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Employment Update 18 February 2011

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United Kingdom

Read the 'Employment Law Update'' newsletter, 18 February 2011, on ffw.com

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

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Default retirement age - transitional provisions

The Government has now published the Draft Employment Equality (Repeal of Retirement Age Provisions) Regulations 2011, which set out the transitional provisions for phasing out the default retirement age (DRA) of 65 from 6 April 2011.

The Regulations come into force on 6 April 2011 and, unless the transitional provisions apply, retirements under the DRA procedure will no longer be valid from this date. In essence, the transitional provisions state that the current DRA procedure will continue to have effect in relation to a person if:

  1. notification of retirement has been given in accordance with the Employment Equality (Age) Regulations before 6 April 2011; and
  2. that person "will attain" the age of 65 (or the normal retirement age if higher) during the period that begins with 6 April 2011 and ends with 30 September 2011.

Unfortunately, the above second condition has already caused some confusion. The effect of this condition is that an employee who is 65 by 6 April 2011 would not appear to fall within the transitional provisions as, being 65 already, they will not "attain" that age between 6 April 2011 and 30 September 2011. If such an employee has already been given notification of retirement but is then dismissed on or after 6 April 2011, the employer may therefore be exposed to age discrimination and unfair dismissal claims (unless the employer can show that the retirement is objectively justified).

In light of the issues arising from the transitional provisions, we will be holding a small roundtable discussion in March, for senior HR personnel and management, to enable employers to prepare for the abolition of the DRA. Places are limited, so if you would like to attend, please click here for further information. 

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Time off for training - no extension

The Government has confirmed that it will not extend the right to request time off for training to employees of small and medium-sized employers in April 2011.

Following consultation, the Government has delayed implementation to allow "further, thorough discussion, scrutiny and evaluation". Further Education, Skills and Lifelong Learning Minister, John Hayes said:

“It is vital to the economy and individuals that everyone has access to the training they need. That is why we are investing in apprenticeships, protecting adult and community learning, and freeing colleges to respond to local needs.

“But it is vital that the right balance is struck between support for training and the need to minimise the burden of regulation for smaller companies."

The right for employees to request time for training has been available to employees of large organisations with 250 or more employees since April 2010. The Department for Business, Innovation and Skills recently published example scenarios providing guidance on how to handle requests for time for training

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Disability guidance

Draft guidance on matters to be taken into account in determining questions relating to the definition of disability has been laid before Parliament and is expected to come into effect on 1 May 2011. Once the guidance is in force, it will be considered by a court or tribunal when deciding whether a person is disabled for the purposes of the Equality Act 2010.

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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Public authorities - in breach of duty to disabled persons

The High Court has confirmed that the HMRC acted in breach of its duties under disability discrimination legislation when pursuing bankruptcy proceedings against an individual, knowing that she had a disability at the relevant time. This case is of particular interest to public bodies, as it is a relatively rare example of discrimination by a public authority in the exercise of its non-employment functions. It highlights how carrying out functions, such as enforcement procedures, can impact on disabled persons and potentially lead to a breach of public sector equality duties.

In Haworth v Cartmel and HMRC, Ms Haworth had suffered from a long-term mental illness and had a particular phobia of opening letters. She developed an interest in breeding horses as a therapeutic hobby and her income from this activity was minimal. The HMRC subsequently received an anonymous letter, which stated that Ms Haworth was a commercial horsebreeder and projected that her annual income was likely to be over £100,000 per annum. This letter eventually resulted in HMRC raising a determination that Ms Haworth owed back tax in excess of £192,000. This formed the basis first of a statutory demand raised by HMRC and then a petition, which led to Ms Haworth being declared bankrupt.

HMRC was aware that Ms Haworth was unable to manage her own affairs and was informed by her mother that Ms Haworth did not open mail, struggled with forms and kept horses as a therapeutic hobby. When the statutory demand was served on Ms Haworth, the server was informed by Ms Haworth that she "was under the Mental Health Act" and that she had a pile of unopened post. Ms Haworth did not open the envelope containing the statutory demand. After the bankruptcy order was made, and following the preparation of tax returns by or on behalf of Ms Haworth, the HMRC accepted that she in fact owed no tax. It was subsequently argued that the bankruptcy order should be either annulled or rescinded.

