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Employment Law Review 2012

Submitted By Firm: Addleshaw Goddard

Contact(s): Michael Leftley, Sarah Harrop

Author(s):

Amanda Steadman

Date Published: 1/8/2013

Article Type: Legal Update

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2012 saw no stone left unturned by the Government in its quest to reform employment law, with barely a month going by without a new call for evidence, consultation or response document being published.  We round up some of the most important legislative developments and proposals from the year and also highlight some of the year's key decisions from the Courts and Tribunals.

New legislation

  • Changes to the unfair dismissal regime: as of 6 April 2012 the qualifying period for unfair dismissal claims increased from 1 to 2 years and the maximum compensatory award increased from £68,400 to £72,300.  The Government has recently concluded the Ending the Employment Relationship consultation which addresses how the compensatory award should be adjusted in future.  In addition, employment judges were given the right to sit alone in unfair dismissal hearings.  This trend is continuing with plans for EAT judges to also sit alone.
  • Employment Tribunal reforms: a raft of reforms came into force on 6 April 2012 as follows: (i) the maximum costs award that can be made by a Tribunal (before referring to the County Court for detailed assessment) increased from £10,000 to £20,000; (ii) the maximum deposit order a Tribunal can order a party to pay increased from £500 to £1,000; (iii) witness statements to stand as evidence-in-chief and to be taken as read at the hearing (unless otherwise directed); and (iv) Tribunals can direct parties to bear the expenses of any witnesses.
  • Pensions auto-enrolment: on 1 October 2012 auto-enrolment duties came into force requiring all employers in Great Britain to automatically enrol eligible jobholders into a pension scheme.  The new duties are to be formally implemented over a four year period starting on 1 October 2012 for employers with over 250 employees. 

Key consultations, responses, guidance etc

  • Mandatory equal pay audits: on 14 June 2012 the Government published its response to the equal pay elements of the Modern Workplaces consultation.  The response confirmed the Government's intention to introduce mandatory equal pay audits for employers who lose equal pay claims where the Tribunal considers that there may be continuing or likely discrimination.  A further consultation on mandatory equal pay audits is to be issued shortly and the change will be brought into force by way of the Enterprise and Regulatory Reform Bill in 2013.
  • Collective redundancies reform: on 21 June 2012 the Government published a consultation on proposals for reform to the collective redundancies regime. The consultation sought views on reducing the 90-day minimum period for redundancies of 100+ employees within a 90 day period to either: (i) 45 days; or (ii) 30 days.  There is no intention to reduce the maximum penalty of 90 days' pay per employee for failure to consult. The Government's response to the consultation was published on 18 December 2012 and confirmed that the consultation period would be reduced to 45 days.  Fixed-term contracts which expire naturally will also be excluded from the scope of the legislation. The changes are due to come into force on 6 April 2013.
  • Charging fees in the Employment Tribunal and EAT: on 13 July 2012 the Government published its response to the consultation on charging fees in the Employment Tribunal and EAT.  The response confirmed the intention to introduce fees into the Tribunal and the EAT for the first time.  A fee remission system will be introduced and a consultation on how the system should work is to be published shortly.
  • Reforms to the Employment Tribunal system: on 14 September 2012 the Government published a consultation on reforms to the Employment Tribunal rules, which primarily aim to streamline the Tribunal process by way of stronger case management.  The consultation sought views on the amendments to the Tribunal rules proposed by Mr Justice Underhill earlier this year.
  • Protected conversations and the compensatory award: on 14 September 2012 the Government published the Ending the Employment Relationship consultation, which sought views on the nature of the guidance needed to support the system of protected conversations outlined in the Enterprise and Regulatory Reform Bill.  Views were also sought on proposals to limit the maximum compensatory award for unfair dismissal to 12 months' pay, subject also to an overall cap of somewhere between £25,882 and £77,646. 
  • Reform of TUPE 2006: in November 2011 the Government called for evidence on the effectiveness of TUPE 2006 due to concerns that the regulations were overly complex and gold-plated the EU Acquired Rights Directive. On 14 September 2012, the Government issued its response to the Call for Evidence.  This briefly set out the key concerns raised by respondents including: (i) concerns about the operation of the service provision change rules; (ii) whether it would be possible to permit the harmonisation of terms post-transfer; (iii) a desire for greater clarity of how TUPE applies in insolvency situations; and (iv) concerns about the interaction of TUPE with other pieces of employment law.  A consultation is due to be issued shortly.
  • Gender diversity: on 1 October 2012 amendments were made to the UK Corporate Governance Code (which applies to companies with a premium listing of equity shares) to require the annual report to include a description of the board's policy on diversity (including gender), any measurable objectives that it has set for implementing the policy and progress on achieving the objectives.  In addition, a supporting principle requires that the evaluation of the board should include consideration of the gender balance.
  • Introduction of a new "employee-owner" status: on 18 October 2012 the Government published a consultation on the proposal to create a new employment status known as the "employee owner" (now to be known as "employee shareholder").  The hallmark of this status is that the employee owners receive fully paid-up shares worth between £2,000 and £50,000 from their employers in exchange for less favourable employment rights.  The Government published its response to the consultation on 3 December 2012, confirming legislation to amend the Employment Rights Act 1996 to create the new status has been included in the Growth and Infrastructure Bill.
  • New family-friendly regime: on 13 November 2012 the Government published its response to the flexible working and flexible parental leave elements of the Modern Workplaces consultation.  The response confirms that in 2014 the right to request flexible working will be extended to all employees who have 26 weeks' continuous service.  In addition, the consultation outlines a proposal to allow a mother and father / mother's partner to be able to share up to 50 weeks' "flexible parental leave" and 37 weeks' "flexible parental pay" where the mother ends her maternity leave and pay.  The system will be introduced in 2015 and a consultation on the system will be published next year.  Finally, the response confirms proposals to implement a number of other family-friendly measures including: (i) improved rights for adopters; (ii) rights for parents by way of surrogacy; (iii) rights for fathers to take unpaid time off to attend ante-natal appointments; (iv) extending the period of unpaid parental leave; and (iv) extending the age limit of a child for whom unpaid parental leave can be taken from 5 to 18.

