Age Discrimination & Permanent Health Insurance

Since the abolition of the default retirement age some time ago, questions have arisen regarding what happens to employee benefits should they decide to remain in employment over a certain age.

In the recent case of Smith v Gartner UK Ltd, Ms Smith (the Claimant) was absent from work on the grounds of sickness and had been receiving payments under Gartner UK Ltd’s (the Respondent) Permanent Health Insurance (PHI) scheme during this time.  In line with the terms of the PHI policy that the Claimant had originally signed up to in 2003, these payments were stopped when the Claimant reached the age of 60.

Of further note is the fact that the Respondents had in fact introduced a new PHI scheme in 2007 which provided employees with cover until the age of 65.

In response to the cessation of her benefits, the Claimant brought a claim for direct age discrimination against the Respondents, arguing that by not continuing the payments beyond the age of 60 they had treated her less favourably as a result of her age and could not justify this decision.

Ms Smith’s claim was rejected by the Employment Tribunal and she subsequently appealed to the Employment Appeal Tribunal (EAT) who rejected her appeal on the basis that the reason her payments ceased at the age of 60 was purely because the terms of the policy she had signed up to dictated that this be the case.  This was therefore not a decision made by the Respondent and as such could not be deemed an act of discrimination.

The EAT further decided that the Respondent’s decision not to extend the benefits of the PHI policy introduced in 2007, could similarly not be deemed discriminatory.  As the Claimant was already receiving benefits under the old PHI policy and was not actively working, she did not satisfy the conditions of the new scheme.

In light of the above, Employers could be advised that they are not under an obligation to offer additional benefits in excess of PHI schemes simply to avoid discrimination claims and that cases such as these may very much depend upon the terms of the PHI policy in question.  It should also be noted that the Equality Act 2010 does allow Employers to cease offering PHI in addition to other insured benefits, at the age of 65 or the employee’s state pension age (whichever is the higher).

Beware however that this area of the law may well be subject to change in the future given the very different decision reached by the Employment Tribunal in 2013 in the case of Witham v Capita Insurance Services Ltd.

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An employee’s right to privacy – are your emails protected?

One of the most common issues encountered by employers today is whether emails sent by employees are able to be used in disciplinary proceedings against them.  Are they the private property of the employee or can an employer use them as evidence if they have an effect on their employees/the workplace?

In the case of Garamukanwa v Solent NHS Trust, an employer was recently held not to have breached an employee’s right to a private and family life (Article 8 of the European Convention on Human Rights) when they reviewed private information that belonged to the employee on the basis that the information related to work and therefore had a potential impact on the employer.

The Claimant (Mr Garamukanwa) worked as a Clinical Manager for the Respondent (Solent NHS Trust), and had formed a personal relationship with a fellow colleague, Ms Maclean.

Following the breakdown of this relationship, the Claimant then believed that Ms Maclean had started a relationship with another colleague, Ms Smith. Ms Maclean and Ms Smith subsequently received an email from the Claimant in which he advised them that unless they told their manager about their relationship, he would do it himself.

Prior to this an anonymous letter had in fact already been sent to the aforementioned manager (Mr Brown), accusing Ms Maclean and Ms Smith of ‘inappropriate sexual behaviour’ in the workplace.  Mr Brown subsequently raised these concerns with Ms Maclean and Ms Smith, who denied both having a relationship and inappropriate sexual behaviour.  Ms Maclean later advised Mr Brown about the email that herself and Ms Smith had previously received from the Claimant and stated that she felt threatened as a result of this.

Mr Brown therefore informally raised these concerns with the Claimant, who apologised for sending the email but denied being the person who had sent the letter to him.  Ms Maclean and Ms Smith were then the subject of a vendetta which consisted of the sending of malicious emails and photos to management and other members of staff, from various anonymous email addresses.  In addition a fake Facebook profile was set up and around 150 of the Respondent’s employees were added to it.  It later became clear that whoever was responsible for the vendetta was following Ms Maclean and Ms Smith, and Ms Maclean believed that the Claimant was in fact stalking her. 

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Shared Parental Leave

In April 2015 the government implemented new legislation to make parental leave shareable with the objective of challenging the old fashioned assumption that women will always be the parent that stays at home. It was intended to give parents the choice and flexibility in caring for their children and to help mothers who wanted to return to work early share responsibility for the care of their child. It was anticipated that the introduction of SPL would be unlikely to impact significantly given the potential financial implications, lack of career progression and women’s potential reluctance to share their leave.

