Legal Alert

Issue 60, December 2008

Immigration rules in force: Tier 2 of the Points Based System in force

Businesses that already employ, or intend to employ, skilled workers from outside the European Economic Area (EEA) and Switzerland need to be fully compliant with Tier 2 of the new Points Based System (PBS) in force from 27 November.

Under the new system, only employers who have registered with the UK Border Agency (UKBA) as a licensed sponsor will be able to employ migrant workers, who need to pass a points-based assessment before they are given permission to enter or stay in the United Kingdom. The number of points the migrant needs, and the way the points are awarded, can be checked using the online points-based calculator on the UKBA website. Points are awarded to reflect the migrant's ability, experience, age and, where appropriate, the level of need within the sector where the migrant will be working.

The UKBA has issued new policy guidance on the PBS, which contains useful information for sponsor firms and migrant applicants.

Failure to comply with the new rules can lead to a sponsor licence being withdrawn, or the possibility of the sponsor facing civil or criminal sanctions.

Operative date
27 November 2008

Territories
England, Wales and Scotland

More information

• Access the online  points-based calculator on the UKBA website.
• Download the  policy guidance from the website (PDF)

New dispute resolution procedures due in force from April 2009

Employers need to make sure now that they are familiar with the important changes affecting discipline and grievance procedures that are due to take effect next April.

Following consultation by the Department for Business, Enterprise and Regulatory Reform in 2007, in which businesses were asked for their views on measures to help solve employment disputes successfully at work, key reforms to the law on discipline and grievance procedures were included in the Employment Bill, which received Royal Assent in November 2008.

The Act is due to come into force in April 2009, and provides for the complete repeal of the statutory dispute procedures, and of the existing law on the role of procedure in unfair dismissal. In addition, a new statutory Code of Practice on discipline and grievance, supported by extensive non-statutory guidance, has been published by Acas, and is currently awaiting final parliamentary approval.

If the new rules are introduced on 6 April 2009, as anticipated, the current mandatory 'three-step' processes for discipline and grievance will no longer apply. Employment tribunals will decide cases on the basis of what is 'fair and reasonable', and the new Acas Code of Practice and non-statutory guidance will establish the principles of what an employer and employee should do. Employment tribunals will have discretionary powers to adjust awards by up to 25 per cent if an employee or employer has acted unreasonably in not following the principles in the new Acas Code.

Operative date
6 April 2009

Territories
England, Wales and Scotland

More information
Read the  statutory Code of Practice on the Acas website

Case law: length of service as criterion for redundancy selection can be lawful

Employers need to review carefully the terms of their redundancy policies in the light of a recent High Court ruling.

The question before the court in this case was whether length of service could be retained as a criterion within a selection matrix for redundancy, on the basis that it was a 'proportionate means of achieving a legitimate aim' under the age-discrimination rules.

The company's redundancy policy stated that employees would be assessed for redundancy against five measured criteria. Under one of them, credit was given for length of continuous service. However, the age-discrimination rules (which provide generally that less favourable treatment of an employee on grounds of age is prohibited unless the treatment can be justified) contain an exception that allows an employer to use length of service as a criterion in relation to the award of a 'benefit' that is potentially discriminatory, where it fulfils a business need (eg by encouraging the loyalty or motivation, or rewarding experience, of some or all of the workers).

The court decided that the policy of giving credit for long service amounted to conferring a benefit on the employee concerned - the benefit was the retention of employment which would otherwise be lost.

However, the tribunal also found that the criterion fulfilled a business need, because length of service equated to loyalty and experience, and meant that older workers were better protected from losing their jobs than younger workers in a difficult economic climate.The employer had therefore justified the impact of the age-related benefit.

Operative date
Immediate

Territories
England, Wales and Scotland

Case law: minimal information required for written grievance in equal pay claim

Employers need to be alert to written grievances relating to potential equal pay claims, as only minimal information is required in these cases to satisfy the first step of the statutory grievance procedure, according to a recent ruling.

