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Employment Update 15 April 2011

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United Kingdom

Read the 'Employment Law Update' newsletter, 15 April 2011, on ffw.com

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

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New NMW rates - October 2011

The Government has accepted the independent Low Pay Commission's recommendations for this year's National Minimum Wage rates. The following rates will come into effect on 1 October 2011:

  • The adult rate will increase from £5.93 to £6.08 an hour;
  • The rate for 18-20 year olds will increase from £4.92 to £4.98 an hour;
  • The rate for 16-17 year olds will increase from £3.64 to £3.68 an hour; and
  • The rate for apprentices will increase from £2.50 to £2.60 an hour. 

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Agency workers - guidance published

The Department for Business, Innovation and Skills (BIS) has now published the draft guidance to the Agency Workers Regulations, which are due to come into force in October 2011. The Government has also published a quick start guide to the Regulations.

The final guidance is expected to be published on the Business Link website at the end of April or soon after, allowing the necessary time for all parties to prepare for the changes prior to the regulations coming into force in October 2011.

The draft Guidance provides information on a range of areas, including:

  • who is in and outside the scope of the Regulations
  • the issues surrounding qualification for equal treatment
  • what "pay" includes and excludes
  • how to identify "basic working and employment conditions" 

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Redundancy - inflating score for employee on maternity leave

The Employment Appeal Tribunal (EAT) has confirmed that inflating the redundancy selection score of an employee on maternity leave did constitute unlawful sex discrimination. The decision is a useful reminder for employers that they cannot favour pregnant employees or those on maternity leave beyond what is reasonably necessary to compensate for the disadvantages which arise from their pregnancy or maternity leave.

In Eversheds Legal Services Limited v De Belin, the claimant, Mr De Belin, was one of two associates working in a law firm, Eversheds. The other associate was Ms Reinholz. In September 2008, it was decided that one of the two associates in the team would have to be made redundant. Mr De Belin and Ms Reinholz were scored against various performance criteria, one of which was "lock up", which measures the length of time between undertaking a piece of work and receiving payment from the client. The measurement was calculated as at 31 July 2008, when Ms Reinholz was absent on maternity leave. As lock up could not be measured for her as at that date, Eversheds awarded her the maximum score for this criterion, which was 2 (compared to Mr De Belin's score which was 0.5). The overall score for Mr De Belin was 27 and for Ms Reinholz was 27.5, which meant that Mr De Belin was selected for redundancy. In the course of the redundancy consultation, and a subsequent formal grievance, Mr De Belin protested that what had happened was unfair and constituted sex discrimination.

The Sex Discrimination Act 1975 (SDA) (and similar provisions in the Equality Act 2010 (EqA)) provides that it is direct sex discrimination to treat a person less favourably than another on the ground of their sex. The SDA (and the EqA) also provides that when assessing whether an act is sex discrimination against a man, "no account shall be taken of special treatment afforded to women in connection with pregnancy or childbirth".

The EAT upheld the tribunal's decision and confirmed that Eversheds had unlawfully discriminated against Mr De Belin by inflating Ms Reinholz's score to the maximum while confining Mr de Belin to his own score. It fully accepted that the protection of the special position of employees who are pregnant or on maternity leave may sometimes require them to be treated more favourably than their colleagues. However, it held that this obligation cannot extend to favouring pregnant employees or those on maternity leave beyond what is reasonably necessary to compensate them for the disadvantage that arises from their pregnancy or maternity leave. It is necessary to read the words "special treatment afforded to women in connection with pregnancy or childbirth" as referring only to treatment accorded to a woman so far as it constitutes a proportionate means of achieving the legitimate aim of compensating her for the disadvantages occasioned by her pregnancy or maternity leave.

In this case, the means adopted by Eversheds to resolve the problem caused by Ms Reinholz's absence as at the measurement date which would otherwise have applied were not proportionate and went beyond what was reasonably necessary. In his grievance meeting, Mr De Belin had proposed alternative ways of measuring the lock up. In the EAT's view, the most satisfactory alternative was to measure the lock up performance of both candidates for redundancy as at the last date that Ms Reinholz was at work.

The EAT acknowledged that a decision which protected employers from liability in respect of any advantageous treatment afforded to women who are pregnant or on maternity leave, however excessive or unfair to colleagues, would provide a more distinct "bright line". However, the EAT noted that the price would be too high and the familiar proportionality principle strikes the right balance. It is a flexible principle which allows employers a wide margin of discretion as to the appropriate special treatment to be accorded to pregnant employees and those on maternity leave, particularly where such advantages are not directly at the expense of their colleagues and do not cause them serious prejudice. In this case, the disproportionate advantage to Ms Reinholz meant a direct and unfair corresponding disadvantage to Mr De Belin. 

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Red tape challenge website

The Government has launched a red tape challenge website, challenging the public to help cut unnecessary regulations.

The aim is to give the public and businesses a chance to have their say on regulations that affect their everyday lives; whether it is to speak up for well designed rules that are there to protect or challenge badly designed or badly thought through regulations that are an unnecessary burden.

The campaign is part of the Government's growth agenda. The first area to go under the microscope will be retail. Following this, every few weeks a new set of regulations, organised around themes, will open on the website for anyone to comment on.

Once a theme has closed to the public, the Prime Minister has said in a letter to all Ministers that they will have three months to explain why a regulation is still required, or it will be scrapped.

The first five themes of the red tape challenge campaign will be:

  • Retail (pilot phase open for four weeks beginning April 7).
  • Hospitality, food and drink (open for two weeks beginning May 5).
  • Road transportation (open for two weeks beginning May 19).
  • Fisheries, Marine enterprises and inland waterways (open for two weeks beginning June 2nd).
  • Manufacturing (open for two weeks beginning June 16). 

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Moratorium for micro-firms - clarification required

The Government has put in place a moratorium for micro firms on all new domestic regulations for the next three years. However, the Federation of Small Businesses (FSB) has said that firms were still unaware of exactly how this would affect them.

"At the moment, there is some confusion as to what regulations are included in the moratorium," a spokeswoman from FSB said. "There needs to be clarification as soon as possible so micro-firms know where they stand."

The FSB has recently warned that micro firms will still be hard hit by the large number of regulations that come from Europe. It has called on the Government to push for stronger changes in the EU to ensure that the constant flow of extra burdens ceases. The FSB is urging MEPs and Commission Officials to 'think small first' and introduce a one in one out rule for all Commission proposals.

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SMEs not willing to hire ex-public sector workers

According to a recent survey by uSwitch, 22% of small to medium business enterprises (SMEs) intend to hire new staff but just 2% of them would actively seek to recruit public sector workers.

Almost a quarter of small businesses would hire a public sector worker if there was no-one else for the job. One in ten would not hire a public sector worker at all. According to the survey, 55% of SME owners believe public sector workers to be unrealistic in their expectations about pay, holidays and employment terms, and only 11% of those questioned considered public sector workers to be as productive as their private sector counterparts.

SME owners also perceive public sector workers to be incompatible with their businesses - just 6% think that a public sector worker would fit in well with their company. 

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