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Enterprise and Regulatory Reform Bill 
 
Following on from our update on this Bill's progression through Parliament last month, the Bill reached Royal Assent on 25th April 2013 and has now been entered onto the statute books. The provisions contained within the Act will now be implemented from June 2013, October 2013 and April 2014 and a brief summary of those key provisions is outlined below: - 
 
Early Conciliation – employees wishing to bring a claim against their (former) employers in an Employment Tribunal will have to contact ACAS first, who will attempt to promote a settlement between the two parties. This is likely to be brought into effect from April 2014. 
 
‘Whistleblowing’ – with effect from June 2013; disclosures will have to be ‘in the public interest’ in order to be protected under legislation. In addition, employers can be liable if an employee is bullied or harassed by their colleagues as a result of making a disclosure, unless the employer can show that they have made all reasonable efforts to prevent this from happening. 
 
Compensation Awards – the Secretary of State will be empowered to vary the unfair dismissal compensation limit, which currently stands at £74,200. It has already been announced by the Government that from this summer, it will limit the compensation payment to 52 weeks pay or £74,200, whichever is the lowest amount... 
 
Pre-termination Negotiations – from this summer, any evidence of offers made and negotiations conducted during employment with a view to an agreed termination will be inadmissible in unfair dismissal cases. 
 
Political Opinion/Beliefs – employees who are dismissed as a consequence of their political opinion/belief will be able to make a claim for unfair dismissal, without having the required qualifying service (two years for those employed on or after 6th April 2012 and one year for those employed before that date). This change will be implemented with effect from 25th June 2013. 
 
Equality Law – as previously reported, ‘third-party harassment’ contained within the Equality Act 2010 will be repealed, as will the questionnaire procedure provisions also contained within that act. In addition, ‘Caste’ will be added to the definition of ‘Race’ within the Act and the Government will also have the power to make regulations that would require employers to conduct a ‘pay audit’ if they lose an ‘equal pay’ claim or a sex discrimination claim which is related to pay. As yet, the implementation date for these elements is unconfirmed. 
 
Tribunal Procedures and Penalties – another area which we have been monitoring closes is the changes that the Enterprise and Regulatory Reform Act 2013 will have on Employment Tribunals. As well as the imposition of a charging structure, other changes to be implemented will include; Legal Officers hearing low value and straightforward claims, EAT Judges hearing cases alone and changes to deposit orders and costs. These will be implemented from this summer and a further change to be implemented from spring 2014, will see Tribunals being able to impose a financial penalty on employers who have breached an employee’s employment rights. 
 
Health and Safety – the Health and Safety at Work Act 1974 will be amended, removing the existing right of an employee to rely on a breach of health and safety legislation, in order to obtain compensation. The current law provides that where statutory health and safety regulations are not complied with leading to injury or damage, a claimant can seek compensation on the basis of the employer’s breach of those regulations (strict liability). The changes mean that it will only be possible to claim compensation for accidents which would currently constitute a breach of health and safety regulations where it can be proved by the claimant that the employer has been negligent at common law. 
 
Owner-Employee Contracts (Again!)  
 
In recent weeks, we have reported that Employee-Shareholder contracts will be implemented; won’t be implemented... This month, the ‘will-they/won’t they’ dilemma has been resolved and we have learnt that they will be implemented with effect from September 2013. Last month, the concept of these contracts was thrown out by the House of Lords, who called the proposal ‘ill thought through, confused and muddled’; however after some somewhat hastily drafted amendments to the relevant clause were drafted, the Growth and Infrastructure Bill, of which this is part, received Royal Assent and was entered onto the statute books on 25th April 2013. 
 
The amendments to Clause 27 of the Act now require that: - 
a 7-day cooling off period before an offer of an employee shareholder contract can be accepted 
a written statement setting out the rights to be given up and a written statement setting out the type of shares and rights associated with them 
the individual concerned will receive independent legal advice, the costs of which must be met by the offering employer 
 
These are in addition to earlier concessions implemented after the House of Lords first rejected the Bill which stated that; no-one would automatically lose employment benefits for failing to accept an employee shareholder job-offer and the granting of income tax relief on the vesting of the first £2,000 of shares. Despite now being implemented, it looks as though the clause will continue to receive a frosty reception; with a number of Solicitors stating that they will be happy to offer independent advice and that advice will be ‘don’t do it’!!! 
 
