From 1 February 2010, the maximum compensatory award for unfair dismissal fell to 65,300. A week s pay remains capped at 380.

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1 February 2010 News A reminder From 1 February 2010, the maximum compensatory award for unfair dismissal fell to 65,300. A week s pay remains capped at 380. Right to request time off to train From 6 April 2010, employees of a business with 250 or more employees will have the right to apply to their employer for time off to train. The regulations that encompass this right were laid before parliament last week. The right broadly mirrors the right to request flexible working, and employers can reject a request on similar grounds, or if they consider the training will not improve the employee s effectiveness at work or the performance of the business. Agency Worker Regulations The final Agency Workers Regulations have now been published. The Regulations are not due to come in to force until October 2011, deliberately allowing time for agencies and those who use agency workers to adjust to the significant changes that the Regulations will involve. Foot Anstey will be running a series of workshops explaining the implications of the Regulations in the spring. Fit notes The Government has published its response to the consultation on the new statement of fitness to work to be used by GPs from 6 April A summary of the amendments that were made in response to the consultation are: A fit note will allow a GP to either provide that an employee is not fit for work or may be fit for work. There is no longer an option that they can certify an employee is fit for work. The Government considers that it is the employer s responsibility still to carry out a risk assessment when the employee returns to work.

2 The fit note will list various adjustments an employer can make to assist a return to work. These include: o a phased return to work; o amended duties; o altered hours; and o workplace adaptations. There is no longer an option for GPs to propose the referral to occupational health. This does not however mean that employers cannot exercise their discretion or any contractual right to refer to occupational health, and in many circumstances, this will remain a prudent course of action. The wording of the option may be fit for some work has been changed to you may be fit for work taking account of the following advice. This is to encourage employers to have discussions with their employees about the changes that can be made to assist their return to work. Although the time is tight, the Government intends to publish further specific advice for individuals, employers and GPs shortly. Additional paternity leave and pay The final draft regulations have now been laid before Parliament in relation to additional paternity leave and pay. The Regulations will come in to force on 6 April 2010, and will apply to parents of babies with an EWC on or after 3 April 2011 or to adoptive parents who are notified of having been matched with a child on or after that date. The right will provide fathers or co-adopters with the opportunity to up to six months leave to care for the child, if the child s mother (or primary adopter) returns to work without exercising their full entitlement to maternity or adoption leave. Leave can only be taken once the mother has returned to work and the baby is over 20 weeks old (or the child has been with its adoptive parents for 20 weeks). The Regulations set out various eligibility criteria and notice periods etc. Additional statutory paternity pay is provided for under separate Regulations and broadly mirrors the eligibility and payment rates afforded under the flat rate of statutory maternity pay. It is only payable for the remainder of the mother s maternity pay period; any period outside this time will be unpaid. Additional guidance will be put in place before 3 April 2011 to ensure that employers and employees are aware of the changes. Pension Protection Fund Levy to increase for strong employers The PPF has announced it is changing the way it calculates the PPF Levy for employers with final salary pension schemes. Strong employers are likely to see significant increases in the risk based portion of the PPF Levy from 2011 onwards. Weaker employers may see their PPF Levy decrease. It is estimated that the risk based portion of the PPF Levy may increase by two thirds for stronger employers, in particular, if their pension schemes are not well funded. There are steps which you can take to reduce your PPF Levy and we can advise you on these. For more information please contact Comron Rowe on or

3 Cases Annual leave (again) The EAT has recently handed down a judgement which goes someway to redress the imbalance faced by employers over the issue of annual leave. The Court was asked to consider whether a worker s right to statutory leave was inalienable, so that the right to leave remained even where a worker had not exercised this by giving correct notice. The case arose because Mr Lyons, a security officer, sought to take his outstanding leave before the expiry of the leave year. He was required under his contract to give a month s notice, but gave only three weeks. His request was therefore rejected and he lost the right to the holiday when the leave year expired. The EAT looked at two issues: Whether a worker can choose between the more favourable of their contractual right to give notice (in this case, a month) and statutory rights (double the amount of time to the leave requested). The Working Time Regulations (WTR) provide that a worker can normally exercise whichever right is more favourable. In this case, had Mr Lyons been permitted to give notice under the WTR, he would have been able to take his annual leave. The EAT rejected this argument. It remains true that a worker can choose a more favourable position in relation to holiday entitlement, so that a contract (or other relevant agreement) could not override the provisions of the WTR in this respect. However, in relation to the exercise of that entitlement (i.e. the notice period that is required), provided the contract was a relevant agreement, Mr Lyons could not choose to override this with the more favourable statutory position. The EAT looked at whether there was an overriding (or inalienable) entitlement to annual leave meaning that a worker could not be prevented from taking annual leave by their failure to exercise the right in time. If the court had found in Mr Lyon s favour, this would have imposed an obligation on employers to ensure that employees took their annual leave during the course of the leave year, rather than lose it. The EAT held not. They considered the right was not inalienable, and that, provided the worker had the opportunity to exercise their right to take holiday during the course of the leave year, this right would be lost if not exercised by the worker. This decision is consistent with the ECJ decision in Stringer, concerning those on long-term sick leave. In that case, the court decided that workers did not lose their right to take annual leave provided they had been given the opportunity to take the leave. How far our courts will go in their interpretation of whether a person on sick leave has had the opportunity to exercise their right when they are on sick leave, remains to be seen. What is clear is that employers are not under an obligation to compel workers who are not on sick leave to take their leave provided they have been given the opportunity to do so. The introduction of annual leave under the WTR was brought as a health and safety measure, and it should be remembered that there remains an expectation that employers will facilitate and even encourage its workers to take leave. However, the EAT decision is likely to put an end to any claimant plans to bring a Stringer-type unlawful deduction of wages claim if they are at work and able to exercise their rights to annual leave. Transfer of undertakings Meaning of affected employees The EAT has confirmed that, when an employer is required to provide information to and consult with employees affected by a TUPE transfer, the definition of who is an affected employee is wide enough to

