Forthcoming Legislation

We start this month’s bulletin with a look at some forthcoming legislation which will take effect from 1 October 2005 to assist with forward planning. We also consider a few interesting (we hope!) cases and, given the new financial year is approaching we consider the Government’s planned changes to existing legislation which have been the focus of recent media attention.

TUPE Regulations

Draft Regulations have been published which will amend the Transfer of Undertakings (Protection of Employment) Regulations 1981. The Regulations have been promised by the Department for Trade and Industry for a considerable period of time and are long over due. They are now expected to come into force in October 2005. Those of you with previous experience of business transfers will no doubt appreciate that it has become a complex area with contradictory decisions from the European Court of Justice not helping matters. The new Regulations seek to clarify a number of areas which have become increasingly uncertain over recent years. In particular, they will focus on the following:

• Contracting-out of business services
• Dismissals related to a transfer
• Changing terms and conditions following a transfer
• A requirement that the transferor (the original employer) informs the transferee (the new employer) of the identities of the employees who will transfer together with any liabilities.

Only time will tell whether the Regulations actually achieve greater clarity thereby reducing the cost of transfers. We will provide you with more information on the Regulations once they have been approved.

Sex Discrimination

The Sex Discrimination Act 1975 is also set for further amendment in order to comply with the amended European Equal Treatment Directive. The Regulations will include provision to protect individuals from harassment of a sexual nature or on the grounds of a person’s sex; provide that discrimination on the basis of pregnancy or maternity leave constitutes sex discrimination and will amend the definition of indirect sex discrimination to include the concept of ‘proportionality’ into justification arguments. Basically, an employer will have to show that the provision (such as a requirement that a member of staff work full time which impacts on more women than men due to childcare responsibilities) is a proportionate means of achieving a legitimate aim.

However, it appears the changes will have little impact in practice as many of the areas to be covered have already been developed by case law. It has long been established that sexual harassment is unlawful with employers being vicariously liable for the acts of their employees, hence the importance of having thorough harassment policies in place and adhered to. Further, even though the Sex Discrimination Act 1975 requires a claimant to compare herself to a comparator (i.e. a male in the same position) the courts and tribunals have been willing to interpret the legislation in such a way to afford protection to pregnant women given that a pregnant woman cannot compare herself to a man since men cannot become pregnant.

Maternity Leave

We suspect that few of you have will have missed the headlines surrounding the Government’s proposals to extend paid maternity leave if they are re-elected.

Presently, all employees are entitled to 6 months maternity leave. During this time they are entitled to statutory maternity pay which is calculated at 90% of salary for the first 6 weeks, followed by 20 weeks at the statutory rate which is just over £100 per week. Employers can recover most, if not all, of the statutory maternity pay paid out.

Those employees who have been employed for 26 weeks by the 15th week before the expected week of childbirth will be entitled to an additional 6 months maternity leave, but this is unpaid. It may seem a bit of a complex calculation as to whether the employee is entitled to additional maternity leave, but actually it’s not. Basically, an employee who becomes pregnant when already employed by the employer will be entitled to additional maternity leave, whereas an employee who joins the employer when already pregnant, will only be entitled to ordinary maternity leave (6 months).

However, the Government has proposed extending maternity pay from 6 months to 9 months by 7 April 2007 with the aim of extending maternity pay to 12 months by the end of the next Parliament. However, it is not clear whether these new rights would just apply to those employees entitled to additional maternity leave or whether ordinary maternity leave will be extended to 9 months. We would assume the former.

Further, the Government plans to allow mothers to transfer a proportion of their maternity leave and pay to fathers although how this would be achieved in practice is not clear.

In order to assist employers, it is proposed that there would be provisions to ensure greater certainty as to when the employee plans to return. Currently, the employer is not entitled to ask whether the employee plans to return. Rather, the employer simply has to inform the employee of her return date which should be calculated on the basis that the employee will take the full amount of leave to which she is entitled. If the employee wants to return early, she has to give 28 days notice.

It’s likely many employers will view these proposals with a degree of concern. Whilst the importance of supporting pregnant employees during their pregnancy and maternity leave should not be underestimated, the maternity leave provisions do impose additional burdens on employers in arranging appropriate cover and ensuring that their business is not interrupted. Many fear that increasing the already generous maternity leave provisions (when compared to other European countries) will only exacerbate the problems and in practice, it is likely there is little an employer will be able to do if an employee changes her mind about returning.

A further proposal is to extend the flexible working provisions to cover carers and adults of older children. The employer would be able to refuse a request on business grounds.

Minimum Wage

The National Minimum Wage will increase from £4.85 per hour to £5.05 per hour from October 2005. From October 2006, it will increase to £5.35 per hour. The rate for 18 – 21 year olds will increase to £4.25 in October and from October 2006 it will be £4.45. We’ll give you a further reminder nearer the time.

Discrimination

The Employment Appeal Tribunal has held in the case of Dattani v Chief Constable of West Mercia Police that a Tribunal is entitled to draw adverse inferences from evasive replies (or a failure to reply) to a question even if the statutory questionnaire procedure under the Race Relations Act 1976 is not being used.

The questionnaire procedure is designed to help complainants who feel they have been discriminated against by requiring an employer to answer questions relevant to the alleged discrimination. The rationale behind this is that it is often difficult to come up with direct evidence of discrimination and therefore inferences should be drawn where there is an inadequate explanation in respect of a particular decision. The same process is used in relation to the other discrimination legislation.

Importantly, the statutory questionnaire warns employers that inferences can be drawn so the employer is encouraged to provide full and frank answers.

However, as a result of the above decision, employers should be mindful of potential discrimination claims and should be prepared to justify the decisions taken in respect of employees and explain the basis of those decisions to the employee if asked. There is a temptation amongst many employees, especially if an employee has left employment (and particularly if they were employed for less than a year) to ignore requests for information. But they now do so at their peril as a failure to reply, or an incorrect or evasive reply could cause the employer great difficulties later on if a discrimination claim is brought.

Bullying

Bullying can lead to absenteeism, low morale, poor standards of work, personal injury and constructive dismissal claims if not handled properly and treated seriously. To protect itself and its employees, an employer should have a proper policy in place to discourage bullying and to reassure employees that such an issue is taken seriously by the employer.

Employees are becoming increasingly aware of the routes available to them if they feel they have been bullied or harassed at work and it seems that employees are increasingly taking action, especially in relation to constructive dismissal claims.

Now, following the recent case of Majrowski v Guy’s & St Thomas’s NHS Trust an employer can be held liable for the acts of its employees under the Protection From Harassment Act 1997. Whilst the Act clearly affords an individual a course of action against the harasser (i.e. the individual bully) it was not clear whether an employer could be held vicariously liable (i.e. whether the employee could claim against the employer in respect of the acts of other employees on the basis that the acts occurred whilst at work). This has now been clarified by the Court of Appeal in the above case and employers may find themselves the subject of civil action for compensation under the Act where bullying has not been dealt with.

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