A number of employment law reforms come into force in April 2012. The most important of the Government’s employment law reforms, the increase in the unfair dismissal qualifying period, takes effect on 6 April.
. Changes taking place on 6 April include:
• the Unfair Dismissal and Statement of Reasons for Dismissal (Variation of Qualifying Period) Order 2012 SI 2012/989 increasing the qualifying period required to bring a claim of unfair dismissal or request a written statement of reasons for dismissal to two years for those starting a new job on or after 6 April 2012. Employees whose employment started before 6 April will remain subject to the one-year qualifying period
• the Employment Tribunals Act 1996 (Tribunal Composition) Order 2012 SI 2012/988 enabling judges to sit alone in unfair dismissal cases
• the Employment Tribunals (Constitution and Rules of Procedure) (Amendment) Regulations 2012 SI 2012/468 amending the Tribunal Rules to enable employment judges and tribunals to order a party to pay a witness’s expenses in attending a tribunal; take witness statements as read unless an employment judge or tribunal directs otherwise; provide that the rule on sending documents to the EHRC shall not apply where the Security Service, the Secret Intelligence Service or the Government Communications Headquarters is a party; increase the maximum costs order from £10,000 to £20,000; and increase deposit orders for weak claims from £500 to £1,000
• the Equality Act 2010 (Amendment) Order 2012 SI 2012/334 making clear that a claimant’s solicitor can be an independent adviser for the purpose of a compromise agreement
• the Social Security Benefits Up-rating Order 2012 SI 2012/780 increasing Statutory Sick Pay from £81.60 to £85.85
• changes to guidance on tribunal application and response forms to include the average value of awards and time taken to reach a hearing
• changes to the immigration rules, including limiting the stay of temporary Tier 2 migrants to a maximum of 6 years, and removing the ability of overseas domestic workers to change employer.

In Woodcock v Cumbria Primary Care Trust the Court of Appeal has upheld a tribunal’s finding that a redundancy dismissal, the timing of which was motivated to avoid the cost of an enhanced pension if the employee was still employed at the age of 50, was justified age discrimination. In the course of its judgment the Court stated that while the age discrimination legislation does not exclude cost considerations from the justification defence, ECJ case law shows that an employer cannot justify discriminatory treatment ’solely’ because the elimination of such treatment would involve increased costs.
W’s position as chief executive of an NHS Trust disappeared in a national reorganisation. He failed to secure a new chief executive role and was informed that he was at risk of redundancy in September 2006. The Trust delayed giving W notice of dismissal in expectation that he would find alternative employment. W was invited to a redundancy consultation meeting in March 2007 but this was delayed until 6 June. Before that meeting, the Trust realised that if W was given his 12 months’ notice after his 49th birthday on 17 June, he would still be employed on his 50th birthday, and entitled to take early retirement on enhanced terms. As this would increase the cost of his redundancy by at least £500,000 the Trust gave W notice of his dismissal on 23 May. W subsequently lodged a claim of direct age discrimination.
The tribunal found that issuing the notice of dismissal before the W’s 49th birthday was less favourable treatment on the ground of his age – a comparator who was not the same age would not have been treated in the same way. The tribunal noted that although saving costs alone could not be a legitimate aim, cost plus another factor could be. The tribunal found that dismissing W because he was redundant prior to consultation in order to avoid further costs was a legitimate aim which was proportionate and justified. W had had a very long notice period, and consultation would have achieved nothing – W wanted a chief executive role and there was not one available. W appealed to the EAT and then the Court of Appeal.
The Court of Appeal rejected the appeal holding that, given the unusual facts of the case, issuing W’s dismissal notice was not purely treatment aimed at avoiding costs. Like the tribunal and EAT, the Court considered that the dismissal was served with the aim of giving effect to the Trust’s genuine decision to make W redundant. It was a legitimate part of that aim for the trust to ensure that it avoided additional costs. In considering the extent to which an employer can rely on cost considerations to justify discrimination, the Court stated that there was ’some degree of artificiality’ in an approach to justification that rendered a cost factor inadmissible on its own, but admissible if linked to a non-cost factor. The Court noted that every decision an employer takes is likely to involve a cost consideration, and the wording of the Employment Equality (Age) Regulations 2006 did not exclude cost considerations – merely requiring that the treatment be a proportionate means of achieving a legitimate aim. However, the Court summarised the effect of ECJ case law as being that ‘an employer cannot justify discriminatory treatment solely because the elimination of such treatment would involve increased costs. It seems that based on this decision it maybe relatively easy for employers to combine financial considerations with some other consideration to justify age discrimination. Note race and sex discrimination cannot be justified.

