In general, the Department for Business, Enterprise and Regulatory Reform introduces legislative changes twice a year – April and October. The idea is to make it easier for employers (and employees) to keep abreast of the changes. The following are (on the whole) effective from April 2009.
We will publicise the changes that become effective in October 2009 in our September edition of HReSource.
MARCH 2009
New points-based immigration system End March 2009
Phase two of the Government's Tier 4 implementation plan for a new points-based immigration system covering students, comes into effect at the end of March 2009. This requires students applying to come to the UK to be assessed under the new points system. All education providers wishing to sponsor potential students must now have a licence from the Border Agency.
APRIL 2009
Minimum statutory holiday entitlement increased 1 April 2009
The statutory entitlement to paid holiday goes up from 24 days per year to 28 days.
Increases to statutory maternity, paternity and adoption pay 5 April 2009
The standard rate of statutory maternity, paternity and adoption pay increases from £117.18 to £123.06 per week (paid after the first six weeks).
Changes to trade union membership rules 6 April 2009
Section 19 of the Employment Act 2008 states that a trade union has the right to expel or exclude an individual on the basis of their membership or former membership of a political party. These changes were introduced following a judgement of the European Court of Human Rights (ASLEF v UK).
Repeal of the statutory dispute resolution regulations 6 April 2009
The Employment Act 2008 (Commencement No.1 and Transitional Provisions and Savings) Order 2008 repeals the statutory dispute resolution regulations and restores the law on unfair dismissal to how it was before the regulations were introduced.
Increased penalties for failure to pay national minimum wage 6 April 2009
The Employment Act 2008 also clarifies and strengthens the enforcement framework for the National Minimum Wage
Introduction of revised ACAS Code of Practice 6 April 2009
The revised statutory ACAS code of practice on disciplinary and grievance procedures becomes effective which allows tribunals to adjust awards up or down by up to 25 per cent in the event of a breach of the code.
Statutory sick pay increases 6 April 2009
Statutory sick pay increases from £75.40 to £79.15 per week.
Extension to right to request flexible working 6 April 2009
The right to request flexible working is extended to parents of children up to the age of 16.
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If someone is laid off work and then re-hired, this can still count as continuous employment. But what if the original company goes into liquidation? In Da Silva Junior v Composite Mouldings and Design Ltd, the Employment Appeal Tribunal (EAT) said that employees are protected if it can be shown that the same owner is still in charge.
What happened?
Mr Da Silva started work for a company called Andream Ltd on 11 November 2005. The company got into financial difficulties and the majority shareholder, Mr Greenwood, dismissed all the employees on 1 December 2006. A liquidator was appointed on 20 December.
In early January 2007, Mr Greenwood acquired some of the assets of Andream and began trading as Composite Mouldings (which he had set up on 20 November) at the same premises, with the same machinery and the same employees. Mr Da Silva started work for him again on 14 January 2007, but was dismissed on 17 August. He claimed unfair dismissal but the tribunal had to decide if he had one year's continuous employment in order to bring the claim.
The employment judge said Mr Da Silva's employment had not been disrupted by the six week break as it was "an absence on account of a temporary cessation of work" under the Employment Rights Act (ERA) 1996. However, the judge then decided that by the time Mr Da Silva started work for Composite Mouldings, the two companies were no longer "associated" as required under the ERA, as Andream had gone into liquidation. He did not, therefore, have the requisite continuity of service to pursue his claim.
The EAT, however, disagreed. It said that the Insolvency Act 1986 makes clear that a company in voluntary winding up remains in existence until it is actually dissolved. As there was no dispute that the period between his dismissal and re-engagement on 14 January constituted a temporary cessation of work, the only question was whether the companies were still "associated" on 15 January.
The company argued that for the purposes of section 231 of the ERA, the liquidator was in control and Composite Mouldings could not be an associated employer of Andream.
The EAT disagreed, saying that "the fact that, during the liquidation, the company spoke through the liquidator" did not affect the issue of control which rested with Mr Greenwood - he had dismissed Mr Da Silva, called in the liquidator and re-hired Mr Da Silva. His continuity of employment had therefore been preserved by the temporary cessation of work and his employment by an "associated" employer.
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The law requires employers to consult with trade unions and individual employees in the event of making employees redundant. In E-Zec Medical Transport Service Ltd v Gregory, the Employment Appeal Tribunal (EAT) said that the employee's dismissal was unfair because the company had failed to consult properly and could not prove that they had applied the criteria objectively.
What happened?
In October 2006, Ms Gregory reduced her hours with E-Zec (a private ambulance provider) to look after her disabled daughter. Due to a downturn in work, the company started a redundancy programme the following month. The selection criteria were drawn up by two managers.
The HR manager checked the non-work criteria including service, absence, sickness and discipline record. A regional manager marked the criteria relating to performance, commitment, attitude, skill base and team working, but relied entirely on his subjective judgement to do so. The trade union was not consulted on the selection criteria, nor was the process explained to staff.
As Ms Gregory had the second lowest score, she was selected for redundancy and invited to a meeting at which she was given a letter which said she might be made redundant. At a "consultation" meeting in January 2007, she was then given a letter telling her she had been dismissed due to redundancy. Ms Gregory claimed unfair dismissal, among other things.
The tribunal agreed that she had been unfairly dismissed, saying that the company had failed to consult with the trade union when the criteria were still at a formative stage, and had not given Ms Gregory time to respond to the proposals. It also said that the criteria were not objective because too much of the marking was left to the managers' personal judgement.
And the EAT agreed. It criticized the managers for their failure to consult the union and staff in relation to the selection criteria and said that the scoring was unfair because of the subjective way in which it had been carried out. The EAT also agreed that the consultation process was inadequate as Ms Gregory was only told how she would be scored, but not how the selection criteria had come about, nor how the marking process would work.
It decided that the process was unfair and "fell outside the band of reasonable decisions for the key criteria to be left to one individual who was not able to support his marking by reference to any company documents such as performance appraisals, who had not spoken to any other manager concerning those marks and who had made no notes or given any indication as to how he had made this individual choice".
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Employers who are struggling in the financial recession should be careful to consult with staff before cutting their pay (or their hours for that matter).
There have been reports recently of a number of companies announcing plans to cut employee pay as a way of avoiding redundancies. But unions are pointing out that employers have no unilateral right to do so and must consult with their employees first in order to get their consent.
If they don't, they could find themselves faced with claims for redundancy payments. This is because they would effectively be terminating existing contracts and then re-engaging people at the reduced salary level. This leaves companies open to redundancy claims as a result of collective consultation legislation.
Employers might also find themselves being presented with claims for protective awards of up to 90 days' pay.
If employers want to suggest pay cuts as a way of avoiding redundancies, our legal experts recommend that they enter a specific agreement with affected employees, stipulating a date when the pay (or hours) reduction will cease.
For more information contact Nigel or Malkit on 01743 452852.
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