Included in this Edition... Sex Discrimination Regulations, Statutory Procedures, Equal Pay, Changing Terms and Conditions

Sex Discrimination Regulations

The Employment Equality (Sex Discrimination) Regulations 2005 are due to come into force on 1 October 2005. The Regulations are being introduced to bring English law into line with European legislation on sex discrimination and whilst certain issues will be clarified by the Regulations, in practice, their effect may be limited.

The Regulations will provide statutory protection for pregnant employees (which also specifically covers pregnancy related illness) and those employees on maternity leave. However, the courts and tribunals have always taken a broad approach to the Sex Discrimination Act 1975 and the existing legislation has been interpreted to protect pregnant employees and those on maternity leave in any event.

The Regulations will also make harassment unlawful. Harassment is defined as engaging in “unwanted verbal, non-verbal or physical conduct of a sexual nature which has the purpose or effect of violating dignity or creating an intimidating, hostile, degrading, humiliating or offensive environment”. This must be on the grounds of the sex of the particular person.

Whilst the Tribunals have protected employees from harassment for some time on the basis that harassment is a “detriment”, it is not actually prohibited under the Sex Discrimination Act 1975. Therefore, this development is helpful but an employee may still have to compare herself to a man to establish that harassment has occurred; whereas under the European legislation the harassment only has to be “related to the sex of a person” which is broader. As such, the Regulations may not actually extend protection in this area, particularly where comments are directed at a group of people of different sexes.

There will also be a change to the definition of indirect sex discrimination (e.g. applying a practice to all employees but which disadvantages a particular sex, such as a requirement to work part time). The current test is whether a provision, criterion or practice is to the detriment of a significant proportion of women when compared to men. From October 2005, the new test will be whether a provision, criterion or practice puts (or would put) women at a particular disadvantage. This should make it easier for employees to establish sex discrimination as they will not need to produce statistic evidence as the number of female employees affected.

Furthermore, rather than looking at arguments of justification, the Tribunal will have to consider whether the reasons given by the employer to explain the requirement are a proportionate means of achieving a legitimate aim. Again, this is not miles away from the current requirements but it possibly more burdensome on employers than the existing law.

That said, employers already have a difficult task to justifying indirect sex discrimination. In the case of British Airways v Starmer 2005 the employers, BA, sought to justify a requirement that Ms Starmer work 75% of full time hours rather than the 50% she had requested, on various business grounds, including health and safety. The business reasons were rejected as insufficient by the Tribunal and Employment Appeal Tribunal which also held that there was insufficient evidence to support the health and safety grounds put forward.

Statutory Procedures

The statutory dismissal and grievance procedures have been in force for nearly a year. Despite this, there is still relatively little case law on the procedures to provide guidance to employers and employees alike as to what exactly is required in order for the procedures to be satisfied.

This issue arose in the case of Cooke v Secure Move Property Services Ltd 2005 which concerned a claim for constructive dismissal on the basis of a biased disciplinary procedure.

Two issues arose in that case:

1. Did the grievance procedure apply?
2. If it did apply, what was required to constitute a grievance?

In that case, the employee had resigned before the disciplinary hearing took place. He wrote to his employer saying he thought the procedure was biased. The employer claimed that in order to bring the claim, Mr Cooke should have raised a grievance and his letter was insufficient.

However, the Tribunal found that Mr Cooke was not required to raise a grievance. This was on the basis that under the Employment Act 2002 (Dispute Resolution) Regulations 2004 the grievance procedures do not apply in situations where the employer has dismissed the employee or is contemplating dismissal. As the claim related to the disciplinary procedure, a grievance did not have to be raised.

The Tribunal further considered what an employee needs to put in a statement of grievance. The Tribunal decided that it was not necessary for the employee to use the term “grievance” or make reference to the statutory procedure. In this case, the employee’s letter would have been sufficient.

Therefore, as previously suspected, it seems Tribunals will take a wide approach to what is a grievance. It is advisable that where employees resign in writing in circumstances which suggest that the employee is unhappy over a work situation, it is advisable to assume that a grievance is being raised and invite an employee to a meeting.

Where it appears, a grievance has been raised following the employee’s departure, the statutory procedure should always be followed. The employee is unlikely to go to the time and trouble of writing to complain after leaving if they do not intend to bring a claim in the Tribunal.

Equal Pay

Where an employee brings a claim for equal pay on the basis that she is doing “like work” to a male comparator, can an employer seek to defend the claim on the basis that the woman is actually doing more work?

This was the argument raised by the employer in the case of SITA (UK) Ltd v Hope 2005. In that case, Ms Hope was employed as the deputy to the Group Purchasing Manager and eventually given that role but was not provided with a deputy or given a pay rise. Therefore, Ms Hope was actually doing more than the previous Group Purchasing Manager but for less money. The Tribunal, sensibly, decided that an employer could not rely on an employee doing more work than her comparator to justify paying her less.

But the story did not end there. Ms Hope had actually been made redundant following a restructure. A male employee was made Head of Procurement, which was, effectively, Ms Hope’s old job. He was paid more than Ms Hope had been as Group Purchasing Manager. Again, Ms Hope alleged that the employer was in breach of the equal pay legislation.

In respect of this allegation, the employer sought to rely on the fact that the pay of the Head of Procurement had been “red circled” following the restructure. This is a potential “genuine material factor” defence to a difference in pay as it is not due to the person’s sex.

However, the Tribunal decided that in dismissing Ms Hope as redundant and then appointing a male Head of Procurement amounted to sex discrimination. As such, the employer could not establish a genuine material factor defence as ultimately, the difference in pay was due to Ms Hope’s sex.

Changing Terms and Conditions

It is not uncommon for an employer to want to change the terms and conditions of employment of its employees to prevent employees from working for a competing business.

An employee may be prepared to enter into the new restriction without argument or may be induced in return for a financial reward.

However, problems arise when an employee refuses to sign the new contract. What, if anything, can the employer do?

The first issue to consider is the reason for the change in terms and conditions. In this situation, the employer must have a legitimate business interest to protect – such as an established customer base. The next issue is whether the proposed change is reasonable. The reasonableness of a non-compete clause will depend on the particular circumstances of the company. The geographical area over which business is conducted needs to be considered, together with the type of business carried out. The length of time the restriction will be in force also has to be considered. For instance, an employer who only operates in the North East and whose customers are only in the North East, could not restrict an employee from working anywhere in the UK, but a restriction in respect of working in the North East is likely to be reasonable, depending on the circumstances of the case.

In the case of Forshaw v Archcraft Ltd 2004 an employer sought to impose a 12 month non-compete clause on employees who were relatives of a dismissed employee who was setting up in competition. The employees refused to sign the new contracts and were dismissed.

The Employment Appeal Tribunal held that the restriction the employer was seeking to impose on the employees was unreasonably wide. As such, the employees’ refusal to sign up to the unreasonable terms could not be relied upon as a fair reason for their dismissal. Had the restriction been a reasonable one to impose, the situation would have been different.

It is also worth bearing in mind that the statutory procedures will apply to such situations and that consultation is essential. The statutory procedures will not apply where the all the employees in a category are being dismissed provided that the employer offers to re-engage the employees upon termination of the contracts. However, the employer will still need to adopt a fair process which, in practice, is likely to encompass the statutory procedures.

If you would like further information please do not hesitate to contact Kevin McKernan, Head of Employment Unit at Crutes Law Firm.

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