Yet more on what constitutes a “philosophical belief” in the context of discrimination

Posted on April 18, 2011 by Martin Malone

I have written on numerous occasions about the sometimes odd and unexpected practical applications of the Religion and Belief Regulations (now incorporated within the Equality Act).

This month has seen another and some would say rather tenuous interpretation of what constitutes a protected philosophical belief. Mr Devan Maistry worked for the BBC and presented complaints to an employment tribunal alleging discrimination based on his age and his belief that “public service broadcasting has the higher purpose of promoting cultural interchange and social cohesion”.

At a preliminary hearing the tribunal had no difficulty in finding that Mr Maistry had a genuine belief in the “higher purpose” of the BBC. Perhaps more surprisingly the tribunal was also willing to accept that this constituted a philosophical belief capable of protection under discrimination legislation.

I am bound to observe that this latest in a series of similar decisions makes one wonder where the limits will be drawn when considering such matters. It is hard to imagine that the legislators had this type of scenario in mind when approving legislation to provide protection against discrimination primarily on religious grounds. Belief systems can be undertood to encompass religion, world view, philosophy, ideology or even “life stance” (for more on the latter read here).

I should make clear that I do not think that either Mr Maistry or those advising him are wrong in their approach to the claim based on current law. However I do question whether this is a legitimate area for statutory protection from discrimination. It is easy to see how many employees could have very strong views about the purpose and importance of the work that they do, e.g. teachers, doctors, lawyers, charity workers etc., but does that really mean that all should have a potential route to legal redress based on discrimination? There is also the troubling aspect of those whose philosophical beliefs are at the edges or perhaps beyond those which are acceptable to society as a whole. Presumably they should be entitled to similar protection? Perhaps the ultimate irony would be discrimination law coming to the protection of someone whose beliefs are profoundly discriminatory. Based on current case law, this is entirely conceivable and more or less inevitable. Yet again it seems that the best of intentions could result in a wholly unintended and unwanted outcome.

CBI attacks Employment Tribunals and sets out compelling case for reform

Posted on April 18, 2011 by Martin Malone

The Government is currently carrying out a consultation on workplace dispute reforms and on Friday 15 April the CBI added its substantial contribution to the debate in the form of its report: “Settling the matter: Building a more effective and efficient tribunal system“.

The report criticises the current “slow, legalistic and antagonistic” process so derided in particular by owners of SMEs who regard it as stacked against them from the outset.

The CBI’s key proposals are:

take action to weed out weak claims and create the capacity to hear valid claims more quickly;
encourage early agreement on a fair settlement; and
improve efficiency when cases do go to a tribunal.

Katja Hall, CBI Chief Policy Director, said:

It’s always regrettable when the relationship between employer and employee breaks down to the point where a tribunal claim is made. But when this happens, both sides deserve a system that is consistent, quick and keeps legal costs to a minimum. Instead, we are saddled with a tribunal system that is expensive, stressful and time-consuming for all parties.

“Surely it’s in everyone’s interests for cases with merit to be heard quickly and settled, while weak claims are swiftly identified and weeded out. We’d like to see more workplace disputes being resolved before they reach tribunal.”

The submission is well-written and researched and it sets out a compelling case for reform of the employment tribunal system. The case studies make for particuarly interesting reading and demonstrate clearly that the current system is broken and dire need of a thorough overhaul.

Additional paternity leave

Posted on April 17, 2011 by Martin Malone

It is now well known that where parents of a child born on or after 3 April 2011 are both working, then once the mother goes back to work the father (provided he has “clocked up” at least 26 weeks’ continuous employment with the employer) can then take up to 26 weeks of “additional paternity leave”.

What may be less well known, or at least not generally understood, is that the right to additional paternity leave is NOT the same, and does not have the same effect as, a right to share between them as they choose the normal 52 weeks maternity leave available to mothers.

In law the father’s right to additional paternity leave is separate from the mother’s right to maternity leave. In practice, if the father decides to take it, it may often have the same practical result as sharing 52 weeks leave. But it can mean that the total taken by the mother and father can exceed 52 weeks.

