Our aim is to keep you up to date with key developments in employment law so that you can manage your business better. Please note that the Newsletter is for information only. It is not intended as legal advice and must not be read as such.

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Where to the NHS?

On 19 January, the Government introduced The Health and Social Care Bill. This deconstructs the NHS as we know it in England and gives GPs control of 80% of the NHS budget. The current tiers of management - Primary Care Trusts and Strategic Health Authorities - will be scrapped and their powers transferred to GP consortia. These consortia will be responsible for buying health care for their local populations from whichever provider in the public, voluntary or private sectors they think best meets their patients' needs. Whilst recognising the need for reform, these changes have been criticised as too far too fast by doctors' representative bodies, health think tanks and the trade unions. They risk destabilising the NHS at a time when it has to make financial cuts and damaging healthcare provision. But the Government seems determined to press ahead. They are taking a huge risk. As Phillip Stevens pointed out in the Financial Times of January 18, these reforms could become Cameron's poll tax. 

No more default retirement age

The Government has confirmed that the default retirement age of 65 (DRA) will be abolished on 1 October 2011. This means that forcing an employee to retire at 65 after 1 October could be unfair dismissal and age discrimination.

There are transitional provisions. Provided the employer gives notice of intended retirement to the employee before 6 April 2011 and the employee's retirement date is before 1 October 2011, the DRA still applies. Otherwise, the employer is stuck.

So, what happens to retirement ages after 1 October 2011? Employers can still have compulsory retirement ages without falling foul of age discrimination legislation if they can objectively justify them. The compulsory retirement age will need to meet a legitimate aim. Business planning or health and safety could be such aims - provided there is evidence to support them and they are not just token reasons. Even if the legitimate aim hurdle is overcome, objective justification will not be made out unless the retirement age is a proportionate means of achieving the legitimate aim. It will not be if the legitimate aim could be satisfied in other ways.

Even if the compulsory retirement age is not discriminatory on grounds of age, forcing the employee to retire at that age is still a dismissal. So, to avoid a successful unfair dismissal claim, the employer will have to have a potentially fair reason for dismissal (which can no longer be retirement) and follow a fair procedure.

Acas have published Guidance for employers - Working without the default retirement age. This is available from their website: www.acas.org.uk.

Brave new world beckons?

New compensation limits

On 1 February 2011 the limit on a week's pay rises from £380 to £400. The maximum basic award is £12,000 and the maximum compensatory award is £68,400.

On 6 April 2011, the standard rate of SMP rises from £124.88 a week to £128.73 a week. On the same date SSP rises from £79.15 a week to £81.60

National Minimum Wage for sleepovers

Under Regulation 15(1) and (1A) of the National Minimum Wage Regulations (NMWR) time work (which has to be paid) for a worker who is by arrangement sleeping at or near a place of work and is provided with suitable facilities for sleeping which he is permitted to use only includes time when the worker is awake for the purpose of working. However, according to the case law on Working Time all the time spent living-in on call counts as working time. In South Manchester Abbeyfield Society Ltd v Hopkins and Woodworth UKEAT/0079/10, the Employment Appeal Tribunal (EAT) had to decide whether the NMWR were overridden by the rules on working time.

Both the claimants were housekeepers at an Abbeyfield Home. They were both provided with on-site accommodation and were required to be on call outside their normal working hours. They claimed that their hours on call were hours at work and claimed back pay to cover all their on-call time at least at the National Minimum Wage (NMW) rate. The employment tribunal upheld their claims on the basis that the whole of the on-call periods were working time under the Working Time Regulations and so should be paid.

The EAT overturned the tribunal's decision. They said that for NMW purposes a distinction had to be drawn between on-call time where the worker was clearly working (for instance a nurse on-call whose job was to answer a telephone helpline) and a case such as this one where the worker was merely present at the work place outside their normal hours and might be called rarely if ever. In this latter situation, although all the on-call hours could be working time for the purposes of the Working Time Regulations, so far as the NMW was concerned, where the worker was provided with facilities for sleeping, Regulation 15(A) applied and only time when the worker was actually called counted for NMW purposes.

Don't say you are dismissing an employee unless you mean it

If an employer makes it clear that an employee is dismissed, that is the position even if the employer subsequently realises that this was a mistake and wants to retract it - Willoughby v CF Capital plc 2010 IDS Brief 910 EAT.

In this case, W, an account manager in sales who had worked for the company for 18 years, was told by her manager that the company was in financial difficulties and one option was for staff to become self-employed. They would then receive a retainer and commission. W said she was interested and asked for details. Three weeks later on 23 December she received a letter with an agency agreement for her signature confirming an agreement that her employment would terminate at the end of the month.

On 5 January W, having taken legal advice, told her employer that she did not accept the agency agreement and was treating herself as dismissed. Her manager then phoned her twice to say that it was a misunderstanding and she had not been dismissed and confirmed this in writing on 9 January. W brought an unfair dismissal claim. The employer tried to argue that W must have realised that the wording of the letter was a mistake and that there was no compulsion for her to become self-employed.

The EAT, overturning the tribunal, held that the letter of dismissal was clear. The employer's words of dismissal were unambiguous and they had taken too long to retract them.

Employers can't plead poverty to reduce compensation

Under s.123 of the Employment Rights Act (ERA) the amount of the compensatory award (the main financial award in unfair dismissal cases) is such amount as the tribunal thinks just and equitable in all the circumstances having regard to the loss suffered by the complainant (the employee) as a result of the dismissal insofar as this is due to the employer's action.

In Tao Herbs and Acupuncture Ltd v Jin 2010 IDS Brief 910 (1477/09), the EAT confirmed that an employer's ability to pay was irrelevant to the assessment of the compensatory award. This was so even if the award would make the employer insolvent. The tribunal's duty under s.123 of the ERA is to make a compensatory award of such amount as it considers just and equitable in all the circumstances.