Employment Alert No. 90 – Things to Watch Out For in 2005
January 5, 2005
Happy New Year! 2004 was a busy year for the legislators and employment tribunals/courts, which means that there is lots to look out for in 2005.
Here are our top 10 issues to look out for in 2005!
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1. Information and Consultation |
The Information and Consultation of Employees Regulations 2004 will come into force on 6 April 2005 in relation to businesses with 150 or more employees. The Regulations will require the establishment of procedures for informing and consulting employees at a national level.
Qualifying employers should consider their strategy and whether it would be preferable to enter into a voluntary arrangement with employees now, or risk the default statutory model. As it is such a short time until 6 April 2005, employers should also consider their response in the event of an employee request and how any new forum might sit with already established employee representative bodies, particularly unions.
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2. Amendments to the TUPE regulations |
As you know, the Government has been struggling with changes to TUPE. The key issues under consideration include: when TUPE should automatically apply in outsourcing situations; protection of occupational pension rights (see below); flexibility in relation to insolvency; clarification of the economic, technical or organisational reason (ETO) defence; and when employment contracts may be varied for an ETO reason.
Implementation had initially been expected on 6 April 2005 but the Regulations are not due to be published in draft form until March 2005 – so this seems unlikely.
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3. Pensions and TUPE |
The proposed Transfer of Employment (Pension Protection) Regulations 2005 provide that, as required by the Pensions Act 2004, on a TUPE transfer where transferring employees had access to occupational pension benefits with employer contributions before the transfer, the transferee employer must offer the employee membership of an occupational pension scheme or of a stakeholder arrangement with minimum employer contributions.
Draft Regulations have been published for consultation which is due to run until 21 January 2005. It is anticipated that the protection will apply to all TUPE transactions that are completed on or after 6 April 2005. If the Regulations are made as currently drafted, transferee employers will be required, as a minimum, to provide a Defined Contribution scheme into which they make matching contributions of up to 6%. If employers wish to provide a Defined Benefit scheme, then the situation is more complicated. Our Pensions Department would be pleased to advise further.
This should be taken into account in deals which are due to close later this year.
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4. Tribunal forms |
As explained in Employment Alert No. 88, remember that from 6 April 2005 the new form Tribunal Claim Form and Response Form must be used. Failure to use the correct form may result in a claim or response being thrown out – so this is definitely a date to diarise! The forms can be found at http://www.employmenttribunals.gov.uk/default.asp.
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5. Increase in employment protection awards |
As set out in Employment Alert No.89, the compensation limits on tribunal awards will increase from 1 February 2005. The maximum Compensatory Award a Tribunal can make for unfair dismissal will rise from £55,000 to £56,800 and the current maximum amount permitted for calculation of a week's pay will rise from £270 to £280. Employers proposing to dismiss employees with effective termination dates on or from 1 February 2005 must use the new limits when calculating entitlement to statutory redundancy or potential liability arising from a dismissal.
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6. Redundancy |
In December 2004 ACAS published a revised advisory booklet providing guidance on how best to handle redundancies. It encourages employers to, for example, begin consultation as early as possible, to allow for longer than the statutory period of consultation wherever practicable and to agree selection criteria with employee representatives. It also provides detail of a formal redundancy procedure.
The booklet is not legally binding but Tribunals will, no doubt, pay regard to it. This means that, for example, where the booklet suggests that measures for minimising or avoiding compulsory redundancies include retraining and redevelopment, reduction of overtime and/or introduction of short time working, any witness for an employer sued for unfair dismissal on the ground of redundancy should expect to be taken through that list and asked whether the particular step was taken and, if not, why not.
Employers should, therefore, get into the habit of applying these new tips when starting a redundancy process. The booklet can be found at www.acas.org.uk/publications/b08.html
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7. Information about workers' health |
In December 2004, the Information Commissioner published the fourth and final part of the Code to provide guidance on the Data Protection Act 1998 – entitled “Information about Workers’ Health” which can be found at www.informationcommissioner.gov.uk/cms/DocumentUploads/Part%204%20Employment%20Code%20Final.pdf. The Code provides useful practical guidance on circumstances in which information about health may be processed and about how such information should be treated once it is collected.
Employers should particularly note that the Code provides that (i) line managers should only have limited health information about the employees they manage; (ii) information about workers’ health should be kept separately from personnel files, for example, in a sealed envelope; (iii) an employer sending an employee to a company doctor should ask for the employee’s consent for the company doctor to give HR a copy of that report.
In light of this, employers may want to look again at how they treat information about health and, in particular, about the level of detail provided to those outside of HR.
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8. Disability discrimination |
The Disability Discrimination Bill was introduced in November 2003 but is scheduled to be passed in 2005. One of the key features of the proposed Bill includes an extension of the definition of disability to provide that people with HIV, cancer and MS will be deemed to be disabled within the meaning of the Disability Discrimination Act 1995.
Therefore, employers dealing with issues arising from such conditions should take care to comply with the provisions of the Act in relation to reasonable adjustments and less favourable treatment.
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9. Age discrimination |
It will not be news that, from October 2006, discrimination on the grounds of age will be prohibited. However, the Regulations which will give effect to this new law have not yet been finalised and, indeed, the Government will be commencing a public consultation on the draft Regulations during the summer of 2005.
Given the potential impact on employers, particularly in relation to the provision of benefits, the publishing of the draft Regulations will allow employers to start planning for changes to empoyment policy and career development programmes.
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10. Bonuses and grievances |
In October 2004, the Court of Appeal delivered its decision in the case of Cantor Fitzgerald International v Horkulak. The key point for employers is that those operating discretionary bonus schemes must exercise their discretion to award bonus and assess the amount of bonus in good faith and rationally. Employers need to be able to articulate why they exercised their discretion in the way they did and demonstrate that they did so in a way that was rational and in good faith.
Employers should think carefully about recording reasons for each bonus decision to justify their position and to show that they have exercised their discretion in a rational, non-capricious manner. This will assist employers to deal with the inevitable increase in the number of challenges to bonus that will result.
The Statutory Dispute Procedures came into force on 1 October 2004 (see Employment Alert No. 87 for further detail). One effect of the SDPs is that (save in exceptional circumstances) before an employee may complain to an Employment Tribunal of constructive dismissal, he/she must first have raised a grievance with the employer. As a result, employers should expect to deal with more grievances in 2005 and should review procedures to ensure that grievances are dealt with in a timely, efficient way.