Key cases

UK Commuter working in Libya had the right to bring a claim for unfair dismissal: the Supreme Court held that in the case of an employee who worked in Libya on a rotational basis when his employment terminated, the connection with Great Britain was sufficiently strong for the employee to have a claim for unfair dismissal (Ravat v Halliburton Manufacturing and Services Ltd).

TUPE - guidance on the meaning of "organised grouping of employees" where service provision changes are concerned:  the EAT confirmed that the service provision change test in TUPE is not met as a matter of course because a contract is outsourced from one service provider to another. It is necessary to explore whether the employees constitute "an organised grouping" in the first instance. This involves examining whether the employees are organised according to client requirements rather than their employer's shift patterns or working practices (Eddie Stobart Ltd v. Moreman)

Age discrimination – justification of compulsory retirement: the Supreme Court decided that a firm of solicitors had identified "legitimate aims" which could objectively justify the compulsory retirement of a partner at the age of 65. The Court highlighted that 'inter-generational fairness' and the 'dignity of older workers' were proper social policy reasons which could justify what would otherwise amount to direct age discrimination (Seldon v Clarkson Wright and Jakes).

Employee fairly dismissed for Facebook posting about a colleague: derogatory comments made by an employee on Facebook about his colleague did not bring the employer's reputation into disrepute, however the harassment of a colleague was sufficiently serious to justify the gross misconduct dismissal. The employee's attempts to rely on the Human Rights Act 1998 were unsuccessful - by posting the comments on Facebook he abandoned any right to consider his comments as private. The right to freedom of thought to manifest one's beliefs was not engaged and the right to freedom of expression did not entitle the employee to make comments which damaged the reputation or infringed the rights of another (Teggart v Tele Tech UK Ltd).

Holidays and sickness: in ANGED v FASGA, the ECJ held that a worker who fell sick whilst on annual leave could take their annual leave at a later date. It did not matter whether the sickness started before or during the annual leave.  In NHS Leeds v Larner, the Court of Appeal held that a worker on long-term sick leave who had not had an opportunity to take annual leave could carry forward unused leave into the following leave year, despite the fact that the worker had not made a request to do so. The worker was also entitled to a payment in lieu of the carried over holiday upon the termination of her employment.

Time limit for bringing equal pay claims: the Supreme Court held that equal pay claims, which would have been out of time in an Employment Tribunal, could proceed as breach of contract claims in the High Court. Whilst the civil courts have a discretion to strike out equal pay claims that it is more 'convenient' for a Tribunal to hear, such claims can never be more conveniently disposed of by a Tribunal where they would be time-barred (Birmingham City Council v Abdulla).

TUPE - no service provision change where the identity of both contractor and client has changed: the Court of Appeal upheld a decision of the EAT that there will be no service provision change for the purposes of the Transfer of Undertakings (Protection of Employment) Regulations 2006 on a change of contractor where there is also a change in the client to whom the services are provided (McCarrick v Hunter) .

