Archive for the ‘Employment’ Category

Compromise Agreements and Professional Fees – New Guidance

Redundancies involving senior staff often involve a compromise agreement under which the employee agrees to compromise their right to take a case to the Employment Tribunal in exchange for a payment. When a compromise agreement is being negotiated, it is very important to take legal advice, which raises the question of the allowability of legal fees.
 
In the past, HM Revenue and Customs (HMRC) have dealt with this by way of an extra-statutory concession, which allows the employer to pay the employee’s professional fees and claim a tax deduction for the expenditure and the employee is not deemed to have received a benefit in kind for tax purposes, provided certain formalities are observed.
 
HMRC have now sought to regularise the position, but the draft regulations that have been published do not appear to extend the concession to compromise agreements which cover the compromise of certain types of potential claims, such as those under the Equality Act or those undertaken following a successful conciliation by ACAS.
 
Representations have been made to HMRC and it is to be hoped that the revised regulations will cover all forms of compromised claims.

Posted May 15th, 2011 in Employment |

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Special Treatment of Women in Connection with Pregnancy or Childbirth – Get the Balance Right

The Employment Appeal Tribunal (EAT) has ruled that it is necessary to construe the wording of the Sex Discrimination Act 1975 – and the Equality Act 2010 which supersedes it – in a manner which incorporates the legal principle of proportionality. The obligation to afford special treatment to a pregnant woman or a woman who is on maternity leave should not therefore extend to favouring her beyond what is necessary to compensate her for any disadvantages occasioned by her condition. The treatment should constitute a proportionate means of achieving this aim (Eversheds Legal Services Ltd. v de Belin).

 
John de Belin was made redundant following a redundancy exercise involving himself and another employee, a Ms Reinholz. Ms Reinholz was absent on maternity leave on the date selected for measuring one of the criteria used. This was ‘lock up’ – a measurement of the time between undertaking a piece of work and the receipt of payment from the client. Eversheds therefore accorded her the maximum score, in accordance with what was said to be its general policy applying to candidates for redundancy who were on maternity leave or away on sabbatical. The fact that Ms Reinholz was given the maximum lock up score tipped the balance in her favour and Mr de Belin was selected for redundancy.
 
The EAT held that the means adopted by Eversheds went beyond what was reasonably necessary in the circumstances. There were other ways of removing the maternity-related disadvantage to Ms Reinholz without unfairly disadvantaging Mr de Belin. In the EAT’s view, the most satisfactory way would have been to measure the lock up performance of both candidates as at the last date on which Ms Reinholz was at work, as this basis would have reflected her actual performance.
 
This case raises several questions for employers, not only with regard to the selection criteria used in any redundancy process but also regarding any differences between maternity and paternity pay arrangements. We can advise you to ensure your policies and procedures get the balance right.
 
 
 
 

Posted May 5th, 2011 in Employment |

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Malicious Dismissal Claims on the Rise Says CIPD

UK employers are increasingly falling victim to instances of ‘malicious dismissal claims’ from disgruntled ex-employees.


A survey by the Chartered Institute of Personnel and Development (CIPD) found that up to 60 per cent of employers have had to deal with employees who have made unfair dismissal claims  and then added on a discrimination claim to improve their potential payouts.


The research follows a recent pledge by the Government to change the way workplace disputes are dealt with. However, 69 per cent of employers surveyed claimed proposals, which would see the minimum period that employees must serve before claiming unfair dismissal increase from one year to two, will have “little impact”.
If you face any claim of discrimination, contact us promptly for advice on how to handle it:  awards made to staff who have suffered from discrimination are often substantial and making sure you follow correct procedure is essential.

Posted April 27th, 2011 in Employment |

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Disguised Remuneration Guidance Published

The proposed rules to deal with ‘disguised remuneration’ (where remuneration or assets are made available to an employee by a third party such as an employee benefit trust) have bee published.
 
The rules will be contained in the Finance Act 2011 and will apply retrospectively from 6 April 2011.
 
The legislation is much more complex than the proposals published last December. HM Revenue and Customs has published a series of responses to frequently-asked questions which are a less impenetrable guide to the legislation than the Finance Bill.
 

Posted April 20th, 2011 in Employment |

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Religion or Belief Discrimination – What Constitutes a Philosophical Belief?

When the Employment Equality (Religion or Belief) Regulations 2003 were first introduced, employees were protected from discrimination by reason of any ‘religion, religious belief or similar philosophical belief’. The wording was changed in 2007, with the word ‘similar’ being removed so that the Regulations covered ‘any religion, religious or philosophical belief’. This wording has been retained in the Equality Act 2010, which replaced the 2003 Regulations in October 2010.

 
In Granger plc v Nicholson, the Employment Appeal Tribunal identified the criteria which must be satisfied for a belief to be a philosophical belief under the 2003 Regulations. Relying on this test, the Employment Tribunal has held (Maistry v BBC) that the belief of a BBC employee that ‘public service broadcasting has the higher purpose of promoting cultural interchange and social cohesion’ falls within the definition of a philosophical belief.
 
