EMPLOYMENT
LAW
UPDATE
FOR
EARLY OCTOBER 2008
CONTENTS
1. IN THE NEWS .......................................................................................... 2
Age Discrimination ....................................................................................... 2
Age Concern challenge to UK law hits setback ................................................... 2
Sex Discrimination; Equal Pay ...................................................................... 2
Government publishes first Equality Public Services Agreement ........................... 2
2. CASE LAW ............................................................................................... 3
Religion; Discrimination ............................................................................... 3
Noah –v- Desrosiers (trading as Wedge) .......................................................... 3
Grievance Procedure .................................................................................... 3
Claridge –v- Daler Rowney Ltd ........................................................................ 3
Employment Tribunal; Practice and Procedure ............................................. 4
McKindless Group –v- McLaughlin .................................................................... 4
Breach of Contract ....................................................................................... 4
Tullet Prebon Group Limited –v- Ghaleb El Hajjali .............................................. 4
3. NEW AND PROPOSED LEGISLATION ....................................................... 6
Reminder – October Changes ....................................................................... 6
National Minimum Wage Increase .................................................................... 6
Distinction between ordinary and additional maternity leave removed .................. 6
Agency workers employed under fixed term contracts entitled to SSP .................. 6
Display of Employers’ Liability Insurance Certificates ......................................... 6
1. IN THE NEWS
Age Discrimination
Age Concern challenge to UK law hits setback
In Incorporated Trustees of the National Council on Ageing (Age Concern England) v
Secretary of State for Business, Enterprise and Regulatory Reform, Heyday, part of
Age Concern, is seeking judicial review on the Employment Equality (Age)
Regulations 2006. One issue raised by Heyday is that in allowing employers to
compulsory retire employees at 65, the EU Directive on Equal Treatment is not
adequately implemented as the UK rules do not set out the instances where an age
limit can be justified. During the case in the High Court, it was decided that the issue
should be referred to the European Court of Justice (ECJ) for its opinion. As a result,
the president of the Employment Tribunals has stayed all claims relating to
compulsory retirement until the ECJ gives its ruling.
The Advocate-General, a senior legal advisor to the ECJ, has now issued his view
which, although is not binding on the ECJ, could influence the judges who are
expected to give judgment in early 2009. The view backs the current UK rules
allowing employers to compel workers to retire at 65 as long as such a compulsory
retirement age can be justified by an identifiable legitimate aim and the means to
achieve it are „appropriate and necessary‟. He does not deem it necessary for UK law
to include a list of instances where the default retirement age can be justified. If the
ECJ follows this Opinion it is likely that the High Court will also find that a default
retirement provision is objectively justified.
In consideration of the above, employers should remember that employees have the
right to request to work beyond the age of 65 and employers must to consider any
such a request. Whilst some employers have suggested that if they lose the right to
retire employees at 65 they would be less likely to recruit older workers, others have
stated that they appreciate the value of recruiting and training older employees and
have been introducing flexible working practices for some time as a result of other
equal treatment legislation. Such debate is likely to continue until the ECJ gives
judgment in early 2009.
Sex Discrimination; Equal Pay
Government publishes first Equality Public Services Agreement
The Government has published a public service agreement (PSA) for 2008-2011
outlining its aims regarding equality before 2011. The PSA highlights the need for
greater transparency in an effort to narrow the gender pay gap with measures
suggested such as the abolition of pay secrecy clauses; public bodies reporting on
the gender pay gap and public sector purchasing power being encouraged to
promote transparency in the private sector.
The PSA also sets out the government‟s aim to reduce the pay gap between disabled
and non-disabled people although it does not provide information as to how this will
be achieved. In addition, the new National Equality Commission is due to report on
how people‟s life chances are affected by discriminatory issues like race, disability
and wealth and how such factors influence each other. Its report is due at the end of
next year.