 

 

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Client Successes

Altra Industrial Motion Inc.

Altra Industrial Motion Inc. has multiple locations in the U.S., as well as Central America, Europe, and Asia. The Employment Law Alliance has proved to be a great asset in assisting us in dealing with employment issues and matters in such diverse venues as Mexico, Australia, and Spain. We have obtained excellent results using the ELA network for matters ranging from a multi-state review of employment policies to assisting with individual employment issues in a variety of foreign jurisdictions.

In one instance, we were faced with an employment dispute with a former associate in Mexico that had the potential for substantial economic exposure. The matter had been pending for over a year, and we were not confident in the employment advice we had been receiving. I obtained a referral to the ELA counsel in Mexico, who was able to obtain a favorable resolution of the dispute in only a few days. Based on our experiences with the ELA, we would not hesitate to use its many resources for future employment law needs.

American University in Bulgaria

In my career I have been a practicing attorney, counsel to the Governor of Maine, and CEO of a major public utility. I have worked with many lawyers in many settings. When the American University in Bulgaria needed help with employment litigation in federal court in Syracuse, New York, we turned to Pierce Atwood, the ELA member we knew and trusted in Maine, for a referral. We were extremely pleased with the responsiveness and high quality of service we received from Bond Schoeneck & King, the ELA's firm in upstate New York. I would not hesitate to recommend the ELA to any employer.

David T. Flanagan
Member of Board of Trustees 

Arcata Associates

I really enjoyed the Conducting an Effective Internal Investigation in the United States webinar.  We are in the midst of a rather delicate employee relations issue in California right now and the discussion helped me tremendously.  It also reinforced things that you tend to forget if you don't do these investigations frequently.  So, many, many thanks to the Employment Law Alliance for putting that webinar together.  It was extremely beneficial.

Lynn Clayton
Vice President, Human Resources

Barrett Business Services, Inc.

I recently participated in the ELA-sponsored webinar on the Employee Free Choice Act.  I was most impressed with that presentation.  It was extremely helpful and very worthwhile.  I have also been utilizing the ELA's online Global Employer Handbook.  This compliance tool is absolutely terrific. 

I am familiar with several other products that purport to provide up-to- date employment law information and I believe that this resource is superior to other similar compliance manuals.  I am delighted that the ELA provides this free to its members' clients.

Boyd Coffee Company

Employment Law Alliance (ELA) has provided Boyd Coffee Company with a highly valued connection to resources, important information and learning. With complex operations and employees working in approximately 20 states, we are continually striving to keep abreast of specific state laws, many of which vary from state to state. We have participated in the ELA web seminars and have found the content very useful. We appreciate the ease, cost effectiveness and quality of the content and presenters offered by these web seminars.  The Global Employer Handbook has provided our company with a very helpful overview of legal issues in the various states in which we operate, and the network of attorneys has helped us manage issues that have arisen in states other than where our Roastery and corporate headquarters are located in Portland, Oregon.

Capgemini Outsourcing Services GmbH

As an international operating outsourcing and consulting supplier Capgemini has used firms of the Employment Law Alliance in Central Europe. We were always highly satisfied with the quality of employment law advice and the responsiveness. I can really recommend the ELA lawyers.

Hirschfeld Kraemer

As an employment lawyer based in San Francisco, I work closely with high tech clients with operations around the globe. Last year, one of my clients needed to implement a workforce reduction in a dozen countries simultaneously. And they gave me 48 hours to accomplish this. I don't know how I could have pulled this off without the resources of the ELA. I don't know of any single law firm that could have made this happen. My client received all of the help they needed in a timely fashion and on a cost effective basis.

Stephen J. Hirschfeld
Partner 

Hollywood Entertainment Corporation

As the Vice President for Litigation & Associate General Counsel for my company, I need to ensure that we have a team of top-notch employment lawyers in place in every jurisdiction where we do business. And I want to be confident that those lawyers know our business so they don't have to reinvent the wheel when a new legal matter arises. With more than 3400 stores and 35,000 employees operating in all 50 U.S. states and across Canada, we rely on the ELA to partner with us to help accomplish our objectives. I have been delighted with the consistent high quality of the work performed by ELA lawyers. I encourage other in-house counsel to use their services, as well.

Ingram Micro

Ingram Micro is the world's largest technology distributor, providing sales, marketing, and logistics services for the IT industry around the globe. With over 13,000 employees working throughout the U.S. and in 35 international countries, we need employment lawyers who we can count on to ensure global legal compliance. Our experience with many multi-state and multi-national law firms is that their employment law services are not always a high priority for them, and many do not have experts in many of their offices. The ELA has assembled an excellent team of highly skilled employment lawyers, wherever and whenever I need them, and they have proven to be an invaluable resource to our company.

