Publications
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Childcare vouchers
At the recent Labour Party Conference, Gordon Brown proposed the removal of tax and NIC relief for employer based childcare vouchers, saying that the current scheme is badly targeted and that the middle classes benefit more than others. The proposal was to switch the current scheme to one that provides 10 hours of free childcare a week for 250,000 two year olds by 2015. The recent proposal, with regards to childcare vouchers, refers to two separate changes, at different dates.
1. March 2011: Parents who are not already receiving vouchers from their employer at that time would not be able to join a scheme
2. 31st March 2015 the Government’s proposal is tax and NI exemption would be removed completely.When the scheme was first set up first set up 20 years ago it recognised the prohibitive cost of childcare and was a way to support parents to be able to afford to go to work. The proposal to remove the vouchers, which are thought to save parents up to £2,400 a year on childcare, has had an adverse reaction from the public. Over 33,000 employers have now adopted the scheme and many parents have found it to be the only way that they could consider returning to work. According to research by a leading voucher provider, it has shown that the vouchers are a key support to over 340,000 parents and around 57% of the parents that use the scheme say they would not be able to afford their existing childcare arrangements if they did not receive the tax break on the vouchers.
Several former ministers have also spoken out and written to Downing Street, raising the point that going forward with this recent proposal would remove “effective and popular childcare support from hard-working parents”. They have also said that the plans to cut childcare vouchers are “greatly unfair’’ and ‘’mark the undoing of one of Labour’s landmark achievements”. The ministers’ overall message has been that ‘’surely this is not the time to be removing key support schemes from hard-working families when they need to be at their most engaged to help recover from the recession’’.
More than 75,000 people have now signed a petition opposing the removal of the scheme on the Downing Street website criticising the Prime Minister’s proposal and urging him to reconsider.
Downing Street is now said to be ‘listening’ to warnings from the public and have said they will look at the criticisms very carefully. More information is expected in the pre-budget report which is being held on the 9th December.
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High Court upholds retirement age of 65
In the long awaited Heyday litigation the High Court, handed down its decision on 25 September that the Government’s designated retirement age (DRA) of 65 and the ability to justify direct age discrimination are both lawful.
The Heyday challenge was initiated in 2006, when Age Concern (now Age UK) challenged certain aspects of the Employment Equality (Age) Regulations 2006 which came into force in April of that year. Regulation 30 allows employers to dismiss an employee on the grounds of retirement at the age of 65 and this does not constitute unlawful discrimination.
Regulation 3 permits an employer to justify direct and indirect age discrimination. Age UK argued that legitimate reasons for retiring an employee could be established on a case by case basis and therefore no DRA was necessary.
The case was referred to the European Court of Justice and it was decided (March 09) that having a DRA would be discriminatory unless is was justified by legitimate social policy objectives. It was then referred back to the UK to see if there was this justification.
The Government were successful in terms of the DRA. Mr Justice Blake decided that the DRA was justified and he was satisfied that the Government had proven that “the concept of a designated retirement age was based upon a social policy aim that may be generally described as maintaining confidence in the labour market.” Objectives such as workforce planning, protection of the dignity of workers at the end of their working lives and encouraging culture change were included in this. It was considered that a DRA of 65 was proportionate to the social policy objective in question, however he also stated that there were significant reasons why a higher age should have been selected, including creation of a cultural change in relation to age discrimination and ensuring that the DRA was in line with the state pension age.
There is an imminent review due of the DRA and so it is anticipated that there will be continued discussions on the topic of whether the age should be increased or not. It is typically felt that the DRA ‘’does create a greater discriminatory effect than is necessary on a class of people who are both able to and wait to continue in their employment’’. It is anticipated that the DRA of 65 provided for in the Regulations will increase following the Government’s review (2010).
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Six months of maternity leave to be transferrable to the father
Consultation plans to allow new mothers to transfer some of their maternity entitlement to the father have been announced. The proposal would mean that mothers with maternity leave, will be able to transfer up to six months of this leave to the father, provided it is in the second six months of a child’s life.