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2. CASE LAW
Religion; Discrimination
Noah –v- Desrosiers (trading as Wedge)
Ms Derosiers advertised for a junior assistant to work in a small hair salon that
marketed itself as specializing in „funky‟ styles. Ms Noah‟s application for the job was
not taken any further when Ms Derosiers discovered that Ms Noah wore the
traditional hijab headscarf, which covered her hair completely, and that she would
therefore be unable to promote the business by wearing a hairstyle representative of
the salon‟s image. As a result, Ms Noah lodged a claim in the Employment Tribunal
alleging direct and indirect religious discrimination.
In respect of the direct discrimination claim, the Tribunal found that there was no
evidence that Ms Noah had been discriminated against because of her religion as any
employee covering her hair would have been treated in the same way. The Tribunal
found that Ms Derosiers genuinely believed that a successful applicant would have to
display their hair in the salon and that this was a commonly considered in the hair
industry as a necessary means of marketing the salon to its customers.
However, the indirect discrimination claim succeeded as a requirement for employees
to display their hair whilst at work amounted to a provision, criterion or practice
(PCP) that put those of Ms Noah‟s religion at a disadvantage when compared to
others. In addition, whilst the PCP was consistent with the salon‟s brand image and
strategy and could be justified as a legitimate aim, Ms Desrosier‟s methods were not
proportionate to achieving that aim. The Tribunal believed that had Ms Derosiers
explored other options, she may have found other ways of pursuing her aim with less
discriminatory impact. As a result, Ms Noah was awarded £4,000 for injury to
feelings.
The above case highlights the need for Employers to consider, explore and test
options available to them (such as trial periods) before applying a PCP that may have
discriminatory impact.
Grievance Procedure
Claridge –v- Daler Rowney Ltd
Mr Claridge, the Claimant, had been employed by Daler Rowney Ltd (the “Company”)
for over 30 years as a team leader on the production line. He had been seen leaving
the production line more than once and was questioned by the production manager
about it at a meeting. The Claimant claimed that he was told at the meeting that he
was being demoted, in breach of his contractual rights and the disciplinary rules.
After the meeting, he subsequently went on sick leave for depression. He brought
three grievances in relation to his alleged demotion which were not heard for several
months due to his ill health. The Company claimed he was not demoted and that
there was someone merely covering his role until he was well enough to return. The
Claimant then requested voluntary redundancy which the Company declined to offer.
The Company did not uphold Mr Claridge‟s grievance and as a result, he resigned.
Mr Claridge brought a claim of unfair constructive dismissal citing the Company‟s
failure to deal with the grievance properly and within a reasonable time. He argued
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that the delay between his raising of a grievance and the outcome (four and half
months) was a breach of the Company‟s implied duty of trust and confidence.
The Tribunal found that there were valid reasons for the delay, particularly due to
the Claimant‟s inability to attend a meeting due to ill health, although it was critical
of the Company for getting caught up in procedural matters which added to the
delay. Nonetheless, it concluded that the Company acted in a way that a reasonable
employer would have acted and therefore found in its favour. C appealed to the
Employment Appeals Tribunal.
The EAT held that an employer‟s unreasonable conduct in dealing with a grievance
must amount to fundamental breach of the contract of employment to be capable of
founding a constructive dismissal claim - where conduct is calculated or likely to
destroy or damage the employment relationship. It was therefore decided that the
Company‟s handling of the grievance, despite being open to criticism, was not
beyond the range of reasonable responses for an employer.
Employment Tribunal; Practice and Procedure
McKindless Group –v- McLaughlin
In McKindless Group –v- McLaughlin, Mr McLaughlin was employed as a bus driver by
McKindless Group until he was dismissed. He subsequently claimed for automatic
unfair dismissal when his employer conceded on the eve of the Tribunal that it had
failed to follow the statutory DDP. The tribunal awarded a 50% uplift in
compensation to Mr McLaughlin on the basis of the employer‟s delay in conceding
liability and the subsequent lost opportunity for both parties to negotiate a
settlement. The Company appealed to the EAT on the award of the uplift claiming
that no details had been submitted by Mr McLaughlin to evidence whether the
employer had deliberately chosen to ignore the correct procedure. The Tribunal could
not therefore have the evidence to find it just and equitable to award an uplift
greater than the usual 10% in cases where employers have not followed the
statutory DDP.