An example will make this clear. If the mother starts her maternity leave on the earliest possible date (11 weeks before her expected week of childbirth) and goes back to work 20 weeks after the child is born she will have had 31 weeks of maternity leave assuming the birth happened when expected. The father can then take 26 weeks additional paternity leave (this will expire before the child’s first birthday and thus fulfil a legal condition to that effect). The total of the maternity leave and additional paternity leave will then add up to 57 weeks – and on top of that the father will have been able to take the normal two weeks’ paternity leave available under previous law, meaning that in total, between them the mother and father will have had 59 weeks leave. They will of course also be entitled to their normal annual holiday rights.

It is also worth noting that additional paternity leave is only available to husbands/partners of working mothers (self-employed counts – technically the requirement is that the mother must be entitled to one or more of the following: (i) maternity leave; (ii) statutory maternity pay (”SMP”); or (iii) maternity allowance). The new right is available to adoptive parents and to partners and civil partners – who can be same sex partners leading to the interesting result that it is possible for a woman to claim paternity leave (as Humpty Dumpty said to Alice: “When I use a word, it means just what I choose it to mean – neither more nor less”).

Tax on termination payments

Posted on April 17, 2011 by Martin Malone

Amendments to the PAYE Regulations in effect from 6 April 2011 mean that the perfectly legal “trick” of deducting only basic rate PAYE from termination payments made to departing (or more accurately recently departed) employees who are higher rate tax payers will no longer work.

Currently where a payment to an employee is deferred until after he or she has left the employment in which they were employed, the employer has to deduct tax at the basic rate only, using PAYE code BR. This is because the payment will not be included on the individual’s P45. The result is that higher-paid employees may not pay enough. Of course they have to pay in due course but not until after their tax return for the year has become due. This can give a substantial cash-flow advantage to higher paid ex-employees who can thus have interest free use of the postponed tax, sometimes for many months.

From April 2011 the employer has to operate code 0T instead of code BR, so that affected ex-employees will pay tax upfront at the basic, higher and additional rate as appropriate. Tax code 0T is a “worst case” code: it does not allow for any personal allowances and requires deduction of tax on a non-cumulative (Week 1/Month 1) basis.

In some cases it may well be that this will result in more tax being deducted than eventually turns out to be appropriate. In that case the employee will have to reclaim the overpaid tax later.

It is worth stressing that this is “merely” a change in PAYE coding, effectively meaning that the change is a cash flow change rather than a change of substance. In particular the exemption from tax for the first £30,000 of compensation paid on termination of employment which can apply in many cases is not changed.

It is also worth noting that the effect of the new rules can be mitigated if the termination payment is made under contractual terms which provide for payment by monthly instalments. This is because in that case each instalment will be taxed separately. Depending on the amounts involved, it may be possible to work out a system where only basic rate tax is payable under Code 0T on each monthly instalment even though the cumulative total of the instalments will mean that the ex-employee is a higher rate taxpayer.

March 2010 Budget and employment law

Posted on April 17, 2011 by Martin Malone

A government “Plan for Growth” document was issued along with the Budget on 23 March 2011. From an employment law angle the following items are of most significance:
• extension to businesses with fewer than 250 employees of the right for employees to request time to train has not been implemented on 6 April 2011 as previously planned;
• extension to parents of 17 year olds of the right to request flexible working has not been implemented on 6 April 2011 as previously planned;
• the “dual discrimination” rules in Equality Act 2010 have not been introduced on 6 April 2011 as previously planned
• the government “will consult to remove the unworkable requirement in the Equality Act for businesses to take reasonable steps to prevent persistent harassment of their staff by third parties …”.

Other relevant matters include:
• basic personal income tax allowance to go up by £1,000 (to £7,475) in April 2011 and by a further £630 (to £8,105) from April 2012;
• consultation on simplification and merging of income tax and National Insurance;
• abolition of the so-called “Default Retirement Age” (at 65) has proceeded as planned from 6 April 2011;
• up to 50,000 additional apprenticeships and up to 100,000 additional work experience placements over the next four years;
• a moratorium exempting micro (fewer than 10 employees) and start-up businesses from new domestic regulation for three years from 1 April 2011;
• promote labour mobility “by boosting the supply of housing through support for the housebuilding industry, with a FirstBuy shared equity programme to assist over 10,000 first time buyers to get on the housing ladder”;
• increase Approved Mileage Allowance Payments from 40 pence to 45 pence per mile and extend it to cover volunteers travelling as passengers;
• the National Insurance rate rise which the last Government announced will have to go ahead.
• ending the practice of “disguised remuneration” which “sees highly paid employees offered tax-free, lifetime loans that are never repaid”.
• increasing employee contributions for public service pensions by “an average of 3 percentage points”;
• Lord Young’s recommendations on health and safety laws will be implemented in full;
• plans will proceed for introduction (over many years and not for current pensioners) of a single-tier flat-rate state pension (currently estimated to be worth around £140 to £150 per week)