Up to three months of the transferred leave will be paid at the same rate as Statutory Maternity Pay as long as the leave is taken during the mother’s 39 week maternity pay period. Consultation on the implementing regulations is due to commence soon. The Government intends that the law will be in force by April 2010 and will be effective for parents of children due on or after 3rd April 2011, to allow employers to adjust to these measures.
In terms of administering the new system, parents will be required to self certify by providing details of their eligibility to their employer. But as the system could be open to abuse, employers and HM Revenue & Customs will be able to carry out further checks on entitlement if they feel necessary.
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Increase in statutory redundancy payments and national minimum wage from 1 October 2009
Statutory Redundancy
In line with the 2009 Budget, from 1 October 2009 the weekly limit used to calculate statutory redundancy pay will increase from £350 to £380 (resulting in a maximum potential payment of £11,400). Redundancy payment is calculated in line with the following:
- how long you have been continuously employed
- your age
- your weekly pay, up to a certain limit (£380 from 1 October 2009).
You will get:
- 0.5 week’s pay for each full year of service where your age was under 22
- 1 week’s pay for each full year of service where your age was 22 or above, but under 41
- 1.5 week’s pay for each full year of service where your age was 41 or above
The Government’s decision is designed to provide more support for those individuals made redundant in the current economic climate.
These figures are updated annually in February, and the introduction of this one-off increase means the usual increase in February 2010 will be suspended.National Minimum Wage (NMW)
The new NMW rates come into effect on 1 October 2009.
There are three hourly rates as follows:
- For workers aged 22 and over, the current rate of £5.73 per hour will increase to £5.80
- For workers aged 18 to 21, the current rate of £4.77 per hour will increase to £4.83
- For workers aged 16 and 17, the current rate of £3.53 will increase to £3.57.
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Happy Holidays! (But no money to spend…)
From the 1st of April 2009 the minimum holiday entitlement will increase from 4.8 weeks (20 days) to 5.6 weeks (28 days) NB. This can include bank holidays and is pro-rata for part-time employees. This increase will benefit a large number of employees across the UK and with an increasing focus on the importance of work life balance for employees across all sectors, this will hopefully boost morale in this economic downturn.
However, at the same time, 61% of businesses have reported in a recent ‘personnel today’ survey that they would be implementing pay freezes and cutting hours in response to the credit crunch and in an effort in some areas to reduce the number of full redundancies. The outlook continues to be gloomy and it is predicted that more initiatives to reduce redundancies will be implemented across the UK. The most common at present have been reduced working hours across departments with falling levels of work, the option of taking a sabbatical with a limited amount of pay and pay freezes.
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Equalities Bill
In June, the government announced an Equalities Bill which is expected to be introduced in to the next Parliamentary session, starting in November. It is designed to “declutter” our discrimination laws which have built up over the last 40 years. They point out that there are currently nine major pieces of discrimination legislation, around 100 statutory instruments and more than 2,500 pages of guidance and statutory codes of practice. These cover discrimination on grounds of sex, race, disability, age, sexual orientation and religion or belief. The aim is to clarify legislation and guidance, to help those who benefit from the law and those who need to comply with it.
The aims are to
• Introduce a new Equality Duty on the public sector.
• End age discrimination
• Require transparency
• Extend the scope of positive action
• Strengthen enforcementThis is a step closer towards positive discrimination, enabling employers to favour female or ethnic minority candidates if they are under represented in the workplace and are equally qualified for the job, compared with non disadvantaged applicants.
It will also encourage employers to disclose information about workers salaries, and prevent secrecy clauses within employment contracts which stop employees discussing their salaries with each other.
A comprehensive paper on the content of the Equality Bill will be published soon which will include the Government’s response to the consultation “Discrimination Law Review; A Framework for Fairness: Proposals for a Single Equality Bill for Great Britain” which was carried out last year.
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Challenge to compulsory retirement age
The Employment Equality (Age) Regulations 2006 permit employers to dismiss on the grounds of retirement those employees who are aged 65 or over without this being regarded as age discrimination, unless a normal retirement age in excess of 65 applies to that employment. An employer wishing to retire an employee compulsorily at any age is required to follow a procedure, giving them between six months and 12 months notice, and informing them of a right to request not to retire.