Konami Gaming

Our company, Konami Gaming, Inc., is growing rapidly in a very diverse and highly regulated industry. We are aggressively entering new markets outside the domestic U.S., including Canada and South America. I have had the recent opportunity to utilize the services provided by the ELA. The legal advice was both responsive and professional. Most of all, the entire process was seamless since our Nevada attorney coordinated the services and legal advice requested. I look forward to working with the ELA in the future, as it serves as a great resource to the legal community.

Jennifer Martinez
Vice President, Human Resources

Nikkiso Cryo, Inc.

Until recently, I was unaware of the ELA's existence. We have subsidiaries and affiliates throughout the United States, as well as in Asia, the Middle East and Europe. When a recent legal issue arose in Texas, our long-time Nevada counsel, who is a member of the ELA, suggested that this matter be handled by his ELA colleague in Dallas. We are very pleased with the quality and timeliness of services provided by that firm, and we are excited to now have the ELA as an important asset to help us address employment law issues worldwide.

Palm, Inc.

The ELA network has been immensely important to our company in helping us address an array of human resources challenges around the world. I strongly encourage H.R. executives who have employees located in many different jurisdictions to utilize the ELA's unparalleled expertise and geographic coverage.

Stacy Murphy
Former Senior Director of Human Resources

Rich Products

As the General Counsel for a company with 6,500 employees operating across the U.S. and in eight countries, it is critical that I have top quality lawyers on the ground where we do business. The ELA is an indispensable resource. It has taken the guesswork out of finding the best employment counsel wherever we have a problem.

Jill K. Bond
Senior Vice President/General Counsel, Shared Services and Benefits

Ricoh Americas Corporation

We have direct sales and service offices all over the U.S., but have not necessarily had the need in the past for assistance with legal work in every state where we have a business presence. From time to time, we suddenly find ourselves facing a legal issue in a state where we have no outside counsel relationship. It has been a real benefit to know that the ELA has assembled such an impressive team of experts throughout the U.S. and overseas.

A few years ago, we faced a very tough discrimination lawsuit in Mississippi. We had never had to retain a lawyer there before. I was absolutely delighted with the Mississippi ELA firm. We received an excellent result. They will no doubt handle all of our employment law matters in Mississippi in the future. I have also obtained the assistance of several other ELA firms around the U.S. and have received the same outstanding service. The ELA is a tremendous resource for our company.

Roberts-Gordon LLC

Our affiliated companies have used the Employment Law Alliance in connection with numerous acquisitions, and have always been extremely pleased with our ability to obtain the highest quality legal advice on due diligence issues from jurisdiction to jurisdiction. We have found the Employment Law Alliance firms to be not only first rate with respect to their legal advice but also responsive and timely in assisting us with federal and state law issues critical to our due diligence efforts. We consider the Employment Law Alliance to be an important part of our team.

Rockwell Collins, Inc.

We have partnered with many ELA firms on the development and execution of case management strategies with very positive results. We have been very pleased with the legal advice and counsel provided by the law firms we have utilized who are affiliated with the Employment Law Alliance. The ELA firms we have worked with are customer focused, responsive, and thorough in their approach to handling labor and employment law matters.

Elizabeth Daly
Assistant General Counsel

Sanmina-SCI

Sanmina-SCI has facilities strategically located in key regions throughout the world. Our customers expect that we will provide them with the highest quality and most sophisticated services in the marketplace. We have that same expectation for the lawyers with whom we do business. With operations in 17 countries, we need to be certain that we have a team of lawyers working together to address our employment law needs worldwide. The ELA has delivered exactly what it promised-- seamless and consistent high quality services delivered in each locale around the globe. It has quickly become a key asset for our human resources department.

Starwood

We own, manage, and franchise hotels throughout the U.S. and in more than 90 countries. With more than 145,000 employees worldwide, ensuring that we comply with the complex web of local labor and employment laws in every one of these jurisdictions is a daunting task. The Employment Law Alliance has served as an important resource for us and we have benefited greatly from its expertise and long reach. When a legal dispute or issue has arisen in some far-flung place, Employment Law Alliance lawyers have always provided responsive, practical, and cost-effective assistance.

Wilmington Trust Corporation

Wilmington Trust has used the ELA to locate firms in California, Washington State, Georgia, and Europe. Our experience with the ELA lawyers with whom we have worked has always been one of complete satisfaction and prompt, practical advice.

Michael A. DiGregorio
General Counsel  

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