Equality Act 2010 – new April items

Posted on April 17, 2011 by Martin Malone

As is well known, the Equality Act 2010 replaced the vast majority of British anti-discrimination laws with one single statute on 1 October 2010. Not all parts of the Act came into force on 1 October 2010 and 6 April 2011 is the start date for three significant related items:
1. Positive action (Equality Act 2010 s.159)
2. Public Authority duties (Equality Act s.149)
3. Codes of Practice issued by the Equality and Human Rights Commission

Positive action. As from 6 April 2011 it is lawful for an employer to take any of the nine “protected characteristics” (sex, race, religion, sexual orientation etc.) into account in selecting to whom to offer a post, whether recruitment of a new job applicant or promotion of an existing employee, if the candidates are each as qualified as the other(s) and people having the same protected characteristic are under-represented in the employer’s workforce. Any action taken must be a proportionate means of addressing such under-representation.

The official explanatory notes to Equality Act 2010 explain that “The question of whether one person is as qualified as another is not a matter only of academic qualification, but rather a judgement based on the criteria the employer uses to establish who is best for the job which could include matters such as suitability, competence and professional performance”.

Positive action in favour of someone is not the same as positive discrimination in their favour (which generally remains unlawful after 6 April if it is because of a protected characteristic simply because it generally involves unlawful discrimination against someone else). Thus simply offering a job to a woman because women are underrepresented in the company’s workforce when a male candidate is better qualified is not lawful. Similarly offering the job to a woman who has the same qualifications as a male candidate is not lawful if women are adequately represented in the workforce. Those both remain, as previously, unlawful direct discrimination.

Employers should remember that they may need to justify any positive action if an unsuccessful candidate sues. Also it is worth noting that “positive action” of the sort noted above is not compulsory, unlike the duty imposed on employers to make “reasonable adjustments” in favour of employees who suffer from a disability, which can clearly amount in a rather different sense to taking positive action.

The Public Sector Equality Duty. This is a statutory duty on public bodies and others carrying out public functions which came into force on 6 April 2011. The intention is that it will “embed equality considerations into the day to day work of public bodies, so that they tackle discrimination and inequality and contribute to making society fairer”.

Codes of Practice. The Equality Act Code of Practice on Employment and the Code of Practice on Equal Pay, both prepared by the Equality and Human Rights Commission, also came into effect on 6 April 2011. According to the EHRC:

“The purpose of these Codes of Practice is to explain the new statutory provisions of the Equality Act. The Codes will help to ensure that the law is applied consistently by lower courts and tribunals. They will also help make the law accessible to a wider audience, such as those who have obligations and those who have rights – or their representatives. The Codes set out clearly and precisely what the legislation means. They draw on precedent and case law and explain the implications of every clause in technical terms. These statutory codes are the authoritative source of advice for anyone who wants a rigorous analysis of the legislation’s detail. For lawyers, advocates and human resources experts in particular, they will be invaluable”.

It is relevant to point out that the coalition government has announced that three other measures previously due to be introduced on 6 April 2011 under Equality Act 2010 are postponed or cancelled. These are the provisions for what was called the Equality Act Socio-economic duty (scrapped, as announced in November 2010); the rather technical provisions allowing claims for “dual discrimination” (postponed, possibly indefinitely, as announced in March 2011) and the provision under which employers would be liable for harassment of their employees by third parties if they “failed to take such steps as would have been reasonably practicable to prevent the third party from doing so”.

Compromise agreements

Posted on April 17, 2011 by Martin Malone

For many years it has been the practice of the Inland Revenue, now HMRC, to publish “extra-statutory concessions”. These effectively correct errors in and omissions from legislation which would result in tax being collected where it would be inappropriate.

