Can you reduce your employees holidays?

It was reported by the BBC on the 16th May 2013 that Paolo Di Canio had “threatened to reduce his players holidays should they not perform “with dignity” in their final game”.


Effectively Mr Di Canio was saying that rather than allowing his players the usual five to six weeks, he would reduce their holiday to the minimum 4 weeks.

In the UK, the Working Time Regulations 1998 allows workers the right to take 5.6 weeks paid holiday in each leave year, which is inclusive of bank holidays.

On that basis it would be difficult to see how Mr Di Canio could reduce his players’ holiday to just four weeks, as he would be in breach of the Working Time Regulations 1998.

What employers must be aware of however is that an employer’s right to holidays should be fully detailed in their contract of employment, particularly if it is the employers’ intention to allow them more than the minimum 5.6 weeks.

If more than 5.6 weeks holiday is being given then any reduction in holiday would result in the employee being able to make a claim either in the County Court or the Employment Tribunal. It is also possible that because it would be such a significant breach of contract that employers could also face a claim for constructive dismissal.

In any event employers should make sure that they have adequate policies and procedures in place detailing how applications for holidays should be made, in what circumstances holiday requests may be refused and clear details as to whether holiday can be carried over to the following leave year. If all holiday is not used, employers should not make payments to employees in lieu of holiday that has not been taken.

Compulsory Retirement?

Last week our blog looked at the general points that employers should consider when the question of retirement arises. One important question is whether a compulsory retirement age should be included in any policy.


Until the 6th April 2011 there was, what was known as the “default retirement age” of 65, which meant that compulsory retirement of employees at or over 65 was permitted. Now however compulsory retirement age must be objectively justified.

This means that it is not impossible to still retire employees at 65, provided that 65 is an appropriate age.

There is a general assumption that if performance declines with age, whether that be due to competence or health, however those points on their own are not sufficient to justify a retirement age. There have certainly been a number of people who have been able to hold down high profile well after this age. For example look at Sir Alex Fergusson managing a successful Premier League side until the age of 71, when some would argue that due to the stress involve in that type of work, a retirement age of 65 would be justified.

The big question is what can justify a retirement age and this is something that has been looked into by the Courts in great depth.

In particular the case of Seldon v. Clarkson, Wright and Jakes found that there had to be proportionate and legitimate aims in setting a retirement age.

Seldon was the former partner in a solicitors firm who imposed a retirement age of 65 on their partners. The firm put forward 6 legitimate aims which included;

1 Ensuring associates were given the opportunity of partnership after a reasonable period as an associate, thereby ensuring that associates do not leave the firm;

2 Facilitating the planning of the partnership and workforce across individual departments by having a realistic long term expectation as to when vacancies will arise;

3 Limiting the need to expel partners by way of performance management, this contributing to a congenial and supportive culture in the Respondent firm.

Perhaps unhelpfully, even tough this matter has gone all the way to the Supreme Court, there was no decision as to whether 65 was in fact the correct age. The implication of the case however is that provided there are legitimate aims that can be justified and supported by the employer then a retirement age will be capable of being enforced.

Overall employers should still treat compulsory retirement with caution and should instead try to adopt a much more flexible approach to retirement without any need to set ages.

Any issues with work carried out could be dealt with through the capability policy and procedures and illness and general health issues could be dealt with through an appropriate sickness absence policy, both of which all employers should have in place.

Are you ready for your Sir Alex, Paul Scholes or David Beckham moment?

In the last week there have been three very notable announcements of retirement. Sir Alex Ferguson and Paul Scholes will both retire from Manchester United and football in general on the 19th May 2013 after Manchester United have played West Brom. David Beckham has recently announced that he too will be retiring from professional football at the end of this season.

It is inevitable that an employer will have people retire, but the difficult part is making sure that there are proper procedures in place to deal with retirement.

There are many things that employers need to be aware of regarding retirement. Generally when employers are considering what points to include in their retirement policy and procedure, they should think about the need to include a compulsory retirement age, the way in which any discussions regarding employees plans for the future will be conducted to ensure that there can be no allegation of discrimination for example on the grounds of sex or age, and indeed, the notice provisions that will be required.

Requiring an employee to give as much notice as reasonably possible is crucial and would allow for appropriate planning. Certainly with any manager or senior employee such as Sir Alex Ferguson, the steps needed to ensure that a replacement is found need to be taken swiftly to ensure that the right candidate is recruited and also to allow for a proper handover where necessary.

If a retirement age were going to be imposed then employers must make sure that the retirement age is capable of being objectively justified, something we look at in more detail another time.

For the time being however it is simply sufficient to say that appropriate planning and discussions with staff should be at the forefront of all employers minds to ensure that they are not “left in the lurch” when employees do decide to retire.

