BUSINESS MATTERS Employment law update


Here, Martine Nathan, Partner at Teacher Stern Solicitors, examines a selection of recent employment and employee related news that is likely to impact on all employers, including those operating in the voice and data channels.


Martine Nathan T


he Government has published detailed guidance on the agency workers regulations. These Regulations are due


to take effect on 1 October 2011. They give temporary agency workers the right to equal treatment with permanent workers as regards basic working conditions. Some of the key provisions are:


• The regulations cover individuals engaged by an employment business to perform work for one or more of the employment business’s clients (but not the genuinely self-employed).


• There is a 12 week ‘qualifying period’ during which time agency workers need not be given equal treatment.


• After this, agency workers must be given equal pay, holiday pay, bonuses, access to facilities and other working conditions. Share options and awards, sick pay, pensions, notice pay and benefits in kind (for example, cars, health insurance) are not covered.


• Agency workers must be informed about permanent vacancies in the organisation and allowed to apply for them if they are suitable.


This is going to mark a real change for employers that make regular use of agency workers alongside permanent staff. Employers will need to review policies, pay and benefits practices and recruitment to ensure equal treatment.


Default retirement age Another issue in the news is the abolition of the default retirement age from 6th April 2011. Employers have previously been allowed to forcibly retire employees at 65. This means that there is no longer a ‘safe’ age at which to retire employees. It will rarely be permissible to set a default retirement age across a business, although it may be possible to choose particular jobs that justify retirement at a particular age. This will, however, be open to challenge and the best advice is that retirement dismissals (without the employee’s consent) will be tricky. Instead, employers will have to find another lawful and fair reason (such as poor performance, redundancy or misconduct) to legally justify dismissing employees.


Positive action for pregnant employees?


A large UK law firm has discriminated against a male employee for selecting him for redundancy in preference to a female employee on maternity leave. The law firm had devised selection criteria which it used to judge the employees at risk of redundancy. The employee on maternity leave could not be scored in a particular category because of her maternity absence, so she was given the highest score possible to compensate for this. This meant that she scored very slightly more than a male employee, who was then selected for redundancy. He successfully


complained that he had received less favourable treatment than his colleague on the grounds of her maternity absence. This makes it even more difficult to handle redundancy processes involving employees on maternity leave. The best advice is to ensure that selection criteria are devised so as to be capable of scoring without being affected by the employee’s maternity absence.


‘Disguised remuneration’ arrangements


On 6th April 2011, the tax rules applying to the incentivisation of employees were radically and adversely changed with the introduction of a new draconian anti-avoidance tax regime aimed at so-called ‘disguised remuneration’ arrangements. By way of background, HMRC announced as recently as in the June 2010 Budget that it would introduce blocking legislation to tackle ‘arrangements using trusts and other vehicles to reward employees which seek to avoid, defer or reduce tax liabilities’ because it was perceived that employee benefit and retirement trust arrangements were being abused to provide tax free benefits to participating employees. In broad terms, the new regime imposes an income tax/NIC charge when a trustee or any other third party takes ‘a relevant step’ (which includes steps to allocate or earmark cash or other assets) under an arrangement to provide benefits to employees (or persons linked to employees).


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There are limited ‘safe harbours’ which are designed to exempt certain approved arrangements but these are restrictive and complex. Employee incentivisation programmes should only be approved after assessment under the new regime. This clearly represents further unwelcome red tape compliance requirements on employers.


Government to relax legal burden on employers? The Business Secretary, Vince Cable, recently announced a range of measures to reduce the amount of red tape faced by business. They include repealing certain employment laws and, importantly, proposes a moratorium exempting businesses with fewer than 10 employees, and genuine start ups, from new domestic regulations for three years. Employers are being invited to take part in Government consultation to tell them what they think of around 22,000 existing laws and suggest ways to improve the system by removing or changing them. The Government also proposes automatically reviewing all new laws after five years to check that they are working properly and to consider whether to abolish or extend them. n


In next month’s article we will answer the questions our Employment Group are most frequently asked. If you wish to raise a query, do let us know and we will respond. m.nathan@teacherstern.com


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