Employment Update - 29 January 2010

Holiday - use it or lose it? The Employment Appeal Tribunal (EAT) has confirmed that workers who fail to comply with notice requirements for requesting annual leave (which may be under the employment contract or the Working Time Regulations 1998 (WTR)), could lose their unused annual leave entitlement at the end of the leave year. Employers are likely to welcome this decision, but should take careful note of the EAT's warning that employers must not operate notice provisions "unreasonably, arbitrarily or capriciously". Under the WTR, a worker who wishes to take annual leave must give notice to his employer at least twice as many days in advance as the amount of leave he or she wishes to take. Employers are able to refuse the leave by giving counter-notice. These provisions can be varied by a "relevant agreement" (e.g. a contract of employment).   In Lyons v Mitie Security Limited, Mr Lyons worked as a security guard for Mitie Security Limited (Mitie). His employment contract provided that: holiday requests should be submitted on Mitie's standard holiday request form; where possible, holiday request forms should be submitted at least four weeks before the start of the holiday; all holiday should be taken during the relevant holiday year and cannot be carried over to the following year; and  any holiday pay for holiday entitlement not taken in the relevant holiday will be forfeited. At the beginning of March, Mr Lyons had nine days outstanding leave entitlement which needed to be taken by 31 March, which was the end of the holiday year. He sent a fax to Mitie requesting payment for those remaining nine days before the end of the leave year. He did not make a specific request for days and did not use the holiday request form. When Mr Lyons found out that he had not been paid for the nine days, he sent a grievance letter. When his grievance was not upheld, he resigned and presented a claim for unfair constructive dismissal and for the outstanding holiday pay. The tribunal dismissed both claims and Mr Lyons appealed. The EAT upheld the appeal. It noted that the absence of case law would suggest that employees have not been denied their reasonable requests for holiday entitlement, even towards the end of a leave year. It did confirm, however, the right to statutory leave is not inalienable and has been made subject to notice provisions in the WTR, which are also subject to any contractual variation.   The EAT noted the ruling by the European Court of Justice in Stringer and others v HMRC that, as reported in earlier Employment Updates, the Working Time Directive did not prevent national legislation from laying down conditions for the exercise of the right to paid annual leave, including even the loss of that right at the end of a leave year, provided that the worker actually had the opportunity to exercise that right. If the notice provisions were operated correctly, they could, as envisaged in Stringer, result in the loss of the right to untaken leave at the end of the leave year. However, as noted above, employers should not operate notice provisions in an unreasonable, arbitrary or capricious way so as to deny any lawfully requested entitlement

Additional paternity leave and pay - update The Government has published its response to the consultation on additional paternity leave and pay, together with six sets of draft regulations. The regulations are intended to come into force on 6 April 2010 and have effect for parents of children due on or after 3 April 2011. In brief, they provide for the following: Fathers will be entitled to up to six months' additional paternity leave, which can be taken once the mother has returned to work; This new entitlement will be available during the second six months of the child's life, giving parents the option of dividing a period of paid leave entitlement between them; Some of the leave may be paid if taken during the mother's 39 week maternity pay period. This would be paid at the same rate as Statutory Maternity Pay (this is currently £123.06 and will rise to £124.88 in April 2010); Parents will be required to "self certify" by providing details of their eligibility to their employer; and Employers and HMRC will both be able to carry out further checks of entitlement if necessary.

EHRC announces package of proposals for older workers The Equality and Human Rights Commission (EHRC) has announced a set of proposals for fundamental changes to employment policies to open up more work opportunities for older Britons and to address the challenges of an ageing workforce. The proposals include abolishing the default retirement age, extending the right to request flexible working to all, overhauling employer recruitment practices to prevent discrimination and improving training and development.   The policy, part of the EHRC's Working Better initiative, aims to address the chronic under-employment, low-paid employment and low income experienced by older Britons. The EHRC will be working closely with employers to develop guidance for organisations to implement non-discriminatory recruitment practices.

