Thomson Snell & Passmore\'s e-workplace law

1. In the news… January 2012
Workplace Law
Welcome to another edition of e-workplace law. We continue to live
through interesting times. So in our first update of 2012, there is plenty of
ground to cover.
We will touch upon the recently introduced Agency Workers Regulations 2010, providing you
with a guide to the steps that you ought to be taking if you have yet to get to grips with your
obligations in this area. Looking forward, we have an article on the planned changes to the laws
relating to pensions. We will also comment on plans to increase the length of service required in
order to bring unfair dismissal claims, as well as recent developments in the law relating to
holiday accrual during sick leave.
Agency Workers Regulations 2010 –
what should you be doing now?
Many of you will have heard a lot about the Agency Workers Regulations
2010 (AWR) over the last year or so.
Some of you may already have done what you need to do to make sure that your business is
compliant. If you have, then you get a gold star and go straight to the top of the class. But there
are, no doubt, many out there who have not quite managed to find the time to concentrate their
minds on this issue just yet. Well you can put it off no longer!
The AWR came into force on 1 October 2011. You can remind yourselves of the key features of
the regulations by reading our information sheet.
Once you have done that, you need to draw up an action plan for the practical steps that you
need to take.
If you are a hirer of agency workers:
Head Office
3 Lonsdale Gardens
Tunbridge Wells  audit all those working for you. Work out who your agency workers are. You might have
Kent TN1 1NX more than you realised
T 01892 510000  consider whether your agency workers are performing the same or similar roles to
F 01892 540170 people whom you permanently employ. You may need to conduct a detailed analysis of
the roles in question, in order to evaluate quite how similar the roles are
Thames Gateway
 consider what collective facilities (e.g. canteen, car park, gym) you provide to staff and
The Old Rectory
St. Mary‟s Road
ensure that agency workers can use them also
Greenhithe  compare your agency workers to permanent members of staff undertaking the same or
Kent DA9 9AS similar work. Are there any differences in their basic terms and conditions? If so, you
T 01322 623700 may have an issue
F 01322 623701
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2. January 2012
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 identify agency workers for whom there are no direct comparators. Are there still any
basic terms that you offer to all staff, which you do not offer to agency workers? This
could also cause problems
 where appropriate, provide your agencies with information relating to your standard
terms and conditions, pay scales and holiday terms, in order to ensure that they are in a
position to comply with the legislation
 keep an eye on the clock – it is essential that you have your house in order before your
agency workers accrue more than 12 weeks‟ continuous service.
You may also want to consider whether continuing to use agency workers still makes sense.
Would you be better off engaging casual workers directly? Is it worth contracting-out parts of
your business entirely? You may need to consider some fairly radical options, if the cost of
engaging agency workers proves too high.
If you are an agency:
 make sure that you have reviewed your standard contracts, in order to address the
obligations with which you and your clients must comply
 make sure that you have put in place the internal systems necessary for collating
information relating to the terms and conditions that you need to replicate
 in advance of any agency worker reaching the 12-week point, make sure that you
request the relevant information from your clients
 notify your clients of the changes that you are proposing to make to the way in which
you pay the agency workers
 put in place systems for regularly checking with your clients, in order to make sure that
no further changes to terms and conditions have been made
For more information please contact Nick Hobden, Partner and Head of Employment, on 01892
701326 or by email at nick.hobden@ts-p.co.uk.
Pensions auto-enrolment – not as far
off as it seems
You may already be aware of the fact that important changes to the law
relating to the provision of pension benefits are due to come into force
over the next few years.
The largest employers will need to have their houses in order by October 2012. The relevant, so-
called, „staging date‟ for the smallest employers is much later. But you put off the consideration
of this matter at your peril; rather a lot of advance planning is required.
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What is this all about?
In a nut-shell, this change in the law will require all employers to automatically enrol “eligible
jobholders” into a pension scheme of some form or another within three months of the jobholder
commencing employment. The scheme in question might be an occupational scheme, some
form of group personal pension scheme or the state-operated National Employment Savings
Trust (also known as „NEST‟).
