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Employment Update 13 May 2011

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United Kingdom

Read the 'Employment Law Update' newsletter, 13 May 2011, on ffw.com

Welcome to our fortnightly round-up of what's happening in employment law.

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More reform on its way?

The Government has announced new areas that it will consider reforming as part of its review of employment red tape - including collective redundancy consultation periods, the Transfer Undertakings Protection of Employment Regulations 2006 (TUPE) and compensation for discrimination awarded by employment tribunals.

The Government has stated that it will look in detail at the case for reforming:

  • Compensation for discrimination - the Government has acknowledged employers' concern about the high levels of compensation sometimes awarded by Employment Tribunals in cases of discrimination and the lack of certainty they have about the level of award they may be required to pay.
  • Collective redundancy - the Government also notes employers' concerns that the current requirement that consultation over collective redundancy runs for a minimum period of 90 days is hindering their ability to restructure efficiently and retain a flexible workforce. It also acknowledges employers' claims that it is not clear from the legislation at what point consultation on redundancies should start or end.
  • TUPE - the Government has stated that TUPE offers important protections but some businesses believe that they are `gold plated’ and overly bureaucratic.

The Government will start reviewing these areas this year and wants to ensure that the regulations are fit for purpose. Significantly, the Government states that "legislation will not necessarily be the route to implement any change if there is a case for reform". It remains to be seen to what extent the Government can reform these areas, given the application of European law. Interestingly, the Government has also confirmed that it will launch its consultation on plans to extend the right to request flexible working to all employees and introduce a new system of shared parental leave from 2015 next week. We will report on this in future Employment Updates. 

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Employer liable for unfavourable comments about ex-employee

The High Court has confirmed that an employer was liable for unfavourable comments made about a former employee in an email to his current employer, even though the comments were made a number of years after his employment ended. The case highlights that the duty owed by employers when providing references about former employees can also apply in other non-reference situations, emphasising the need to take care when communicating generally about former employees.

In McKie v Swindon College, Mr McKie worked for Swindon College from 1995 to 2002 and then moved to Bath City College, after receiving an excellent reference from Swindon College. He subsequently accepted a post at the University of Bath in 2008. Mr McKie's new role entailed visiting further education colleges, including Swindon College. In June 2008, the HR director at Swindon College sent an email to his equivalent at the University of Bath stating the following: "We would be unable to accept Rob McKie on our premises or delivering to our students…we had very real safeguarding concerns for our students and there were serious staff relationship problems during his employment at this college. No formal action was taken against Mr McKie because he had left our employment before this was instigated. I understand that similar issues arose at the City of Bath College." Following this email, Mr McKie was summarily dismissed. Mr McKie sued Swindon College for negligent misstatement.

The High Court upheld his claim. The judge held that the evidence produced by Mr McKie in relation to his time at Swindon College suggested that the contents of the email were "largely fallacious and untrue". The author of the email had no personal knowledge of Mr McKie and was not HR director at the time Mr McKie was at Swindon College. He wrote the email following comments made to him by a colleague and the judge held that the colleague's evidence in no way justified the contents of the email. The judge also commented that the procedure adopted at Swindon College giving rise to the sending of the email was slapdash, sloppy and failed to comply with any sort of minimum standards of fairness. For Mr Rowe to dismiss the contents of Mr McKie's personnel file, which recorded promotions and indicated no complaints, as of no great relevance seemed to be "just plain wrong".

The judge confirmed that this was not a "reference" situation (where case law has established that an employer owes a duty to take reasonable care in preparing a reference for a former employee). However, the judge held that Swindon College still owed Mr McKie a duty of care. Swindon College realised that the email might potentially have an impact upon Mr McKie's employment at the University of Bath so the financial damage he suffered by losing his job was "eminently foreseeable". Although six years had elapsed since Mr McKie had been employed by Swindon College, it had brought about the relevant degree of proximity by purportedly relying upon information from the time Mr McKie had worked there. In the circumstances of the case, the judge held that it was fair, just and reasonable to impose a duty of care upon Swindon College.