Can we really let employees bite??

If your employee bit someone whilst they were representing you, what would you do? Most employers would probably see it as an act of gross misconduct, suspend the employee, investigate the allegations, hold the disciplinary and then dismiss the employee for gross misconduct.

Luis Suarez has received a 10 match ban from the FA which he will not be appealing but the reality isn’t necessarily whether the ban itself is right, some may say that it is too harsh in light of other bans given but the big question is what are his employers going to do about it.

Luis Suarez is an employee of Liverpool Football Club. An employer of any size or stature would be ill advised not to have an adequately worded disciplinary policy and procedure in place which clearly sets out not only what procedure would be followed but also what constitutes misconduct, the level of misconduct and what sanction could be expected for each level of misconduct. For example turning up late on a couple of occasions is likely to warrant a verbal warning whereas causing physical harm to another, especially if you are in an employer’s uniform, would constitute gross misconduct and warrant a dismissal.

As a basic guide, employers should investigate allegations made, including holding an investigatory meeting, decide if disciplinary action is required and if so invite the employee to a disciplinary meeting, making sure that all of the evidence is supplied to them prior to the meeting. Allow the employee to put their case forward at the disciplinary and then decide if a sanction should be imposed. Once the sanction is imposed the employee should then have the opportunity to appeal it.

Employers have to make sure that the disciplinary policy is applied consistently and fairly across the entire organization and simply allowing one employee off could lead to numerous problems if faced with similar situations further down the line.

It would be interesting to see how Liverpool Football Club would deal with a biting shop assistant after seeing that Luis Suarez has not been dismissed for gross misconduct.

Changes to sickness

The 2011 “Health at Work; an independent review of sickness absence” report made a number of recommendations about how to minimize loss of work due to ill health.

The report included the following recommendations;

• Establish a new independent assessment service which would provide expert advice on whether an employee could return to work and if so how they could be supported by an employer after they had been absent for 4 weeks.

• Revise “Fit Notes” so that an individual’s capacity to return not only to their own job but to work more generally could be considered.

On the 17th January 2013 the Government published its response and largely accepted the report’s recommendations.

As of 2014 a Health and Work Assessment and Advisory Service will be introduced which will provide;

(a) A state funded assessment by occupational health professionals for employees who are off sick for 4 weeks or more;

(b) Employers and employees with advice on overcoming the barriers that prevent employees from returning to work;

(c) Case management for employees with complex needs who require ongoing support to facilitate their return to work;

(d) “Sign Posting to Appropriate Interventions” including universal job match (a free online job matching service launched in November 2012) for those employed and able to return to work but unable to return to their current job.

The Government also confirmed that revised sick note guidance would be published and that statutory sick pay record keeping obligations are to be abolished although currently there is no date regarding this.

All Change

The Tribunal rules and the way in which compensation are calculated are both to be changed. The main changes are set out below.

Compensation

All employers are very aware that any claim for unfair dismissal could cost them significantly. Currently the basic award, which is calculated on the same basis as a statutory redundancy payment is capped at £13,500.

The compensatory award is an amount which the Tribunal considers to be “just and equitable” and is subject to a statutory cap of £74,200. Employers must be ever mindful that in some cases, there is no cap at all.

The Government believe that the current cap has contributed to unrealistic perceptions about the likely level of Tribunal awards and in the Enterprise and Regulatory Reform Bill it has been proposed that the overall cap will continue to apply as well as a new individual cap. This will mean that where an employee’s earnings and award are less than the £74,200, they will be capped at only being able to be compensated for a maximum of 12 months pay.

This change is expected to be brought into force in the summer at around the same time as the proposed changes to the Tribunal rules.

Tribunal Rules

As of 6th April 2012 new employees do not acquire the right to claim unfair dismissal or redundancy for 2 years from joining unless their dismissal is automatically unfair. In addition the Employment Tribunal rules themselves are due to be changed in the summer to try to make them more understandable by unrepresented parties.

The most significant of the proposed changes are that the Tribunal will become fee paying. Anyone wishing to make a claim in the Tribunal will need to pay an issue fee as in the County Courts. The level of fees is going to depend upon the nature of the claim and it is anticipate that the fee, payable by the Claimant, will be between £160 - £250 In addition there will also then be a hearing fee of between £230 - £950.

Employers will also be hit financially where claims are made and are successful, they will be subjected to a penalty imposed by the Tribunal which will be payable to the exchequer and will be in addition to any awards made to the Claimant.

The penalties will have a minimum threshold of £100 and a maximum ceiling of £5,000 although a 50% reduction will apply if that penalty is paid within 21 days. The Tribunal will continue to have discretion as to whether they are in a position to waive the penalty where there are cases of inadvertent error.