This case concerned three separate appeals, heard together by the Employment Appeal Tribunal (EAT), on the details that needed to be included in their written grievances when raising equal pay claims. A written grievance is required as the first step in the statutory standard grievance procedure.

The EAT concluded that the detail required was minimal. It was enough for an employee to indicate that she was pursuing an equal pay claim. By identifying the claim as an 'equal pay' claim, the employee was also, inevitably, revealing the reason for the claim. The employer would know that the allegation was that a comparable man doing equal work was receiving more than she was, and it could then make further enquiries regarding the claim.

The EAT also stated that to require too much information in a grievance would be wholly inconsistent with the objective of the legislation, and could unreasonably restrict the scope for employees, who are often bringing their claim without legal help, to bring claims if they have not raised a relevant grievance in time.

Operative date
Immediate

Territories
England, Wales and Scotland

Case law: employers' liability for employee's stress at work

Employers have a duty to take action where there are warning signs that an employee is suffering from stress, a recent Court of Appeal ruling has confirmed.

This case concerned an employee, working in a managerial role, who alleged that, before she suffered a breakdown in health, there had been warning signs that she was not coping with some aspects of her job; in effect she was 'at the end of her tether'. She had expressly warned her employers about this but, in breach of duty, they failed to relieve her situation. She had carried on and, a few weeks later, her health had broken down.

The employers denied that they had been in breach of their duty of care, and also denied that any alleged failure to act had caused or contributed to the employee's psychiatric illness. The employers' case was that there were no warning signs of an impending breakdown in health and no express warning from the employee. It had been up to her to see her doctor if she thought she was not fit for work.

The judge reached the conclusion that the employers' failure to act had been a breach of duty for which it was liable. In assessing damages, he took account of various other factors which, he said, had contributed to the employee's illness, and he reduced the damages by 50 per cent, but the final award was still in excess of £100,000. The employers' appeal to the Court of Appeal was dismissed.

Operative date
Immediate

Territories
England, Wales and Scotland

Case law: compensation for loss of earnings payable despite entitlement to incapacity benefit

Employers must pay compensation for loss of earnings to unfairly dismissed employees even where they are claiming incapacity benefit, according to a recent tribunal decision.

This case concerned two employees who successfully claimed unfair dismissal and disability discrimination against their employers. The employment tribunal considered whether the fact that the employees received disability benefit prevented them from claiming compensation for loss of earnings during the same period. The employer argued that the fact that the employees were only entitled to incapacity benefit if they were 'incapable of work' under the relevant benefits legislation meant they were not entitled to be compensated for loss of earnings in that period.

The employees argued that the phrase 'incapable of work' did not necessarily equate to an individual's actual inability to work, but it had a special meaning set out in the benefits legislation, and so the employers were wrong to state that the employees were only entitled to receive incapacity benefits if they were incapable of working.

The tribunal held that receipt of incapacity benefit did not preclude the employees from claiming compensation for loss of earnings during the same period, and the decision was upheld by the Employment Appeal Tribunal (EAT). The EAT concluded that the fact that an individual had obtained incapacity benefit did not in itself show that he or she might not have been able to work and earn money.

Operative date
Immediate

Territories
England, Wales and Scotland

Case law: effective date of dismissal when communicated by post

Employers need to be clear about the date on which the dismissal of an employee becomes effective, when notification is sent by post, following a recent ruling.

In this case, an employee attended a disciplinary hearing, and was subsequently notified, in a letter sent recorded delivery, that she had been summarily dismissed. The letter arrived the next day and was signed for by a member of the household, but the employee was away visiting her sister, and did not return to read the letter for another four days. When she commenced proceedings for unfair dismissal nearly three months later, it became necessary to determine whether the dismissal was effective from the day after the letter was sent (in which case, the proceedings were started outside the permitted time limit), or from the date the letter was read.

The employment tribunal stated that, in circumstances where the employee has neither gone away deliberately to avoid receiving the letter nor avoided opening and reading it, the later date should be used, and the decision was upheld by the Employment Appeal Tribunal (EAT).