An „eligible jobholder‟ is between 22 years of age and state pension age, earning £7,475 a year
or more. "Jobholders" may be employees who are permanent or temporary; agency workers will
also be covered.
Not only will employees be entitled to be enrolled into an appropriate pension scheme but,
presuming that the pension is a defined contribution scheme of some sort, the employer will also
be obliged to make a minimum level of employer contribution to the scheme. The level of this
contribution is set to rise over a period of five years, from 1% to 3%.
Employees will, of course, be able to „opt out‟ of the pension scheme on offer. But employers
who do anything that might be construed as inducing jobholders to „opt out‟ will be breaking the
law. The Pensions Regulator will be responsible for policing compliance with the new legislation.
Do I need to do anything now?
Most people reading this article are unlikely to have to start auto-enrolling their staff until late
2013 or early 2014. In fact, following a recent change in the law, the smallest employers will
have until May 2015 to put their arrangements in place. That might seem a long way off. But
that does not mean that you can put this article to one side and ignore it. You should be planning
now for the introduction of these new obligations. In particular, you need to:
 work out whether you have a pension scheme in place that you are able to use under
the auto-enrolment arrangements
 consider setting up a new pension scheme, should this prove necessary; this is likely to
involve taking legal and financial advice on your options and planning carefully
 consider whether you will simply use NEST instead
 review your standard contractual obligations and work out what, if any, changes you
might need to make to your employment contracts
 consider who will take responsibility for the administration associated with auto-
enrolment
 budget and plan for the administrative costs and, of course, the cost of the employer
contributions that you will be required to make
There is a lot to think about here and the law is by no means straightforward. If you need
someone to help you share the load, call a member of the team for further advice.
For more information please contact James Willis, Senior Associate in Employment, on 01322
422540 or by email at james.willis@ts-p.co.uk.
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Changes to the unfair dismissal
qualifying period – what difference will
they make?
In its recent response to the „Resolving Workplace Disputes‟ consultation
paper, the Government has announced what it describes as “the most
radical reform to the employment law system for decades”.
A range of proposals have been offered up; too many for us to address in a single article. So for
now, we will concentrate on plans to increase the qualifying period for unfair dismissal claims.
The Government has already confirmed that, with effect from April 2012, it intends to increase
the qualifying period from one to two years‟ continuous service. This will take us back to a
position that last existed in 1999. The aim, so says the Government, is to make a positive impact
on business confidence. Current estimates predict a reduction in the number of unfair dismissal
claims of between 1,600 and 2,100 per year.
Unintended consequences
No doubt employers will greet this change with a sense of satisfaction. But what are disgruntled
employees dismissed with less than two years‟ service to do? Answer: bring a discrimination
claim, for which there is no qualifying period. So the unintended consequence of the expected
drop in unfair dismissal claims could be a corresponding increase in discrimination claims.
If employees are desperately seeking to pursue discrimination claims, when previously they
would not have done so, it might be presumed that a large number of these claims will be
relatively weak. But discrimination claims can be technically difficult to defend. This is because of
the way in which the burden of proof operates. If the employee can (i) point to a comparator of a
different race, sex etc and (ii) show an apparent difference in treatment between the employee
and the comparator, the burden of proof switches to the employer to show that its treatment of
the employee was in no way whatsoever related to the „protected characteristic‟ in question.
Proving a negative can be a challenge at the best of times. So employers may have to work very
hard to clear their names.
Is this change in the law potentially unlawful?
We have seen instances over recent years of people challenging the legality of the law itself,
particularly where there is an argument for saying that our domestic laws contradict the terms of
European legislation. Presuming that the qualifying period increases as planned, issues could
arise in this regard.
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It may be arguable that the change in the law will result in indirect discrimination against people
with certain „protected characteristics‟. For example, women or younger workers, statistically,
may be more likely to have shorter periods of service than men or older workers. As a result,
fewer women and young workers would qualify for the protection that unfair dismissal laws
provide. In order to fend off such a claim, the Government would have to show that the
increased qualifying period is „objectively justified‟. The consultation response believes that this
change will improve business confidence in hiring people and thereby boost growth. The
historical justification for a qualifying period has been to give employers time to decide whether
an employee is truly suitable for the role to which they have been recruited. Do employers really
need a period of as long as two years in which to make this decision? In most cases, one might
argue that they do not.