There will also be additional costs for employers to consider. Employers will need to make payment of £160 if they wish to issue a counter claim, £600 if they require judicial mediation, £160 if they want to set aside default Judgment and a further £60 if they wish to dismiss a claim following settlement.

Employers will need to bear the new charges in mind particularly when looking at any negotiated settlement and also when considering the likely risk at a Tribunal. Tribunals themselves are likely to make heavy use of their discretionary power to order the losing party to reimburse any fees paid so although the rules are going to be simplified, you should never under value the benefit of good legal representation.

Too much for ACAS?

Two specific proposed changes will mean a great deal of extra involvement for ACAS but will an overstretched organisation be able to cope and will the plans really mean a better process? We have set out the key principles of these proposals below.

Pre-termination Negotiation

Last year the Government mooted a proposal for what was going to be called “Compensated no – fault dismissals”, aimed at encouraging early settlement. The concept was binned but the Enterprise and Regulatory Reform Bill (the Bill) contains details of the idea where Tribunals will not be able to consider one “Pre-termination negotiation” when considering the fairness of a dismissal.

This means that employers could sit down with an employee who they are looking to dismiss, raise a performance or capability issue and include within that discussion a proposal to end their employment on negotiated terms. This conversation would then be protected and would not be able to be used as evidence that a subsequent dismissal was predetermined, regardless of procedural obligations in any later unfair dismissal proceedings.

The reality of this proposal is that employers who are looking to resolve a difficult situation are likely to be able to have a bit more of a frank discussion with their employee however, employers must still tread with some caution particularly as the way that the Bill is currently drafted would mean that the details of the proposal to end employment and the terms negotiated are only inadmissible in ordinary unfair dismissal proceedings. The fact and content of the offer or discussion may be referred to in relation to other claims such as automatic unfair dismissal, breach of contract or discrimination.

Employers must also be aware that they must not place “undue pressure” on the employee and that they will not receive any protection where it is considered that the employer’s behavior has been “improper”. The difficulty with the way in which it is currently worded is that there is no definitive explanation of what improper behaviour would be although it is going to be defined in a further ACAS publication although further consultation is currently still underway in this regard. Employers should be aware however that the expected change is due to come in to force in the summer.

Greater ACAS involvement pre issue?

The Government intends to introduce a requirement for most types of potential Tribunal claims to be lodged initially with ACAS who will then offer the parties an opportunity to engage in early conciliation with a view to relieving some of the claims going to the Employment Tribunal.

There will be no obligation to actually accept the offer of early conciliation and the requirement is merely to contact ACAS rather than to actually partake in pre-claim conciliation.

In January 2013 the Government issued its consultation on how the process would operate in practice and it closed on the 15th February. Under the proposed two stage process, the way that it would work is that there would be an early conciliation support officer who would make “reasonable efforts” to contact a Claimant, obtain basic information and outline the conciliation process. ACAS would then issue a certificate confirming the Claimant complied with their duty to contact ACAS even if they did not wish to participate in conciliation. The claim would then be able to be presented to the Tribunal.

If the proposed Claimant did wish to participate in early conciliation then the matter would be passed to a conciliator who would contact both the parties. If it was the employer who did not wish to participate then the compliance certificate would immediately be issued and a claim lodged at Tribunal.

If the employer did agree to conciliation then there would be a period of up to 1 month to facilitate a settlement. It is not clear what would happen in the event that a Claimant lodged tribunal proceedings immediately perhaps due to the approaching expiry of a time limit.

Despite ACAS being asked to write definitions and become more active, there will be no additional funding. As anyone with previous experience of ACAS knows, they are already overstretched and so it is impossible to see how they will deal with further increases in workload.

No need to share quite so early but beware of redundancy change

The Department for Business Innovation and Skills had originally announced a number of employment law changes which were due to come into force in April. With just a few weeks left however they have announced that some dates will now be set back.

We blogged last week about the new employment status of Employee Shareholder which had been due to start in April 2013. This is no longer going to happen and instead has been pushed back to the autumn, most likely October.

To proposed new time table is:

Spring 2013

Change to collective redundancy

Consolidation of National Minimum Wage Regulations

Summer 2013

Settlement Agreements to be made easier

12 months' pay cap on unfair dismissal compensatory awards

Revised Employment Tribunal Rules
New Tribunal fees
Whistleblowing improvements
Portable DBS (previously CRB) checks

Autumn 2013
New employee shareholder employment status
TUPE regulation reforms

Changes to Redundancy from April

From the 6th April 2013 if employers are making a number of redundancies they should be aware of the new consultation periods.