The EAT reviewed the law relating to uplifts in compensation and upheld the
Company‟s appeal. It found that any uplift in compensation over the mandatory 10%
for failure to follow the statutory DDP should only be increased up to a level between
10-50% if a Tribunal considers it „just and equitable‟ to do so where there is some
evidence as to why the procedure wasn‟t followed. It reiterated that the employee
had not produced evidence surrounding the employer‟s failure to follow the correct
procedure and as a result, there was no evidence for the Tribunal to exercise its
discretion in awarding a greater uplift.
The Tribunal had also erred in considering the employer‟s conduct of the Tribunal
proceedings when awarding the uplift. The uplift should relate to the failure to follow
the procedures alone, not to the conduct of Tribunal proceedings. Such conduct could
have been penalised by a costs order which would have been more appropriate.
Breach of Contract
Tullet Prebon Group Limited –v- Ghaleb El Hajjali
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Tullet Prebon Group Limited-v-Ghaleb El Hajjali is the first reported case where a
prospective employer has sued a potential employee for breach of contract and has
succeeded using a liquidated damages clause. The case involved a broker who signed
an employment contract with Tullet Prebon but then changed his mind before
starting employment with the company. Tullet Prebon sued Mr El Hajjali as a result
and relied on a „no show‟ clause in his contract. Mr El Hajjali argued that the clause
was a penalty; that the company had failed to mitigate its loss and that the clause
was inserted to deter, not to compensate, which resulted in it being unlawful. Tullet
Prebon argued that it had suffered substantial loss including head hunters fees and
the income that Mr El Hajjali would have generated for the business.
The High Court found for Tullet Prebon and confirmed that employment contracts can
contain liquidated damages clauses and that such clauses will not be struck out
unless „extravagant and unconscionable‟. It also found that on the facts, the clause
contained a formula to calculate the loss which was agreed between the parties; both
parties were of equal bargaining power and that the defendant had been legally
represented when he signed the contract.
Employers in competitive industries may consider including liquidated damages
clauses in contracts of employment useful and should warn potential employees
about the claims they face if they change their minds once such a contract has been
signed. Employers should note however, that a balance must be struck regarding the
level of damages included in contracts of employment as litigating over a small
amount would incur disproportionate costs, whilst greater amounts could be
considered extravagant and unconscionable in the circumstances.
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3. NEW AND PROPOSED LEGISLATION
Reminder – October Changes
National Minimum Wage Increase
From 1 October 2008, the new rate for a worker over 22 is £5.73.
Distinction between ordinary and additional maternity leave removed
New rules apply to those whose Expected Week of Childbirth (EWC) begins on or
after 5 October 2008. The Sex Discrimination Act 1975 (Amendment) Regulations
2008 give women the right to the same terms and conditions during additional
maternity leave as during ordinary maternity leave. In addition, new adoption
regulations make similar changes regarding additional and ordinary adoption leave.
Agency workers employed under fixed term contracts entitled to SSP
The draft Fixed-term Employees (Prevention of Less Favourable
Treatment)(Amendment) Regulations 2008 allow agency workers employed on fixed-
term contracts the right to statutory sick pay from 27 October 2008.
Display of Employers’ Liability Insurance Certificates
Changes to the Employers‟ Liability (Compulsory Insurance) (Amendment)
Regulations 2008 mean that liability insurance certificates do not have to be kept by
employers for 40 years or be displayed in each place of business as long as they are
available to relevant employees electronically.
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