4 include any internal job applicants whose applications are pending at the time of transfer. The EAT rejected the argument that there was an obligation to consult more widely with those who might at some point in the future apply for a vacancy in the part of the business being transferred. The decision in this case considerably widens the scope of the information and consultation obligations on transferors, although fortunately not as widely as it could have. It means that, in a transfer situation, if part of the business is transferring, an employer needs to identify the internal candidates who have made job applications and to include them in the process of information and consultation. This includes potentially seeking a representative from this pool to stand for election as an appointed representative (in the absence of union recognition) if the candidates do not readily fall into an established affected pool. Taxation under TUPE transfer A recent case is a helpful reminder that taxation of employment income isn't always as straightforward as it might be. A lump sum payment made to employees on the transfer of a business was made partly as compensation for the loss of pension rights, and partly to incentivise the employees to provide future good service. The value of the payment for each reason was not differentiated or split out. The case was found in favour of HMRC, concluding the whole of the payment was earnings from employment and thus subject to income tax and NICs (including employer's NICs to be paid by the new employer). Among other things, the case demonstrated that, in TUPE transfers, although employment law says there is a deemed continuation of employment, tax law says there can be a cessation of one employment and the start of another. The losing argument was that the payment had been made in compensation for loss of pension rights as a result of cessation of employment. The court agreed that there had been a cessation of employment for tax purposes, if not for employment purposes. However, the payment was not made wholly in respect of the loss of rights as a result of the termination of employment, but at least partially, if not mainly, as a "reward or inducement to work willingly in the future". Thus it was taxable as employment income. A failure to demonstrate the separate values of a mixed payment such as this can result in the whole of the payment being subject to tax under PAYE. That applies to termination payments as well, where the famous 30,000 "tax free" element can be lost if adequate care is not taken. Right of representation The Court of Appeal has confirmed that a teaching assistant was entitled to legal representation during a disciplinary hearing for alleged sexual misconduct with a child. It agreed with the High Court that the seriousness of the allegation and its likely affect (ending the teaching assistant s career) meant that they had a right under Article 6 of the European Convention on Human Rights to be legally represented during the disciplinary hearing. The Court s comments mean that Article 6 will be engaged if the affect of the disciplinary proceedings, if proved, would deprive the person of their right to practise a profession. A similar conclusion was reached in relation to a doctor (who had the contractual right to legal representation which had subsequently been removed). Whilst profession has not been defined, the fact that it applied to a teaching assistant clearly suggests that it goes beyond jobs which are traditionally regarded as professional. Looking at this decision in the context of the comments made in the doctor s case, if the effect of the disciplinary action would render an employee unemployable, then arguably the right to legal representation kicks in.

5 The case only affects public sector employees at present. Each case should be considered on its merits; public sector employers need to assess the gravity of the allegations, to see, whether if they are upheld, it will prevent the employee from engaging in any future work within that profession and the likelihood that the employee would be unemployable elsewhere. For example, a cleaner who was dismissed for sexual misconduct in a school would be barred from working with children again but would still be able to obtain work outside that sector as a cleaner. The same would not be true of a teaching assistant, nor of a healthcare assistant or doctor within the NHS. For further information or advice on any issues outlined in this publication, please contact Susie Halliday, associate on: e: susie.halliday@footanstey.com t: w: This bulletin is provided for information purposes only. Its contents do not constitute legal advice and should not be regarded as a substitute for specific professional advice. Foot Anstey All Rights Reserved. Offices in Exeter, Plymouth, Taunton & Truro Foot Anstey is regulated by the Solicitors Regulation Authority No Click here to unsubscribe.