The coming months will see some significant changes to employment law in the UK. As such, HR professionals need to be fully aware of the implications and how they are likely to impact on their operations. Here John Buchanan, employment law specialist at law firm Rothera Sharp, briefs the HR Director on the imminent changes and offers his expert opinion on the key implications of the new legislation.
The changes being introduced in 2011 are certainly significant. With a raft of legislation coming into force, there is a great deal for HR practitioners to take note of. Although some of the changes have been deemed controversial, regardless of opinion, they need to be acknowledged and, without the correct processes in place, they could well present serious legal challenges to businesses.
Default retirement age From 6 April 2011 the UK’s default retirement age (DRA) of 65 is set to be abolished. From this date, employers will not be allowed to issue new notifications of retirement to their staff using the default age. It is important to note that any retirement notice issued prior to 6 April will be upheld, but only providing the date of the employee’s retirement falls before 1 October 2011.
Current law leaves it entirely at the discretion of the employer as to whether they terminate employment once a member of staff reaches the age of 65. All they are obliged to do is meet with the employee in question to discuss plans at least six months before their 65th birthday. However, following this regulation change, employers will not be able to prescribe any compulsory retirement age, unless the move can be justified as a proportionate means of achieving a legitimate aim. Furthermore, the abolition of the DRA will make it more difficult for employers to retire their staff lawfully as one of five potentially fair reasons for dismissal will need be established. In most cases employers will cite ‘capability’ as the reason, meaning that proper performance management processes will become crucial, as retirement will no longer be what has previously been a relatively easy option.
It is therefore imperative that well drafted performance management policies are in place. HR teams need to ensure that all managers are fully trained in all aspects of performance management and be confident that all procedures are being properly implemented. Performance problems should be correctly documented and review meetings should be held at the appropriate times – ideally at least twice a year. Employees should be provided with job descriptions detailing both responsibilities and objectives and they should be provided with feedback in the requisite time scale that is both clear and comprehensive. An incompetent approach to such matters may easily result in costly tribunal claims.
Changes to the retirement age had been a part of the Government’s Coalition Agreement and it has been viewed as a way of keeping an ageing population working, while helping to boost the public finances, as the workers continue to pay taxes. At the same time, some have argued that the changes could make workforce management more complicated and, ultimately, increase costs.
Right to request flexible working Another alteration to be mindful of from April 2011 is the right to flexible working, which will be extended to include parents of children under the age of 18. This is an expansion of the current system that already allows parents of children under 17, disabled children under 18 and those who care for an adult aged 18 or over, the right to request flexible working hours. It is estimated that almost 300,000 new people will become eligible for flexible working when the new regulation comes into force. However, individuals must be continuously employed by the same employer for more than 26 weeks before a request can be made.
I have often heard employers expressing concern at the bureaucracy involved in implementing what is a fairly detailed statutory procedure, and that burden is certainly not likely to be easing any time soon. The extension of this law will inevitably lead to a significant increase in the level of applications from employees, placing an additional burden on HR departments in terms of both resources and costs. A heightened level of activity is unavoidable given the vast number of individuals that have now become eligible for flexible working. However, those HR professionals who take time to review their flexible working policies and procedures and have systems in place to cope with the increased demand, will be the ones that stay on the right side of the law.
Agency Workers Directive Due to implemented from 1 October 2011, the Agency Workers Directive is perhaps the most complicated of all of the changes and the one that is likely to have the most legal implications, at least in the short term. Under the Directive, agency workers who have been in the role for a period of 12 weeks or more will be entitled to the same pay and holiday rights as a comparable worker. They will also gain the right to access collective facilities, as well as being made aware of any permanent positions that become available within the company.
In addition, new maternity rights will also be introduced for agency staff, which will mean that they must be given time off for pre-natal appointments and suspended on full pay if the original position is deemed to be unsafe and an alternative role cannot be found. October 2011 is the latest date under EU law that the Directive can be implemented, after being delayed by the previous Government to give both recruiters and clients the chance to prepare for the changes.
These new regulations give individual agency workers specific rights that are enforceable should it come to an employment tribunal. If the worker in question does not receive the relevant terms relating to working time, holidays and pay, regulations state that it is the agency that is liable for the failure, but only to the extent to which it is responsible for the breach. The regulations also stipulate that the host company shall be responsible for any breach to the extent to which it is responsible for the alleged failure in question. If a claim succeeds, then an award of compensation can be made. The tribunal will assess the worker’s loss and calculate what it considers is just and equitable compensation for that loss. However, unless there are exceptional circumstances, compensation will be subject to a minimum of two weeks pay.
If the tribunal finds that either the host or the agency, or both, has arranged a worker’s assignments in a deliberate effort to prevent qualification, the tribunal can order the payment of an ‘additional award’ of up to £5,000. This will mean that both parties can be joined to the claim and ordered to pay a percentage of any compensation. The Agency Workers Directive could be a potential legal minefield and mistakes will inevitably prove to be costly. As it does not come into force until October, HR departments should be using the coming months to make essential preparations.
Databases should be compiled that show the number of agency workers used, the areas in which they work, and the length of time and periods of the year when they are used. Analysis should also be made as to which basic terms are currently offered to new starters for various roles across the business, such as pay, holiday entitlement and any bonus payments. This will ensure that the information is available to provide to an agency. An up to date database will also enable an estimate of additional cost for providing these same terms to agency workers who meet the 12-week qualifying period.
Host companies should also now review their relationships with agencies and, in particular, the commercial terms that govern the relationship with those agencies. Businesses may also find it useful to review their policies for appointing agencies, in addition to scrutinising which managers authorise the use of agency workers. The matters referred to above are the ones that I would deem to be the most problematic for those in HR over the coming months. However, there are other important changes to be aware of as follows. From April, there will be two changes to maternity and paternity leave provisions in the UK.
Fathers of children with an expected week of birth beginning on or after 3 April 2011 will be allowed up to 26 weeks additional paternity leave if the mother returns to work before using her full entitlement to statutory maternity leave. On the same date, the rates for statutory maternity, paternity and adoption pay will increase from £124.88 to £128.73 per week. Further, from 6 April 2011, under the Equality Act 2010, employers will be able to treat individuals with a protected characteristic more favourably during recruitment and promotion processes. This applies when an employer is faced with two or more candidates of equal merit, if the more favourable treatment is intended to address under-representation in the workforce.
And finally, from April 2011, a corporate offence of failing to prevent bribery by people working on behalf of the business will be introduced under the Bribery Act 2010. This is the first time that companies will be liable for the corrupt activities of associated third parties and their own staff. The only defence to avoid the maximum penalty of seven to 10 years imprisonment and an unlimited fine, is to prove that ‘adequate procedures’ are in place to prevent bribery. These new laws are all well documented and I would certainly recommend some wider research and reading on each of them.
In my experience, those who fall foul of employment law are those who do not take time to research and understand their role as an employer. It can be a bit of a tricky and detailed subject, so HR teams should be leading from the front to make sure that both employers and employees are clear of their rights. Now is the time for HR professionals to take stock of the changes that I have discussed and review how they are likely to impact on the operations of their individual businesses, taking specialist legal advice if necessary. Those that are prepared are the ones that are most likely to avoid the costs and, of course, the bad publicity associated with an employment tribunal.
www.rotherasharp.co.uk