The Conlibs have accepted the recommendations of the Low Pay Commission that, from 1 October 2012, the adult national minimum wage (NMW) rate increases from GBP 6.08 to GBP 6.19 an hour, and the apprentice rate increases from GBP 2.60 to GBP 2.65. The rates for 18-20 year olds and 16-17 year olds will not increase, remaining at GBP 4.98 and GBP 3.68 respectively. The accommodation offset will increase by 9 pence to GBP 4.82 per day.
The Conlibs have also accepted a recommendation that it should create, and maintain, effective, clear and accessible guidance on all aspects of the minimum wage, particularly where there is significant evidence of ignorance or infringing practice.
Commenting on the freezing of the youth rates, Business Secretary Vince Cable stated that ‘raising the youth rates would have been of little value to young people if it meant it was harder for them to get a job in the long run’. The Chair of the Low Pay Commission, David Norgrove, hoped it ‘may help to increase the relative attractiveness of young people to employers’.

The Conlibs have published a call for evidence seeking views on whether current dismissal procedures are too onerous and too complex, and whether their application is misunderstood. Views are also sought on compensated no-fault dismissals for micro-businesses with fewer than 10 employees. The call for evidence, which will close on 8 June 2012, is wider than expected, as previous announcements had indicated it would apply only to no-fault dismissals.
The Conlibs hope the call for evidence will provide a strong evidence base on the current understanding of the dismissal process, including awareness, understanding and use of the Acas Code of Practice on Discipline and Grievance. The call for evidence reports concerns that the language of the Acas Code is not accessible to small businesses and that it is too focused on disciplinary issues rather than capability/performance ones. The call for evidence confirms that compensated no-fault dismissals would enable micro-businesses to dismiss employees without a formal dismissal procedure where no fault was identified on their part, provided that the employee receives a set amount of compensation. As is currently the case, employers could dismiss employees without compensation if there is a fair reason for dismissal and the employer acts reasonably. Employees dismissed through compensated no fault dismissal would not be able to claim unfair dismissal but could still bring automatic unfair dismissal claims, as well as discrimination claims.
Business Secretary Vince Cable noted that ‘the UK already has one of the world’s most flexible, adaptable labour markets’ but recognised that ‘ not all jobs work out for both parties – the staff member doesn’t quite fit or simply the relationship has irretrievably broken down’. He went on to note that ‘for micros in particular, who often don’t have legal or HR teams, the process to let a staff member go can be a daunting and complicated process’. The Conlibs state that it intends to strike a balance between giving workers enough support and clarity about what is expected of them to perform to an acceptable standard, and giving employers, especially small businesses, the ability to dismiss poor performers without unnecessary bureaucracy.

In Julio v Jose and other cases the Employment Appeal Tribunal has held that three live-in foreign domestic workers were not entitled to the national minimum wage, as they fell within the exemption that applies to individuals who are treated as members of the family. The appeal raised a variety of issues, but the most significant was the construction of Regulation 2(2)(a) of the National Minimum Wage Regulations 1999, which provides that the exemption applies where an individual lives with the family and is treated as a family member as regards ‘the provision of accommodation and meals and the sharing of tasks and leisure activities’, and there is no deduction from wages for food or accommodation.
There is very little case law on this exemption, which is intended to cover au pairs, nannies and companions. In the course of giving judgment, the EAT held that, among other things, the ’sharing of tasks’ in this context does not include consideration of the work the person is employed to do – the condition is referring to tasks performed by the family as a family unit. Also, there is no need to show equivalence, in terms of the tasks performed by the worker and the employer and/or family, for this condition to be satisfied. In addition to considering the provision of accommodation, the EAT held that tribunals are entitled to have regard to other matters, such as the general dignity with which a domestic worker is treated, the degree of privacy and autonomy he or she is afforded, and the extent to which, if at all, the person is exploited.
The EAT also stressed that, while the exemption should be construed narrowly in order to ensure that domestic workers are not exploited, tribunals should take a holistic approach when considering whether someone is treated as part of the family. So, for example, the fact that one of the claimants, U, who was in her thirties, did not have her own bedroom for some of the time she worked for her employer and had slept on the dining room floor or shared a bedroom with the children did not mean that she was not treated as part of the family. It was relevant that the family had been forced to downsize and were living in cramped conditions and that family members did not always have their own bedroom.