Given that we are now year into the changes it seems an appropriate time to reflect on the impact that SPL has actually had. It appears that fathers have been reluctant to take advantage of the SPL rules mainly on the basis of the financial limitations. Research among 200 employers conducted by My Family Care found that 80% of employees surveyed said that the decision whether they would elect for SPL would depend on whether their employers would pay more than they were obliged to. With statutory pay for parental leave currently set to a maximum of £139.58 per week it could be that many working fathers continue to believe that it’s their duty to go out and earn the money.

Another important consideration that may be affecting the implementation of SPL is women’s reluctance to share their leave. Research suggests that 55% of women surveyed said that they would not want to. However, notwithstanding the potential limitations, the implementation of SPL can only serve to eradicate the inequalities that woman have long suffered in the workplace, by giving them the option to share their leave and combine work and family. It should enable women to carry on with their careers more easily whilst having a family.

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Restrictive Covenants

Employers often choose to insert restrictive covenants into their employment contracts as a mechanism to protect their business interests when their employees leave. They are generally more appropriate for those more senior employees who have access to confidential information and/or have key relationships with clients, suppliers or other employees. However, it appears that more and more employers are including them as a standard feature in their employment contracts regardless of whether such clauses are relevant to the particular employee.

When drafting restrictive covenants it’s important to ensure that the ambit is not too wide in terms of restricted business activity, geographical location and radius and the duration of the restrictions. If they are overly restrictive then the Court is likely to view them as an unlawful restraint of trade and thereby render them unenforceable. In making this determination the Courts look to strike a balance between the employer’s interests, and allowing the employee the freedom to work where he chooses and to take advantage of his own professional skills and knowledge. Covenants included in a contract only to deter an employee from leaving are most unlikely to be enforceable.

This position was confirmed in the recent judgement of Bartholomew’s Agri Food Limited v Michael Andrew Thornton. Whereupon Bartholomew’s (the Applicant) made an application for an interim injunction against Mr Thornton (the Respondent) to enforce the terms of a restrictive covenant contained in the respondent’s contract of employment. The Applicant argued that there were two aspects of protectable interest, namely customer connection and confidential information. However the Respondent argued that the relevant clauses relied upon by the Applicant were in restraint of trade, unreasonable and unenforceable.

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Initial reaction to the introduction of the national living wage

Further to my previous blog post about the introduction of the national living wage (NLW), I was interested to read that not all of us think the effective increase to the national minimum wage will have a positive impact on the UK or its employees.

You will by now probably be aware that larger businesses such as Kingfisher (owners of the likes of B&Q and Screwfix) immediately put provisions in place to ensure that the introduction of the NLW had a minimal impact on their finances. Kingfisher, for example, advised all employees that although they will increase the hourly rate of pay to £7.66 across the board (regardless of age), they will remove benefits such as time and a half/double time for working on Sundays/bank holidays and the increased pay previously received by staff working in London. In addition they have cut summer and winter bonuses and advised employees that should they not agree to these changes and sign a new contract of employment, “unfortunately this will result in your dismissal”.

Workers have understandably reacted angrily to the changes and created a storm on social media by setting up a Facebook campaign and petition entitled “Don’t use living wage as an excuse to cut pay and benefits”.  Rumour has it that the campaign was set up by a B&Q Manager under the pseudonym of Kevin Smith, who wrote:

Those who have worked within the business for over a decade and know our customers and our business the best are losing thousands of pounds a year. Big businesses like B&Q are using the national living wage as an excuse to cut overall pay and rewards for the people that need it the most.

I hope that with the support of others, through signing this petition, we can influence B&Q and other businesses to reverse these changes. I also hope they acknowledge that treating people in this way will have a negative impact on their business in the future.

Currently (as of 5th April 2016) the petition has 134,074 supporters.

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A Guide to the National Living Wage

If you have had the opportunity to read my previous blog post ‘Key Employment Law Changes’, you will be aware that from 1st April 2016, all employers are under a duty to comply with new obligations under the ‘National Living Wage’ regulations.

It is important that small business owners in particular are aware of the implications of this, to ensure that they implement any necessary pay increases and are not subject to later claims for arrears of wages owed.