The charity Heyday, part of Age Concern, has disputed the legal retirement age of 65, and there will be a hearing at the European Court of Justice. According to Personnel Today this will now take place on 2 July, which is months earlier than the 2009 date previously expected. Heyday claims that the UK government is in breach of the EU’s Equal Treatment Directive by imposing a mandatory retirement age. If the challenge is successful, employees who were made to retire at 65 could claim age discrimination – some have already puts claims on record in case the UK government loses.
Currently employers have a choice of continuing to retire employees and face potential liability if Heyday is successful, or remodelling their retirement policy to remove a mandatory retirement age. Hopefully the situation will become less confusing after 2 July.
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TUPE – service provision change
Thomas-James and others v Cornwall County Council and others, has been one of the first cases to examine the application of the service change provision regarding transactions on or after 6 April 2006. These provisions were designed to cover contracting in, contracting out and re-tendering exercises. There are still difficulties with the “amended” TUPE, however, which this case illustrates, when the identification of a transferee for the transferring activities cannot be traced between the outgoing contractor and the new contractor.
Cornwall County Council were one of seventeen service providers contracted by the Legal Services Commission to provide a free legal helpline service. Under this scheme, callers would be routed to the next available adviser from any one of those seventeen with the required category of legal specialism. The LSE put the contracts out for re-tender in 2006 and Cornwall County Council decided not to bid. The Council’s contract and the claimants’ employment contracts with the Council terminated in 2007. The contractors operating the new contract numbered nine rather than seventeen and consisted of some of the past contractors plus a number of new contractors. The claimants and the Council claimed that the contracts of employment had passed to the new service providers, which they denied.
The Employment Tribunal accepted that the claimants had been part of an organised grouping of employees whose purpose would be to carry out activities on behalf of the Legal Services Commission. It could not, however, ascertain which new service provider had taken over the activities previously undertaken by the outgoing contractor – the council. As it was not possible to identify to which of the nine new service providers the council’s former activities had transferred, the claimants were not protected by TUPE as there could be no service provision change.
This is a first instance decision and the case may go to appeal, but it does illustrate the continuing difficulties presented within TUPE.
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Varying Employee Contracts
In the Employment Appeals Tribunal case of Robinson and Tescom Corporation, Mr Robinson was employed as a territorial manager for Tescom, selling systems and components. Tescom formulated a restructuring plan that involved expanding the territory covered by Robinson. Initially this required national travel but, as he did not agree with this proposal, it was amended to cover the whole of the south of England.
Robinson subsequently raised a grievance about the changes stating he wished to remain in his existing position. At the conclusion of the grievance Robinson said that he would take on the extended sales territory, but would review the situation over a 12 month period. Two months later, he said that he would work under the new job description, but under protest, and that he was treating the change as a breach of contract.
He subsequently refused to work to the new terms and Tescom dismissed him summarily for failure to follow a reasonable management instruction. Robinson brought claims for unfair dismissal and breach of contract.
The employment tribunal dismissed the claim, as Robinson had agreed to work under the terms. On appeal, the Employment Appeal Tribunal held that having taken the position that he would agree to work under the new terms albeit under protest and reserving his rights, he was required to in fact work under those new terms. The employment tribunal had been correct to hold that there was no unfair dismissal when Tescom terminated the employment in response to Robinson’s refusal to work under the new terms.
This decision confirms that an employee who is faced with an attempt by the employer to unilaterally vary the contract of employment has four options:
1. To agree to the variation
2. To resign and claim constructive dismissal
3. To refuse to work under the new terms (thus forcing the employer to either permit the employee to continue working under the old terms or to dismiss
4. To ‘stand and sue’ by working under protest and seeking damages (either for breach of contract, or for unfair dismissal).This case illustrates that employees have to choose one course of action and, having done so, can’t then change to another.
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Changes to SMP and SSP and increase to minimum wage
From 6 April 2008 Statutory Maternity Pay will increase from £112.75 to £117.18 per week and Statutory Sick Pay increases from £72.55 to £75.40 per week.
From 1 October 2008 the minimum wage will increase. The adult rate will go up from £5.52 to £5.73 per hour. The rate for 18-21 year olds will rise from £4.60 to £4.77 and the 16-17 year old rate will increase from £3.40 to £3.53.