It is well established that claimants are prevented from arguing that the manner of their dismissal is a breach of the implied term of mutual trust and confidence, as held by the House of Lords in Johnson v Unisys 2001 ICR 480. The House of Lords (Now the Supreme Court) was unwilling to develop the common law to imply a contractual term that an employer must carry out a dismissal in good faith since Parliament had introduced unfair dismissal legislation to govern the dismissal process. Accordingly, an employee who was dismissed in a manner that caused him to suffer a psychological illness which prevented him from obtaining alternative work was not entitled to contractual damages for his ongoing financial loss. Crucially, he was unable to establish a breach of contract on which to base his claim.
Claims for ongoing loss caused by dismissal based on alleged breaches of express contractual disciplinary procedures have also met with little success. A failure to follow a contractual disciplinary procedure is a breach of contract, but the damages available for a breach are limited. In the ordinary course of things, when a disciplinary procedure is unlawfully ignored, the dismissed employee only loses the wages he or she would have received during the disciplinary process, plus any contractual notice period.
This principle, which was established in Gunton v London Borough of Richmond-upon-Thames 1980 ICR 755, CA, holds true even if the employee can show that the disciplinary process, if followed, would have resulted in a finding that he should not have been dismissed. As a matter of pure contract law (without regard to the unfair dismissal legislation), an employer is entitled to dismiss on notice with or without cause. The only recourse for claimants seeking post-dismissal losses is to bring a claim of unfair dismissal in an employment tribunal. Such claims have a number of disadvantages, including a short time limit for lodging proceedings and a cap on compensation.
Supreme Court again dismisses breach of contract claims
Claimants dismissed in breach of an express contractual disciplinary process were handed an opportunity to circumvent the unfair dismissal scheme and the limits imposed by wrongful dismissal law by the Court of Appeal in Edwards v Chesterfield Royal Hospital NHS Foundation Trust 2010 EWCA Civ 571. Importantly, the loss identified in that case– reputational damage said to be caused by adverse findings made in a contractually unlawful disciplinary procedure – was framed as being separate from the loss caused by the dismissal. The Court ruled that a claim for career-long loss of earnings of around £4 million could proceed as it was based on an alleged failure to carry out a disciplinary procedure properly, which amounted to a breach of an express contractual right to the procedure in question. Thus, assuming that a breach causing the loss could be established at a full hearing of the action, such a breach would give rise to normal contractual remedies.
However, this opportunity was not open for long. The Court of Appeal decision in Edwards, along with that in a similar case, Botham v Ministry of Defence, has now been overruled by a majority of the Supreme Court. In short, the Supreme Court ruled that the disciplinary flaws could not be divorced from the dismissal process, and that a breach of contract claim could not be brought for the type of ongoing loss being claimed. Unfair dismissal was the appropriate remedy because that was what Parliament must have intended. For the time being, claimants still cannot claim damages for the manner of dismissal.

The Employment Rights (Increase of Limits) Order 2011 SI 2011/3006 will increase the limits on certain employment tribunal awards and other amounts payable under employment legislation from 1 February 2012.
The main changes are:
• the limit on the amount of a week’s pay for the purposes of calculating, among other things, statutory redundancy payments and the basic award for unfair dismissal will increase from £400 to £430
• the maximum compensatory award for unfair dismissal goes up from £68,400 to £72,300
• guarantee pay increases from the rate of £22.20 a day to £23.50 a day; and
• the minimum basic award in cases where the dismissal was unfair by virtue of health and safety, employee representative, trade union, or occupational pension trustee reasons will increase from £5,000 to £5,300.
The new rates apply where the event giving rise to compensation or payment occurs on or after 1 February 2012. For example, in the case of unfair dismissal the rates apply to all dismissals where the effective date of termination falls on or after this date. Where the dismissal or relevant event falls before 1 February, the old limits will still apply.