By way of background, the National Living Wage was originally calculated based on the amount that employees would have to earn in order to cover basic living costs – prior to this month however, this was used as a benchmark/guidance only, and the rates were not legally enforceable.

From 1 April 2016, the National Living Wage became law under the National Minimum Wage (Amendment) Regulations 2016 for workers aged 25 and over, increasing the minimum wage by £0.50 to £7.20 per hour – the effect is therefore essentially that the National Minimum Wage rate is increased.

Please note – the National Minimum Wage rates will continue to apply for workers aged under 25.

If you are a business owner, you should therefore make arrangements to assess who within your organisation will be entitled to this increase, notify them accordingly and advise your accounts/payroll team to implement the rise.

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Key employment law changes

As you may or may not be aware, each year in April the Government introduces new legislation in respect of employment rights and responsibilities.  Below is a summary of the key changes being implemented this month.

National Living Wage

From 1st April 2016, workers aged 25 and over are entitled to the ‘national living wage’ rate of £7.20 per hour – this is essentially a new ‘top rate’ of the national minimum wage.

NOTE FOR EMPLOYERS:

– The new rate is applicable from the first pay reference period commencing on or after 1st April 2016.

– Please ensure you check that employees’ pay is not brought below the new rate by any form of salary-sacrifice scheme.

Penalties for non-payment of the national minimum wage doubled

This has also taken effect from 1st April 2016 and the same enforcement provisions apply for failure to pay the national living wage.  Further details can be found here: https://www.gov.uk/government/news/measures-to-ensure-people-receive-fair-pay-announced.

Employer NICs and Apprentices

You may have noticed the Government’s recent campaign to entice employers to provide more apprenticeships – in their latest drive they have decided to abolish National Insurance Contributions for apprentices aged under 25.  These changes have been introduced with effect from 6th April 2016 and it is hoped they will incentivise employers to offer more apprenticeships going forwards.

Statutory family-related pay and sick pay

Employers will be surprised to note that there will be no increase to statutory adoption, maternity, paternity or shared parental pay rates this year, and statutory sick pay is similarly unchanged.  Details of the current applicable rates can be found here: https://www.gov.uk/government/collections/statutory-pay.

However new limits for statutory redundancy pay and employment tribunal awards have been introduced from 6th April 2016, and are as follows:

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Employment Tribunal holds that dyslexia is a recognised disability

A Starbucks employee has won a disability discrimination case against her employers after problems arising from her dyslexia led her to make mistakes. Meseret Kumulchew was a supervisor at a Starbucks branch and one of her duties included taking the temperature of fridges and water at specific times and then entering the results in a duty roster. When the information inputted appeared to be wrong Kumulchew was accused of falsifying documents and disciplinary proceedings were instigated. She told the tribunal that she had always made it known to her employer that she was dyslexic and said her actions were no more than a mistake.

The Employment Tribunal found that Starbucks had failed to make reasonable adjustments and had discriminated against her because of the effects of her dyslexia. They also found an element of victimisation and said that there appeared to be little or no knowledge of equality issues.

Unfortunately, the above is a situation that we see all too often in the workplace and can often be as a result of employers misunderstanding their obligations to disabled employees. Fairness and equality in the workplace are vital parts of a successful business and the failure comply with such practices often leads to expensive and highly publicised claims at the Employment Tribunal, as Starbucks have undoubtedly learnt.

I find that the most effective way to prevent complaints of disability discrimination is to educate employers from the outset. The starting point is undoubtedly the definition of disability. The Equality Act 2010 provides that “a person is disabled if they have a physical or mental impairment which has a substantially adverse and long term effect on their ability to carry out normal day to day activities.” There are no set rules on what is covered however employers must at the forefront consider “the effect” on an employee’s ability to do their role.

Aside from establishing the actual disability employers often misunderstand what constitutes a discriminatory act. It’s a matter of common sense that employers should not directly discriminate, so for example should not dismiss an employee because they are disabled.  However, it is often not known that an employee will also have a valid claim at the Employment Tribunal if they can argue that they have been discriminated by perception, for example if they have been discriminated against because of their association with a disabled person and also if a workplace practice disadvantages them.

