7 January 2008

You must have heard it said that employees have too many rights these days. Whilst it is true to say that statutory employment rights are continually being improved upon, it’s not necessarily always bad news for employers. Here are Buddy’s Top 7 legal developments in 2007 which brought glad tidings!   

Some of the best news for employers must surely have been the Gibbons Review in the spring, which called for the statutory dispute resolution procedures introduced by the Employment Act 2002 to be repealed. In response, the Government commenced a consultation exercise on the recommendation, which (not surprisingly!) received wide spread support.  The legislative change necessary to implement the U-turn is now being progressed under the proposed Employment Bill. 

The world of mergers and acquisitions also attracted good news in the form of a decision in Computershare Investor Services PLC v Jackson when the Court of Appeal agreed with the EAT and held that the TUPE regulations could not be used to create rights that did not exist at the time of the transfer. Therefore, an employee who becomes entitled to new service related benefits offered by the transferee is only entitled to have those benefits calculated from the date of the transfer and not their full period of continuous employment. This however may depend on the terms of the new benefit.  If reference is made to continuous service, rather than date of joining the company, the outcome of this case may have been different.

Another Court of Appeal decision to find favour with employers was that of O'Hanlon v Commissioners for HM Revenue & Customs, when it was held that a failure to pay an employee after their entitlement to sick pay had been exhausted was neither a failure to make a reasonable adjustment nor disability-related discrimination under the Disability Discrimination Act. Although the employee had suffered less favourable treatment the employer’s sick pay policy could be justified. 

Employers should also feel a lot better following the case of McAdie v Royal Bank of Scotland which confirmed that an employer's contribution to an employee's illness does not make a subsequent capability dismissal unfair. Although the fact that the employee's stress-related illness was attributed to the conduct of the employer was a relevant factor in determining fairness, the key issue was whether or not the employer acted reasonably in all the circumstances. With this is mind the Court of Appeal agreed with the EAT that where the employer is responsible for the employee's ill-health, more effort is required to find alternative employment for the employee, or a longer period of sickness absence than would otherwise be reasonable should be tolerated, before reaching a decision to terminate employment.

2007 was definitely the year for equal pay, causing such chaos in the public sector that the Government announced in September that councils facing the threat of legal action by trade unions will be allowed to borrow £500m to settle the thousands of equal pay claims on behalf of their members. However, there have been two cases of note which could be described as “pennies from heaven” for employers! 

• In Middlesbrough Borough Council v Surtees & Ors the EAT ruled that a decision not to extend a payment protection scheme to employees who, following a job evaluation exercise, were subsequently found to be doing equal work to those in receipt of a higher salary was tainted by sex discrimination but that the practice was objectively justified. The Claimants argued that had the Equal Pay Act "equality clause" been applied to them at the correct time, they would have been in receipt of a higher rate of pay and the protected pay scheme would also have applied to them. However, the EAT held that the Council were justified in their approach as the purpose of the scheme was to prevent a sudden drop in pay, which was naturally therefore limited to those who were receipt of higher pay at the time, and that the scheme was a necessary part of the job evaluation scheme agreed with the unions. This decision has been appealed so don’t start spending your savings just yet!
  
• In Chief Constable of West Midlands Police v Blackburn and Manley employers were told that they were not required by the Equal Pay Act to “compensate for the economic disadvantages suffered by those who have childcare responsibilities”. The EAT overturned the decision that female police officers should have been paid an unsocial hours’ premium given to other officers who worked nights, even though they did not, as the women were prevented from doing so for childcare reasons and because the police authority could afford it, which would have eliminated the discrimination. Instead, the EAT held that the practice was objectively justified; since the aim was to reward night workers it was necessary and appropriate not to reward those who did not work nights.

Finally, and some what coincidently, the first piece of good news in January 2007 was the EAT decision in James v Greenwich Council, which could be repeated in 2008. The EAT rejected the suggestion in Dacas v Brook Street Bureau (UK) Limited that the passage of time could lead to the inference of a contract of employment between an agency worker and an end user and held that an agency worker supplied to the Council for some five years who had been treated in all other respects as a permanent employee was not employed by the Council. This case was heard on appeal by the Court of Appeal on 30 October 2007 when judgment was reserved.

We will bring you this decision as soon as it is announced and we look forward to keeping you updated on all the legal developments in 2008.

Happy New Year!