'Monster' - No Internships Advertised Here... 
 
It has been announced by ‘Monster’, the online recruitment firm that they will not support the advertisement of unpaid internships on its website. It is the first recruitment site to take such action and has stated that this type of work ‘exploits young job-seekers’. This follows the referral of 100 Companies, including Wigan and Reading Football Clubs, to the HMRC for investigation into whether their use of unpaid interns is in fact in breach of the law. 
 
Employers are able to offer unpaid ‘work experience’ to those seeking work, but where the ‘internship’ in fact amounts to an actual ‘job’ i.e. where the hours and duties are fixed and the role is on-going for a considerable period of time; they will be in breach of legislation if they do not at least pay a rate which is equivalent to the National Minimum Wage. The National Minimum Wage currently stands at £6.19 per hour for those aged 21 and over, £4.98 for those aged 18 – 20, £3.68 for those aged under 18 and £2.65 for Apprentices aged under 19 or in the first year of their apprenticeship; these figures will increase on 1st October 2013. 
 
The move by Monster has been universally greeted by those campaigning for the fair treatment of those undertaking internships and it is hoped that more recruitment sites will follow their example. Meanwhile, the HMRC have indicated that they will ‘name and shame’ the Companies under investigation if they are found to be in breach of the legislation with their intern schemes. 
 
Consultation on Apprenticeships 
 
A consultation into the future of Apprenticeships is ongoing and will conclude by the end of May 2013; the basis for this consultation is the Government’s intention for employers to put ‘recognised and meaningful industry standards at the heart of every apprenticeship programme’. The principles behind this statement include: - 
 
Apprenticeships should be focussed on outcomes and it should be clear what apprentices will know and be capable of once they have completed their programme of study/training. 
They should be targeted at a skilled job which will involve substantial new learning that will provide a solid foundation for career progression 
From August 2014, unless already achieved; all apprentices will be required to work towards a level 2 qualification in English and Maths. 
 
At the conclusion of the consultation, the Government’s response will outline its future approach to Apprenticeships and it is expected that it will look to implement the new approach to teaching apprenticeships from 2014/15 onwards. 
Mental Health Discrimination Act 
 
The Mental Health (Discrimination) Act 2013 received Royal Assent at the end of February and will take effect on the statute books from the beginning of May 2013. The Act seeks to remove the stigma and negative association which is attached to those who have mental health conditions. Specifically, the Act repeals earlier legislation which prevents people who have known mental health conditions acting in the capacity of; a Member of Parliament, a member of the devolved legislature, jurors or Company Directors. With the latter, where a Director’s service agreement refers to ‘dismissal due to being of unsound mind’, this will need to be removed. 
 
Cases of Interest 1 ~ Redundancy 
 
In this first case, both the Employment Tribunal and the Employment Appeal Tribunal held that a redundancy situation had occurred, despite the fact that the employee’s replacement had already been recruited. This case is Malekout v. Ahmed (t/a the Medical Centre); in summary, M had indicated to his employers that he was thinking of resigning and in response to this, Mr Kader was recruited as a ‘trouble-shooter’ to work alongside M and to replace him if he did in fact leave the Practice. M accepted that it was appropriate and would be beneficial to the Practice for Mr Kader to be in post at that time and consequently, a situation existed whereby two people were effectively fulfilling the one role of ‘Practice Manager’. 
 
As a trouble-shooter, Mr Kaders’ impact on the Practice was immediate and he identified a number of failings in management practice, where it was clear that M was not doing specific tasks. This resulted in an appraisal being conducted with M, the first one since his appointment into the role 13-years earlier and this highlighted that trust and communication had broken down between M and his employers and also raised serious concerns in M’s ability within the role. M then went on sick leave and during this time, the Practice conducted a restructuring exercise, dismissing M two weeks later on grounds of redundancy. 
 
M then brought a number of claims against his former employer, one of which was unfair dismissal by reason of redundancy. The Tribunal found that the decision to retain Mr Kader and dismiss M had in fact created a redundancy situation and that this had been the sole reason for M’s dismissal. The Tribunal held that the dismissal had been unfair, largely due to the lack of any consultation, but reduced the compensation awarded to M by 100%, to reflect the inevitability that he would have been dismissed in any event. 
 