If it is envisaged that 100 or more employees are going to be made redundant within a 19 day period a minimum period of consultation of 45 days (as opposed to 90 days) will be required. The existing 30 day minimum period where at least 20 but fewer than 100 employees will be made redundant will remain.

Employers must note however that the current 90 day maximum award for a “protected award” where the employer fails to comply with its duty to consult will not be reduced.

A non statutory code of practice will also be issued which is likely to establish guidance on the meaning of the word “Establishment” which has caused a great deal of claims in the Employment Tribunal.

With an ever increasing number of large high street names making large redundancies or closing, employers should keep an eye out for the outcome of the Employment Appeal Tribunals guidance in relation to the collapse of Woolworths and whether an individual store amounted to a separate establishment.

Redundancies appear to be an ongoing issue. Very often employers are aware that redundancies can be an expensive but necessary option to avoid closure. Employers must make sure that they get it right or additional costs and the possible loss of a business is inevitable.

Will you share with your employees?

From April all employers will have the opportunity to share their profits with their employees via the Employee Shareholders Scheme. The intention of the scheme is to encourage small and medium sized to take on staff. Under the scheme employee shareholders will become a new employment status and will mean that in exchange for shares in the company, employees will give up certain legal rights.

Employees will give up the right to make a claim for unfair dismissal, statutory redundancy pay, the right to request flexible working and also the statutory request in relation to study or training. In addition they will need to give 16 weeks notice to return early from additional maternity leave where at the moment it was currently at 8 weeks.

Employees must be given at least £2,000 in shares and the benefits to the employee are that the shares will be exempt from capital gains tax up to a maximum threshold of £50,000.

For employers, it may be an attractive option as two of the most significant employment rights, namely the right to claim unfair dismissal and statutory redundancy payments are being signed away. Automatic unfair dismissals such as being dismissed on the grounds of discrimination or whistle blowing will remain protected.

The big question however is how many employers are prepared to share their profits with their employees and how many employees will actually be advised to give up their employment rights. It is unlikely that the Employee Shareholders Scheme will be attractive to many small employers. Employees who think that they may have a say in the running of the company should be cautious of employers creating shares without a vote. Overall it looks as though this is going to be an unattractive proposition to employers and employees alike.

A Year in employment

It’s been a while since our blogs have been done, in no small part due to maternity leave, so here is a brief summary of the main things that have come up over the last year.

January 2012

Up to £67 million awarded to ex Woolworths staff where administrators failed to comply with their duty to collectively consult. The Tribunal did however treat each Woolworths shop as a separate “establishment” meaning that employees in smaller shops missed out on compensation. Employers should be aware that consultation duties are due to change in 2013. Watch this space for our blog on this issue.

February 2012

Compensation limits rose to a maximum of £12,900 for a basic award and £72,300 for a compensatory award.

Think £85,200 is a lot to lose? The limits went up again in February 2013 and are now £13,500 for the basic award and £74,200 for the compensatory award.

If employers can’t afford to pay out £87k+ in damages they need to make sure that their policies and procedures are accurate and followed appropriately.

April 2012

Anyone employed from 6th April will now have to be employed for 2 years before they are able to bring a claim for ordinary unfair dismissal. Anyone employed before 6th April 2012 will continue to only require 1 year’s service.

Claims where the dismissal is on the grounds of discrimination will continue to have no minimum service required.

May 2012

The Enterprise and Regulatory Reform Bill received its first reading in the House of Commons on 23rd May. The Bill proposed a number of procedural reforms, changes to compensation.

There have been a number of developments in relation to this so watch this space for more updates and blogs specifically relating to the Bill.

June 2012

The Equality and Human Rights Commission (EHRC) published its report “A Perfect Partnership” which reported that disabled people were still put at a disadvantage in the workplace and that employers were confused by what disability means, who is disabled and what support disabled workers might need.

Recommendations within the report were that employers should try to anticipate what adjustments and support may be needed from the outset of employment by manager led discussions and issuing a questionnaire for new starters. I

t also recommended that flexible working should be offered as an option for disabled workers and applicants.

Any employer choosing to use a questionnaire should ensure that the questionnaire does not discriminate against the disabled employee or they may face a substantial claim in the Tribunal.

July 2012

Royal Mail worker Abdul Musa, who was supported by the EHRC, was awarded an undisclosed amount of compensation after successfully showing that he had been dismissed for blowing the whistle on racist behavior.

Employers must ensure that they investigate any complaints made by employees in a timely fashion and must ensure that their Equality policies are up to date and adhered to. The costs of not could be significant.

October 2012

Employers must automatically enroll certain workers into a pension scheme and must pay a minimum level of contributions.