The duty of care owed by an employer to a former employee therefore extends beyond the provision of references. Employers should take care when providing any information about a former employee to their current employer and ensure that all staff are aware of the repercussions of a negligence claim. 

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Agency Workers Regulations - final guidance

On 6 May 2011, the Department for Business, Innovation and Skills published the final guidance for hirers and agencies on the Agency Workers Regulations 2010, which come into force on 1 October 2011. Separate guidance for agency workers will be published shortly.

The Regulations implement the EU Agency Workers Directive as agreed in 2008, following a social partner agreement between the CBI and TUC. They will give agency workers the right to the same basic employment and working conditions as if they had been recruited directly by a company, if and when they complete a 12 week qualifying period in a job.

The guidance covers a range of issues, including:

  • who falls in, and outside, the scope of the Regulations
  • the entitlements that agency workers will receive from the first day of an assignment and the entitlements in relation to basic working and employment conditions following a 12 week qualifying period
  • what pay includes and excludes
  • the rights of pregnant agency workers 

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Disability guidance - 1 May 2011

The Equality Act 2010 (Guidance on the Definition of Disability) Appointed Day Order 2011 (the Order) has been published, which brings into force an updated version of the guidance on matters to be taken into account in determining questions relating to the definition of disability on 1 May 2011.

Previous guidance applied to the definition of disability under the Disability Discrimination Act 1995. The new guidance covers the new definition under the Equality Act 2010, which no longer provides that an impairment will affect the ability of a person to carry out normal day-to-day activities only if it affects one or more of the listed capacities (e.g. mobility; manual dexterity; physical co-ordination). 

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FRC consultation on gender diversity

The Financial Reporting Council (FRC) has begun consultation on whether the UK Corporate Governance Code should be revised to require listed companies to publish their policy on gender diversity in the boardroom and report against it annually. This was a recommendation in Lord Davies' report, "Women on Boards", which was published in February.

Views are also sought on whether the Code should identify some of the key issues to be considered when boards carry out their regular effectiveness reviews, and on the timing of any changes to the Code. Comments on the proposed changes to the Code are requested by 29 July 2011.

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Working Time Directive - talks

According to the Euractiv website, trade unions and employers' groups are due to start a dialogue on the EU's Working Time Directive.

Last year the European Commission published a paper following a consultation on the scope for amending the Working Time Directive, after previous attempts to revisit it failed in 2009, over issues including the opt-out provisions allowing the UK and other countries to go beyond the agreed weekly 48-hour working cap. The next phase in attempting to amend the Directive is on hold while the social partners - representatives of workers and employers - decide if they want to get together to try and agree how the law can be changed.

The social partners have now indicated to Euractiv that they will be ready to begin a dialogue from June at the earliest and before the end of September. 

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Sickness absence - trends

The UK economy lost 190 million working days to absence last year, with each employee taking an average of 6.5 days off sick, according to the latest CBI/Pfizer Absence and Workplace Health Survey.

Despite the introduction of the new "fit note" in 2010, the survey indicates that the rate of absence last year was marginally higher than in 2009, when employees averaged 6.4 sick days, the lowest rate since the survey began in 1987.

The findings include the following:

  • The 190 million days cost employers £17bn, including over £2.7bn from 30.4 million days of non-genuine sickness absence - i.e. "sickies".
  • Nearly a third (32%) of all working time lost to employee absence is attributable to long-term conditions. This rises to 47% in the public sector, emphasising the challenge the sector faces in rehabilitation.
  • So far, practical experience of the fit note scheme has not lived up to the expectations. While a quarter (23%) of employers have reportedly found the fit note helpful to their rehabilitation policies, two thirds of firms (65%) say it has not moved things forward, with other employers undecided.
  • Just one in eight employers (13%) have confidence that doctors have sufficient training to use the new fit notes differently to the old sick notes. 

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