The EAT helpfully indicated that, if employers wish to achieve some measure of certainty, they could do so by including a provision in their contracts of employment that the contract may be terminated by the employer sending a letter of dismissal by first-class post to the employee's home address, as specified in the contract, and that such a letter will be deemed to have been received the next working day.

Operative date
Immediate

Territories
England, Wales and Scotland

Case law: requirement for employee to obtain qualification is not age discrimination

Employers will welcome clarification that they can require employees, including those approaching retirement age, to possess or obtain relevant academic qualifications, in a recent ruling.

This case involved an employee who was nearing his normal retirement age. He was required by his employer (following a re-grading of posts in the organisation) to obtain a law degree in order to be graded at the top grade, and to receive the higher salary linked to that grade. The employee said that he would be unable to complete a law degree before he retired and, on that basis, he brought a claim before the employment tribunal for indirect age discrimination.

The tribunal upheld the claim, on the ground that employees in the age range 60-65 were discriminated against by this requirement, and such discrimination could not be justified. However, the Employment Appeal Tribunal (EAT) allowed the employer's appeal, ruling that it was no more difficult for an older employee to obtain the qualification than for a younger one, and the fact that an older employee would enjoy the benefit for a shorter length of time was not discriminatory. Also, the tribunal had been wrong to identify employees within five years of retirement as a distinct group.

The EAT stated that, if it had concluded that there was discrimination in this case, it would have upheld the tribunal's finding that such discrimination could not be justified. This means that employers need to ensure that the objective of the potentially discriminatory measure cannot be achieved by any other route.

Operative date
Immediate

Territories
England, Wales and Scotland

Case law: online businesses must provide contact details in addition to email address

Businesses that supply online services need to provide contact details on their website allowing 'direct and effective' communication, in addition to their email address, according to a recent European ruling.

This case concerned a German insurance company that displayed its postal and email addresses on its website, and had an online enquiry form by which answers were provided within 30 to 60 minutes, but did not supply a telephone number until after an insurance contract had been concluded. An umbrella body brought an action in the German courts, insisting that the E-commerce Directive (2000/31/EC) required the company to display a telephone number, so that prospective customers could speak directly to the company.

The German appeal court referred to the European Court of Justice (ECJ) the question of whether the Directive should be interpreted as containing such a requirement, and the ECJ concluded that that a service provider must supply prospective customers with contact details for 'direct and effective' communication, in addition to its email address, but not necessarily a telephone number: an electronic enquiry template would be acceptable.

In addition, the ECJ stated that businesses must provide another, non-electronic means of communication when asked by prospective customers who, after contacting the service provider electronically, find themselves without access to the internet or email.

Operative date
Immediate

Territories
England, Wales and Scotland

Have your say: standardised consumer rights across Europe

Businesses have the opportunity to contribute to the Government's ongoing negotiations on the EU Commission's proposal for a new Consumer Rights Directive.

The Commission has reviewed a number of consumer protection Directives (known as the 'consumer acquis'), which have been adopted over the past three decades, and is now proposing a new Consumer Rights Directive that will replace the four Directives concerned with Sale of Goods and Associated Guarantees (99/44/EC), Unfair Contract Terms (93/13/EEC), Distance Selling (97/7/EC) and Doorstep Selling (85/577/EEC).

The proposal aims to ensure a high level of consumer protection, making it easier and less costly for traders to sell cross-border, and providing consumers with a larger choice and competitive prices. At the same time, it will update and modernise existing consumer rights, bringing them in line with technological change such as m-commerce (Blackberry trading) or online auctions, and strengthening provisions in the key areas where consumers have experienced problems in recent years - particularly in sales negotiated away from business premises (eg door-to-door sales).

The proposed new Directive covers the provision of pre-contractual information to consumers, information and withdrawal rights for distance and off-premises contracts, sales contracts and unfair terms in consumer contracts.

The Department for Business, Enterprise and Regulatory Reform (BERR) is consulting on the EU proposal, and businesses have until 2 February 2009 to respond to the consultation.

Operative date
2 February 2009

Territories
England, Wales and Scotland

More information
Download the  consultation response form from the BERR website

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