One of the most common types of disability discrimination is failure to make reasonable adjustments. In the Starbucks case the Employment Tribunal found that that the failure to provide disciplinary notes in a typed form and in a timely fashion, amounted to a failure to make reasonable adjustments. What will amount to a reasonable adjustment is a matter for the tribunal to decide and we can only advise on the basis of previous decisions. However, the general position is, if an adjustment is reasonable then you  must make it to ensure you are not disadvantaging  disabled employees.

Furthermore, it is not a prerequisite for employees to prove their disability. The Employment Tribunal criticised Starbucks in requiring Ms Kumulchew to prove her dyslexia with a “certificate” before her mitigation could be considered.  She informed her employer, after having taken advice from her GP, that she was unable to issue a certificate for dyslexia but suggested that they send her to a company doctor should they wish. They failed to do so and instigated disciplinary proceedings anyway, which the tribunal held was direct discrimination.

Nevertheless Employers should not be deterred from instigating disciplinary proceedings against their disabled employees, although the starting point in deciding whether to do so, should be to consider whether it could be construed that their disability may have affected their conduct or performance. If in doubt, you should always obtain an Occupational Therapist’s report.

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Commission must be included in holiday pay

You may remember some time ago we reported on the groundbreaking decision of the European Court of Justice in Lock v British Gas. The impact of this judgment was significant since this is the case that held that holiday pay should include provision for commission that the employee would have earned had they not been on holiday.

Given the financial implications of this decision to employers nationwide British Gas sought leave to appeal the decision on grounds that the Employment Tribunal should not have followed the Bear Scotland case because that decision was about whether overtime should be incorporated into holiday pay and argued that in doing so the EAT had wrongly interpreted the wording of the Working Time Regulations to conform with the EU Working Time Directive (No. 2003/88) that commission should be included in holiday pay.

The question in this appeal was whether the previous Employment Tribunal was right to insert wording into the Working Time Regulations to allow commission and similar payments to be included in holiday pay calculations. The Employment Appeal Tribunal held that they were, they rejected the appeal and upheld the previous decision that commission payments should be included in the calculation of holiday pay. Mr Justice Singh commented that such an interpretation would not go ‘against the grain’ of the legislation given that Parliament’s purpose in enacting the WTR was to comply with its obligation to fully implement the Directive. The EAT took the view that if the Bear Scotland case was wrongly decided then, that was an issue for the Court of Appeal to rule on.

However, we are not left without difficulty given that the EAT failed to provide any practical considerations or guidance on how the calculation of any holiday pay should be worked out.

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ACAS early conciliation

As you will probably be aware early conciliation is the requirement, introduced by the Enterprise and Regulatory Reform Act (ERRA) that all prospective claimants must contact ACAS before they can present claim to the Employment Tribunal. Prospective claimants are provided with an EC certificate with a unique reference number at the conclusion of the Early Conciliation process which must be entered on the Employment Tribunal claim form when a claim is submitted.

This gives both employers and employees the opportunity to negotiate, narrow the issues or even settle claims without the need to incur extensive legal costs.

However, due to the strict time restraints imposed by the tribunal, it is vital that the details inputted onto the early conciliation certificate are correct. Early conciliation does stop the clock from running with regards to your time limitation to bring a claim in the tribunal although if a mistake is identified you cannot go back. Therefore if an error in the identification of the respondent is identified following the expiry of the primary limitation period there can be the real risk that the claim against the correct respondent would be out of time.

This has quite clearly in the past caused Claimants and their legal advisors a great deal of difficulty and whether the claim could proceed was and still is essentially a matter of judicial discretion.

However, in Mist v Community NHS Trust the Employment Appeal Tribunal provided helpful guidance on whether an error in the identification of a respondent in an early conciliation certificate could prevent the employment tribunal from accepting a claim.

The first respondent was named correctly in the Claimant’s ET1 although the claimant had failed to name the second Respondent in both the ET1 and the EC certificate. The second respondent was joined at a later date although this was challenged on the basis that they had been joined out of time.

At first instance the Employment Tribunal agreed and ruled that the claim against the second respondent had been brought out of time. The Claimant appealed, broadly on the basis that the Tribunal had given undue prominence to the limitation period at the expense of the Claimant’s right to a remedy and had failed properly to assess the balance of hardship. The second respondent cross-appealed, alleging that the Tribunal had no jurisdiction to hear the case against the second respondent in circumstances where the Claimant had not first obtained a relevant ACAS conciliation certificate.

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