 2013/September 2013 which are still sitting in the Leicester processing centre, awaiting payment of fees or a decision about remission. So the true number of ET1s lodged in August 2013/September 2013 will be higher.

5 Grove Court, Grove Park, Enderby, Leicestershire LE19 1SATel 0116 289 7000 Fax 0116 281 6229

Email info@bhwsolicitors.com Web www.bhwsolicitors.com/employment

The content of our Newsletter is provided for general information purposes only and does not constitute legal or other professional advice. This firm is authorised and regulated by the Solicitors Regulation Authority - SRA number 383490

We have developed the BHW Employer Support and Protection Schemes to support and protect employers of all sizes with their employment needs. If you would like more information on the schemes please contact Laura Allanson on 0116 281 6237 or email laura@bhwsolicitors.com or Katie Stephenson on 0116 281 6227 or email katies@bhwsolicitors.com

Meet the team Laura Allanson is an Associate Solicitor and heads up the Employment department. She has over 11 years’ experience of dealing with contentious and non-contentious employment matters. Laura joined BHW after 10 years with the National Farmers Union (NFU) and has a wealth of agricultural and horticultural knowledge. Laura has a real ability to ensure that her client’s problems are resolved in a cost-effective and timely manner.

Katie Stephenson is a Solicitor in the Employment department with an enviable track record in getting the right solution for her clients. Having previously trained as a Barrister, she has a thorough understanding of all aspects of employment law.

Claire Bell is a Solicitor in the Dispute Resolution and Employment departments and is involved with varied employment and dispute resolution work. Claire completed a 13 month secondment with the Amateur Swimming Association and gained extensive experience of sports law during her time there.