The Department for Business, Innovation and Skills (BIS) has confirmed that the increase in the qualifying period for unfair dismissal claims to two years will only apply to those starting a new job on or after 6 April 2012. Employees whose employment started before 6 April will remain subject to the one-year qualifying period. Thus, someone with 18 months’ continuous employment on 6 April will not lose their right to claim unfair dismissal, and an employee with 11 months’ service on that date will still only have to wait one month before being able to claim. The regulations to extend the qualifying period will be published shortly and will be subject to Parliamentary debate.
Further details on the intended dates for a number of reforms announced last year as part of the Employment Law Review were given by the Employment Relations Minister Edward Davey in a written answer to Parliament on 17 January. Subject to parliamentary approval, changes to be effected via secondary legislation – witness statements being taken as read, the removal of witness expenses, judges sitting alone in unfair dismissal cases and changes to limits for cost awards and deposit orders – will come into force on 6 April 2012. Measures requiring primary legislation, including early conciliation, financial penalties for employers, judges sitting alone in the EAT as a default arrangement and an amended formula for uprating tribunal awards and redundancy payments, will be implemented when parliamentary time allows. The revised procedural code for employment tribunals expected as a result of Mr Justice Underhill’s fundamental review of the Employment Tribunal Rules of Procedure is expected to come into force in 2013, following public consultation and subject to parliamentary approval.

After months of speculation and leaks to the press the Conlibs have announced its plans for the ‘most radical reform to the employment law system for decades’. The wide-ranging changes, which include reform of the tribunal system, the introduction of tribunal fees, ‘no fault’ dismissals for micro-companies, and reducing the consultation period for collective redundancies, were described by Business Secretary Vince Cable as ‘emphatically not an attempt to give businesses an easy ride at the expense of their staff’.
Mr. Cable outlined the proposals in his speech to the manufacturers’ organisation, the EEF. Some of the most eye-catching are the unexpected ones that were not widely trailed before the speech. These include a proposal to remove protection for whistleblowing that relates to a worker’s own contract. Since the EAT’s decision in Parkins v Sodexho Ltd 2002 IRLR 109, an employer’s breach or likely breach of an employment contract has been a matter about which disclosures are potentially protected. In his speech, Mr. Cable referred to this as a ‘loophole’, which would be closed. He also announced a call for evidence on whether the 90-day minimum consultation period for collective redundancies should be reduced.
Among other proposals, the Government will also:
• seek views on introducing compensated ‘no fault’ dismissal for micro firms with fewer than 10 employees
• examine ways to ’slim down’ and simplify dismissal processes, potentially working with Acas to change their Code, or publishing supplementary guidance for small businesses
• publish a consultation on two options for the introduction of employment tribunal fees. The first option would require an initial fee to lodge a claim then a second fee to proceed to a hearing. The second option would require those seeking an award above GBP 30,000 to pay more to bring a claim
• call for evidence on proposals to simplify the Transfer of Undertakings (Protection of Employment) Regulations 2006
• consolidate 17 national minimum wage regulations
• consult in the spring on streamlining the regulatory regime for the recruitment sector, and
• create a universally portable CRB check that can be viewed online from early 2013.
As part of the response to the Resolving Workplace Disputes consultation (see link below), the Government has committed to:
• requiring all employment disputes to be offered Acas pre-claim conciliation before going to a tribunal
• increasing the qualifying period for unfair dismissal to two years from April 2012
• consulting in 2012 on ‘protected conversations’ to allow employers to have discussions with staff about retirement or poor performance, which could not be relied on in a tribunal claim
• an independent review of the employment tribunal rules of procedure, led by Mr Justice Underhill, to address concerns that tribunals have become complex, inefficient, and are no longer fit for purpose
• consulting on simplifying compromise agreements – renamed ’settlement agreements’
• considering how, and whether, to develop a ‘rapid resolution’ scheme to offer a quicker and cheaper alternative to employment tribunals
• modifying the formulae for up-rating tribunal awards and redundancy payments to the nearest pound. The Government believes this will save business GBP 5.4 million (net) a year.

In a recent speech setting out measures intended to promote economic growth, Prime Minister Cameron has indicated that the Conlib Government will consult on the introduction of ‘protected conversations’. The proposal is designed to allow employers to have frank discussions on issues such as performance, which would be inadmissible in tribunal proceedings.
In a recent speech to business leaders, Cameron stated his ambition to deregulate to create ‘fair, simple processes that are good for business and good for employees’. The effect of introducing protected conversations, would be that ‘a boss and an employee feel able to sit down together and have a frank conversation – at either’s request’. This would presumably lead to the parties attempting to agree a termination package by way of a compromise agreement if either party saw no way forward for continued employment. He noted that it would ‘help address employers’ fears of a tribunal’. And he confirmed the proposal to introduce fees for bringing claims to employment tribunals, meaning that ‘potential claimants are much less likely to pursue this option unless the employer has a genuine case to answer’.
The speech has been seen by some commentators as indicating that the more radical proposals set out in the Beecroft report – such as the introduction of ‘compensated no-fault dismissals’, for which the employer would need to give no reason – will not be introduced.