The practice has always been of questionable legitimacy. For HMRC to have discretion, even via published “extra statutory concessions”, to decide that tax should not be payable when the law says it should does not fit well with contemporary ideas of law enforcement. In order to regularise the position, HMRC has therefore engaged on a process of formalising extra-statutory concessions into law wherever possible. As part of that process a new statutory instrument, the draft Enactment of Extra-Statutory Concessions Order 2011, has been drawn up. It came into effect on 6 April 2011. Amongst other things it codifies a significant employee related concession.

The relevant extra statutory concession relieves an employee or ex-employee from income tax in respect of monies paid on their behalf by their employer to cover legal costs incurred by the employee exclusively in connection with the termination of his or her employment, provided the costs are paid by the employer pursuant to a court order or direct to the lawyer under the terms of a compromise agreement.

While in principle this codification is to be welcomed, it is worth noting that as drafted the regulations are less beneficial to employees than the concession they are designed to replace. The regulations as drafted apply only if the compromise agreement is made under the Employment Rights Act 1996, for example to settle an unfair dismissal claim. They therefore do not apply if the compromise agreement is under the Equality Act 2010 and they do not apply to legal fees paid in connection with an ACAS COT3 conciliation. This may turn out to be a mistake. However unless the regulations are amended (they have been enacted as drafted) the current position is worse for at least some employees than it has been for many years under the concession.

SMP and other April benefit increases

Posted on April 17, 2011 by Martin Malone

The main employment related National Insurance and similar benefits for 2011/2012 (starting at various dates in April 2011) are as noted below (see the Social Security Benefits Up-rating Order 2011). Equivalent details for earlier years going back as far as 1939 are available on a website maintained by the Institute for Fiscal Studies.

Main employment related means tested benefits for 2011/2012 are:
• Income Support and Income-based Job Seekers Allowance: Single person under/over 25: £53.45/£67.50; Couple both over 18 – £105.95.
• Employment & Support Allowance: £67.50/£105.95 (reduced rate for certain claimants during first 13 weeks’ “assessment phase”)

Main other employment related benefits for 2011/2012 are:
• State Retirement Pension: £102.15 (category A);
• Incapacity Benefit: £71.10 (lower rate) /£84.15 (higher rate);
• Industrial Injuries Benefit: £18.42 to £150.30;
• Jobseeker’s Allowance: under/over 25: £53.45/£67.50;
• Maternity Allowance: £128.73 (earnings threshold £30);
• Statutory Adoption Pay: £128.73 (earnings threshold £102);
• Statutory Maternity Pay: 90% average earnings for first 6 weeks, then £128.73 for next 33 weeks (earnings threshold £102);
• Statutory Paternity Pay: £128.73 (earnings threshold £102);
• Statutory Sick Pay: £81.60 (earnings threshold £102)

Termination of employment status, or termination of employment contract, or both? A conundrum.

Posted on April 17, 2011 by Martin Malone

Strange as it might sound, it is possible for one’s status as an employee to end in circumstances that do not terminate one’s contract of employment. This was the thorny issue in Société Générale London Branch v Geys, decided by the Court of Appeal on 30 March 2011.

In that case, it was crucial to establish upon which of three potential dates Mr Geys’s contract ended, because it was only if it lasted until the latest possible date in January 2008 that a contractual entitlement to a huge bonus (the substance of his claim) could arise.

Société Générale had terminated his employment at a meeting on 29 November 2007, but Mr Geys had written back indicating that he was affirming his contract. Nonetheless, Société Générale made a payment in lieu of notice (in line with his contract) on 18 December 2007, and formally notified him of this by letter on 6 January 2008. The Court of Appeal overturned a previous ruling by the High Court and found that Mr Geys’s contract of employment ended on 18th December – thus he had no entitlement to the extra bonuses.

From Mr Geys’s point of view that, no doubt, was the most interesting (if disappointing) part of the judgment. However, of more general interest is what happened on 29 November 2007, because it highlights the conflict between “pure contract law” and statutory concepts of dismissal which underlie other claims such as unfair dismissal.

There was doubtless a repudiatory breach of contract by Société Générale – they made clear that Mr Geys’s no longer had a job. Yet such a unilateral breach cannot terminate a contract if – as happened here – the other party refuses to accept it. Hence the contract must continue, until ended in accordance with its provisions. However, Mr Geys’s status as an employee was clearly ended on that date – so for statutory purposes, it would be the Effective Date of Termination (EDT).