Mr Maistry claimed that he had been unfairly dismissed and discriminated against on the grounds of age and/or philosophical belief. A Pre-Hearing Review was held to determine whether or not his belief constituted a philosophical belief such as to entitle him to protection under the 2003 Regulations. Mr Maistry argued that the BBC is a public funded body with a clear statement of purpose. He relied on statements made by Lord Reith, the first director general of the BBC, and by Mark Thompson, the present director general, regarding the purpose of public broadcasting, which is to ‘foster a reasoning citizenry’, to ‘support the development of an inclusive, participatory and enlightened democracy’ and to provide a ‘public space’, in which people can encounter culture, education and debate and share experiences, that is neither part of the Government nor the State nor purely governed by commercial considerations. He gave evidence of comment on this purpose by philosophers and academics.
 
As regards the strength of his belief, Mr Maistry had been a student leader, trade unionist and journalist in South Africa during the struggle against apartheid. He was banned from studying at university in South Africa after he took part in the black student boycotts of 1972. He was forced to flee South Africa for a second time in 1987 after his news reports to international agencies led to security police raids on the Press Trust of South Africa News Agency.
 
The BBC accepted that Mr Maistry’s belief was worthy of respect in a democratic society, but maintained that it was in reality an opinion, not a philosophical belief for the purposes of the 2003 Regulations.
 
The ET applied the 5-step test set out in Grainger v Nicholson and found that:
 
  1. There was no reason to doubt that Mr Maistry had a genuine and strongly held belief;
  2. Mr Maistry’s views constituted a belief, rather than an opinion based on the present state of information available. Whilst a belief does not have to be shared, there was evidence that his belief was embraced by academics and philosophers;
  3. The belief clearly related to a weighty and substantial aspect of human life and behaviour and there was nothing in the 2003 Regulations nor in Grainger v Nicholson to prevent the public aims of an organisation amounting to a philosophical belief if those aims were the result of an underlying philosophical belief;
  4. The belief had attained a certain level of cogency, seriousness, cohesion and importance. The ET did not accept the BBC’s contention that it was a political opinion or based on a political philosophy and, in any case, Burton J in Grainger v Nicholson could see no reason why a political philosophical belief could not qualify; and
  5. The BBC had accepted that the belief was worthy of respect in a democratic society. Nor was it incompatible with human dignity and it did not conflict with the fundamental rights of others.
 
The ET refuted any suggestion that its decision would ‘open the floodgates’ so that Tribunals would find themselves inundated by claims from employees on the ground that they have been discriminated against for having a strongly held belief in the mission statement of their public or private sector employer. Any belief must fall to be tested on the individual facts in each case. Furthermore, even when it has been established that an individual’s belief does constitute a philosophical belief, the claimant still has to prove that he or she has suffered less favourable treatment and, if so, that this was on account of that belief.
 
Contact us for advice on any aspect of discrimination law.

Posted April 15th, 2011 in Employment |

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Pension Scheme Deficits – What to Do

In accordance with the Pensions Act 2004 all defined benefit schemes must have regular actuarial valuations to ensure that the scheme meets the ‘Statutory Funding Objective’ (SFO).  The Pensions Act 2008 sets out an employer's obligations to provide information to 'jobholders'.


To ensure SFO compliance, the scheme trustees and managers must prepare a statement of funding principles having obtained actuarial advice. The statement should outline how SFO compliance is to be achieved and the steps to be taken should a shortfall occur and it must comply with the Act and also the Occupational Pensions (Scheme Funding) Regulations 2005 (the Regulations).
 


My scheme fails the SFO, now what?
 


In this situation, having obtained actuarial advice, the trustees and managers should draft a recovery plan for the scheme, a copy of which must be sent to the Pensions Regulator.
 


The trustees and managers should aim to eliminate the shortfall as soon as the employer can reasonably afford to do so, taking into account the employer’s financial position and prospects as well as his willingness to pay the scheme benefits.
 


When drafting the plan, the trustees should consider the factors outlined in the Regulations and the code applicable to occupational pensions. This will include considering the employer’s business plans and the effect the recovery plan will have on the solvency of the employer and also looking at the contingent security provided by the employer (such as the payment of funds into an escrow account which can be paid into the scheme in the event of employer insolvency).
 


The plan should outline how the shortfall is to be eliminated and when this is to be achieved, and should be appropriate for the scheme.
 


What about the employer?
 


The employer must agree to the statement of funding principles and the recovery plan. If agreement cannot be reached, the trustees must inform the Pensions Regulator.


The employer should obtain legal advice at each stage of the process, especially with regard to factors which can lengthen the recovery time allowed to the scheme, such as contingent security.
 


The employer should consider its statutory obligation to provide the trustees with the information needed to perform their duties. Legal advice can assist in ensuring statutory compliance whilst protecting the employer’s interests.
 
 
 
The Pensions Act 2008 imposes considerable additional obligations on employers. Contact us for advice regarding these or any other obligations you may have as an employer.

Posted April 2nd, 2011 in Employment |

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