EHRC outlines measures proposed for publishing pay gaps The EHRC has released proposals outlining the voluntary measures that organisations with more than 250 employees can use to publish information on pay differentials between men and women. The Equality Bill contains a power requiring private sector employers with at least 250 employees to publish information about the differences in pay between their male and female employees. The Government's aim is for employers to publish such information on a voluntary basis and it does not intend to make regulations under this power before April 2013. The power would only be used if sufficient progress on reporting is not made by this time. The EHRC was asked to help improve gender pay transparency in the private sector by working with the business community and key stakeholders to propose ways of measuring and sharing information on the differences between men's and women's pay. The EHRC has proposed a menu of voluntary measures to report on pay by gender for organisations with more than 250 employees. These measures include reporting on: the single figure difference between the median hourly earnings of men and women  the difference between the average basic pay and total average earnings of men and women by grade and job type  the difference between men's and women's average starting salaries The EHRC is also offering employers an option to include a narrative to explain the causes of their organisation's gender pay gap. This narrative would have to be combined with at least one of the quantitative measures above. The EHRC will be producing guidance on these proposals in April 2010. It will begin monitoring the take up of the metrics by large companies later this year. It recognises that employers employing 250-500 employees may be less well prepared than those employing 500+ employees, so will begin monitoring take up by the latter in 2010 and by the former in 2011.

Agency Workers Regulations – response to consultation The Government has published its response to the consultation on the draft Agency Workers Regulations, which were laid before Parliament on 21 January 2010. The response clarifies the approach taken by the Regulations, which aim to provide agency workers with a right to equal treatment after 12 weeks in a job. There are some key changes, for example: The approach to the definition of "pay" continues to be based on the principle of "equal pay for work done", but the Regulations will now include within the scope of equal treatment bonuses that are directly attributable to the quality or quantity of the work done by an agency worker. Vouchers or stamps with a monetary value, such as luncheon vouchers, will also be included.  The Regulations will contain additional anti-avoidance measures. Agency workers will have grounds for a claim to a Tribunal if a structure of assignments develops where the intention is to deprive them of equal treatment rights. As a deterrent, such a breach of the Regulations will attract an additional award of up to £5,000. The Regulations are due to come into force on 1 October 2011. Further guidance will be provided nearer the time.

Tribunals will notify regulators of whistleblowing claims From 6 April 2010, employment tribunals will be able to pass on details about whistleblowing allegations to relevant regulatory authorities. As reported in our Employment Update last year, the Government launched a consultation on these proposals, which aim to allow the underlying allegations (e.g. fraud or health and safety issues) to be investigated by the relevant regulator. Following the publication of the Government's response, the proposed process is to allow employment tribunals to send copies of the claim form (ET1), or extracts from it, directly to the relevant regulator. The regulator would then assess the information and investigate if appropriate as part of their normal regulatory duties, procedures and processes.   Express consent must be obtained from the claimant making a whistleblowing allegation and the ET1 form will be amended, requiring the claimant to indicate whether they consent to the tribunal referring information on to the relevant regulator. The claimant may still go directly to the regulator if they prefer. Guidance will be made available in due course.

Key compensation limits from 1 February As reported in an earlier Employment Update, the maximum compensatory award for unfair dismissal will fall from £66,200 to £65,300 from 1 February, to reflect a fall in the RPI.   The limit on the maximum amount of a week's pay for the purposes of calculating redundancy pay or the basic award for unfair dismissal will remain at £380 until February 2011 at the earliest.

Job satisfaction hits all time low   The ongoing impact of the recession has left employees suffering from a New Year hangover, with job satisfaction levels hitting an all-time low, according to the Chartered Institute of Personnel and Development (CIPD). CIPD's winter 2010 Employee Outlook report shows that any return to economic growth is yet to filter down to the workplace. The proportion of people thinking it likely or very likely they could lose their job has increased since the last quarter, and while private sector employees are most likely to believe this, the proportion of public sector employees worried about losing their jobs has increased significantly since the last quarter. At the same time workers have become more pessimistic about their chances of finding a new job, with nearly two-thirds now thinking this would be difficult. Nearly a third of respondents report that their organisation has made redundancies as a result of the downturn, with a further 15% saying their employer is planning to make job cuts. The proportion of respondents saying that their organisation has cut back on training, frozen pay, cut back on benefits or frozen recruitment has also increased since the last CIPD Employee Outlook report.

Countdown to April 2010 – data protection   From 6 April 2010 organisations and individuals that breach the Data Protection Act will be liable to fines of up to £500,000.   This new power is just the latest step in a series of recent reforms that have seen UK data security laws develop to among the strongest in the world. For further information about how to review your systems for data security before 6 April 2010, please click here and contact Stewart Room, a partner in our Privacy and Information Law Group.