Whilst the case examined issues of capacity, the discussion of HMRC's duty under the former Disability Discrimination Act 1995 (DDA) is of particular interest. HMRC conceded that it knew Ms Haworth was disabled and, as a public authority, HMRC was under a duty to make reasonable adjustments. It was argued on Ms Haworth's behalf that the HMRC could have made further contact with her mother before or after service of the statutory demand and petition, considered alternative enforcement proceedings and drawn the Court's attention to the information available to HMRC before asking it to make a bankruptcy order in her absence. The Court considered that in principle all these points were well made. In particular, it considered the failure of HMRC to take steps to inform Ms Haworth's mother that the statutory declaration and the petition were about to be served and to ask Ms Haworth's mother to attend with Ms Haworth were clear breaches of the requirement to make reasonable adjustments. The Court also considered that HMRC ought to have informed the Court at the date of the petition hearing of the information available to HMRC concerning Ms Haworth's disability. It noted that it was likely that the Court would have sought further medical input before considering what further orders to make.

This case is an important reminder of the significance of public sector equality duties. Whilst enforcement procedures, for example, are often triggered by fixed events, ignoring the issues which may arise from an individual's disability may expose public bodies to claims of discrimination. 

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Criminal records scaled back

The Government has unveiled plans to scale back the vetting and barring scheme and criminal records regime to common-sense levels while ensuring vulnerable groups are appropriately protected.

The proposals come after a comprehensive review of the existing system and include:

  • merging the Criminal Records Bureau (CRB) and Independent Safeguarding Authority to form a streamlined new body providing a proportionate barring and criminal records checking service.
  • reducing the number of positions requiring checks. Only those working closely and regularly with children and vulnerable adults will need them.
  • portability of criminal records checks between jobs to cut down on bureaucracy.

The Government also intends to keep the scope of CRB checks under review. 

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Review of sickness absence

The Government has commissioned an independent review of workplace sickness absence.

Jointly chaired by David Frost, Director General of the British Chambers of Commerce and Dame Carol Black, National Director for Health and Work, the review will explore new ways on how the current system can be changed to help more people stay in work and reduce costs.

Reporting later this year, the review will also:

  • explore how the current sickness absence system could be changed to help people stay in work, reduce and share costs for the taxpayer and businesses, and contribute to economic growth.
  • examine whether the balance of these costs are appropriately shared between individuals, employers and the State.
  • make recommendations for change.
  • ensure that recommendations for change are consistent with promoting private-sector growth and minimising burdens on business - in particular small and medium-sized businesses.

The review, which is jointly sponsored by the Department for Work and Pensions and the Department for Business Innovation and Skills, will include a panel of experts from business, trade unions and health representatives and will be conducted in the context of the Growth Agenda. It will also feed into the wider Employment Law Review, which is looking at measures to reduce red tape and remove the burdens on business and maximise flexibility for employers and employees. 

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Cost of new employment laws

New employment laws due to be implemented over the next four years will cost UK businesses £22.87bn, according to the British Chambers of Commerce (BCC).

The BCC is urging the Government to start the deregulation process and scrap costly employment laws. According to the BCC, some of the most costly regulations in the pipeline are:

  • 2011: right to request time off to train will have an annual recurring cost to business of £174.96m
  • 2011: Agency Workers Directive will have an annual recurring cost to business of £1,548m
  • 2012: Pensions Reform will have an annual recurring cost to business of £4,526m

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Survey on labour market - job creation in private sector; cuts in public sector

Public sector redundancies look set to rise sharply in the first quarter of 2011, according to this quarter's Labour Market Outlook from the Chartered Institute of Personnel and Development (CIPD) and KPMG, but job creation in the private sector offers some hope.

The survey of 750 employers indicates that overall employment levels are likely to fall in 2011. However, the private sector will continue to generate jobs growth, with manufacturing and private sector services providing the majority of the jobs. In contrast, two thirds of public sector organisations will be looking to reduce the size of their workforces in the first quarter of 2011. The survey also indicates that one in three (33%) of employers say they will be looking to employ fewer people in 2011 as a result of the Comprehensive Spending Review.

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