At first glance this is hard to get one’s head around – how can a contract of employment exist when (arguably) the essential mutuality of obligation has gone and one party is no longer an “employee”? Understandably, perhaps, the Court of Appeal wants the Supreme Court to consider whether an unaccepted repudiatory breach should, in fact, be able to terminate the contract.

However, what if the Supreme Court follows this route? The whole doctrine of constructive dismissal (which is a contractual concept which can be the basis for statutory unfair dismissal) relies on an employee promptly resigning in acceptance of a fundamental breach of contract by an employer. Where does it leave the employer’s defence that the employee affirmed the contract if the contract can be terminated by that unilateral breach alone? Will the EDT (so important for strict time limits) be at the date of resignation (as now) or the date of the breach?

The current situation is the product of conflicting legal concepts – but removing that conflict could generate just as many problems. In a case in which the date of dismissal, constructive or actual, is an important consideration proper resolution of the point could be vital, thus underlining the need for expert legal advice in any such situation.

Bribery Act

Posted on April 17, 2011 by Martin Malone

The Bribery Act 2010 was passed just over a year ago, on 8 April 2010 as one of the final pieces of legislation enacted by the last Labour government. The incoming coalition government originally intended to bring the Act into force on 1 October 2010 but postponed this until April 2011 – and then again postponed commencement of the Act following a consultation and representations from business until three months after publication of guidance on how the Act should be applied.

That guidance was eventually published by the Ministry of Justice on 30 March and the Act is now due to come into force on 1 July 2011.

The Act extends to England & Wales, Scotland and Northern Ireland. It creates new criminal offences in connection with offering or receiving bribes and it abolishes the old common law offences of “bribery and embracery” (in Scotland “bribery and accepting a bribe”). The new offences are essentially offering a bribe, accepting a bribe, bribing a foreign public official and (importantly in an employment law context) a new corporate offence of failing to prevent bribery. The Act provides for senior officers to be guilty of an offence committed by a body corporate if it was committed with their consent or connivance. It applies both in the UK and abroad and to both the public and private sectors. The Act provides for a maximum jail sentence of 10 years.

Importantly, the Act provides for a full defence if an organisation can show that it had adequate procedures in place to prevent persons associated with it from indulging in the bribery of which it is accused (Bribery Act 2010 s.7(2)).

Whilst not generally concerned with employment law, the Act provides that a commercial organisation will be guilty of an offence if a person associated with it bribes another person intending to obtain or retain a business advantage for the organisation and also provides for senior staff to be personally guilty of an offence in appropriate circumstances.

From a practical point of view, the Guidance (rather longwindedly entitled “Guidance about procedures which relevant commercial organisations can put into place to prevent persons associated with them from bribing”) is of at least as much, if not more, interest than the Act itself. Overall, the Guidance makes it clear that “Adequate bribery prevention procedures ought to be proportionate to the bribery risks that the organisation faces”, and says that it follows that “a very small business may be able to rely heavily on periodic oral briefings to communicate its policies while a large one may need to rely on extensive written communication” (page 21 of the guidance). It is interesting that this Guidance thus envisages that even a very small business should have some more or less formal bribery policy in place and that it must be communicated to staff while the “Quick Start” guide also provided by the Ministry of Justice specifically states that “you do not need to put bribery prevention procedures in place if there is no risk of bribery on your behalf”.

In regard to hospitality, the Quick Guide simply says “Hospitality is not prohibited by the Act”. The full guidance goes into more detail, pointing out:

“By way of illustration, in order to proceed with a case under section 1 based on an allegation that hospitality was intended as a bribe, the prosecution would need to show that the hospitality was intended to induce conduct that amounts to a breach of an expectation that a person will act in good faith, impartially, or in accordance with a position of trust. This would be judged by what a reasonable person in the UK thought. So, for example, an invitation to foreign clients to attend a Six Nations match at Twickenham as part of a public relations exercise designed to cement good relations or enhance knowledge in the organisation’s field is extremely unlikely to engage section 1 as there is unlikely to be evidence of an intention to induce improper performance of a relevant function”.