Transitional arrangements
Regulations to implement this change in the law will be brought forward shortly. They will include
transitional provisions, which will need to address the position of employees who will have
between one and two years‟ service when the regulations come into force. An employee who
commenced employment in November 2010 will have qualified for unfair dismissal protection in
November 2011. Will such employees then lose that protection in April 2012, only to regain it
when they reach two years‟ service in November 2012? As ever, the devil will be in the detail.
It will be interesting to see how this situation develops.
For more information, please contact Ben Stepney, Solicitor in Employment, on 01892 701359 or
by email at ben.stepney@ts-p.co.uk.
Sickness and holiday pay – an issue that
won’t go away
A few years ago, everyone seemed to be rather preoccupied with the
question of precisely how to deal with the accrual of holiday, when an
employee is on long term sick leave. Various cases on this subject were
widely reported and whilst a number of questions remained unanswered,
something like a consensus arose regarding how to deal with such
situations.
Well now seems like a good time to reflect on this issue, bearing in mind the decisions in two
recent cases; one in the Employment Appeal Tribunal and the other in the European Court of
Justice.
Fraser v Southwest London St George‟s Mental Health Trust
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In the case of Fraser v Southwest London St George‟s Mental Health Trust, after a period of
sickness absence spanning a number of years, Ms Fraser was dismissed from her job as a
nurse. She was paid in lieu of the holiday that she had accrued during the holiday year in which
her employment terminated. But she received nothing in relation to the two preceding years,
during which she had been absent from work and had not taken any holiday. She brought a
claim, alleging an entitlement to further holiday pay in respect of these two years. In response to
her claim, her employers agreed that Ms Fraser had accrued holiday during her sickness
absence. But they argued that as she had not asked to take any holiday, that holiday had been
lost.
The EAT judge considered the law in this area and concluded that payment for annual leave
under the Working Time Regulations 1998 normally only arises in respect of leave actually
taken. The judge also acknowledged that an employer could reasonably adopt a „use it or lose it‟
approach to holiday, such that an employee could not, on termination of employment, claim pay
for holiday that might have accrued in an earlier holiday year.
The judge accepted that case law established the potential right for an employee on sick leave
either to (i) take paid holiday whilst sick or (ii) request permission to carry it forward to a future
holiday year. But the judge concluded that it was for the employee to raise this issue with her
employer. Because Ms Fraser had not sought her employers‟ agreement to carry holiday
forward, she was not entitled to any further payment on the termination of her employment.
KHS AG v Schulte
The case of KHS AG v Schulte came before the ECJ. It concerned a locksmith who, following a
heart attack, was unable to work. After a period of sickness absence extending over a number of
years, his employment terminated. He then sought a payment in lieu of the holiday entitlement
that he claimed to have accrued in the final three years of his employment. An issue arose as to
whether a provision built into German law that limits the ability to carry unused holiday
entitlement forward from one holiday year to the next breached European laws. The German
laws limited the carry over period to 15 months.
The ECJ took account of the fact that the holiday entitlement enshrined in European law was
intended to provide a rest from work, protecting the health and safety of workers. If employees
were able to accrue holiday over the course of many years, then upon taking such leave, it
would not be a way of taking appropriate rest; instead it would simply be a period of relaxation
and leisure. For this reason, the ECJ found that the German rule that limited the accrual of
holiday was reasonable and lawful.
Conclusion
The cases in this area continue to stack up. But with each new decision, there are additional
nuances and complications. There is the possibility that one or more of the domestic cases could
be further appealed to a higher court. In the circumstances, this could be very helpful in
providing further clarity on the situation in the United Kingdom.
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For now, if you are wrestling with your obligations in this area, it is essential that you take
specific legal advice. We are on hand to help.
For more information please contact Susanna Gilmartin, Partner in Employment, on 01892
701322 or by email at susanna.gilmartin@ts-p.co.uk.
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