M appealed this decision, but it was thrown out after a preliminary hearing; the EAT concluding that the Practice had employed Mr Kader because of the fear that M would resign and leave them without a Manager, it was therefore inevitable that with two people effectively doing one job, there would be a need to reduce the number of employees to one and consequently, there had been a diminution in the requirement for employees to carry out work of a particular kind within the meaning of the statutory definition of redundancy. The decision to reduce the compensation was also upheld by the EAT. 
 
Why this case is interesting is that the employer chose to make the dismissal on grounds of redundancy, when in fact it could have opted for any of the other fair reasons for dismissal i.e. capability (for reasons of poor performance and/or a better qualified replacement) or some other substantial reason (the restructure). The decision to categorise the dismissal as redundancy was accepted by both the Employment Tribunal and the Employment Appeal Tribunal and the employer was not required to justify their rationale for taking this approach, it was sufficient that a diminished requirement had arisen and this was a genuine reason for dismissal. 
 
The case is also fairly unique in that the Tribunal ordered a 100% Polkey reduction; forming the opinion that even if the process undertaken by the employer in reaching the decision to dismiss the employee had not been flawed, it would not have made any difference to the outcome i.e. even if the employer had gone through a fair process, taking a longer period of time to make their decision and to consult with the employee, it was inevitable that the employee would ultimately have been dismissed. 
 
However, although the approach taken by the employer in temporarily increasing the workforce to justify the redundancy of a problematic employee shortly afterwards has been successful in this particular case and given its unusual facts; employers are warned that Tribunals will be hard on them if they believe that the employer has developed a particular ‘HR strategy’ without good faith.  
(Darren Isaacs, Partner at GQ Employment Law LLP) 
 
Cases of Interest 2 ~ Obesity in the Workplace 
 
Obesity in the UK is a commonplace issue in the media and news reports and figures suggest that 60.8% of adults and 31.1% of children are overweight and almost 25% of adults (22% female and 24% male) have a ‘body mass index’ in excess of 30, which means they are obese. There is no doubt that these facts have an overwhelming impact on our day-to-day lives and will undoubtedly, over time will become more of an issue in the workplace and for employers. 
 
Obesity itself is not a ‘disability’ and is therefore not protected by the Disability Discrimination provisions of the Equality Act 2010. However, a recent Employment Appeal Tribunal has ruled that associated medical conditions connected to obesity may mean that the individual is disabled. This particular case is Walker v Sita Information Networking Computing Ltd and when the initial Employment Tribunal ruled that Mr Walker was not disabled in accordance with the definition of the Act, Mr Walker appealed against that ruling. 
 
Mr Walker suffered from a ‘functional overlay’ of medical conditions, which included, but were not restricted to asthma, dyslexia, knee-joint problems, diabetes, high blood pressure and chronic fatigue syndrome and all of which were compounded by his obesity, weighing 21.5 stones. The Occupational Health specialist engaged by the Employer concluded that Mr Walker had a wide range of symptoms in which a significant contributor was functional and/or behavioural; but there was no evidence of any pathological process to explain the range of symptoms of any significant structural changes of a physical nature which would lead to significant impairment or disability. ‘Functional overlay’ is defined as ‘an emotional aspect of an organic disease. It may occur as an overreaction to an illness and is characterised by symptoms that continue long after clinical signs of the disease have ended’. It is not, however, a medical condition. 
 
Consequently, the initial Tribunal found that as there was no clear medically defined cause of Mr Walkers’ condition, that he was not disabled. The appeal was allowed by the EAT, who substituted a finding that Mr Walker was in fact, disabled. In applying its findings, the EAT accepted that where the definition of disability refers to a ‘physical or mental’ impairment, the purpose is not to confine it to conditions that can be given a medically-recognised label, one or the other, but to describe the nature of the impairment. In Mr Walker’s case, whether the ‘physical’ or ‘mental’ labels were considered, plainly both were satisfied. 
 
The EAT found that the tribunal had incorrectly held that a physical or mental impairment could only be established if it were possible to say that the impairment was caused by something physical or mental. The cause of such impairment was not the issue and the fact that someone’s impairment may lack an apparent cause was really a matter of evidence rather than a legal issue. If there is no evident cause of a supposed impairment, then a tribunal may conclude that the person does not suffer from it. However, in this case, there was no challenge to the evidence that Mr Walker was suffering from the impairments of which he complained. 
 
In concluding their findings, the EAT Judge stated that the fact that some is obese does not of itself, make someone disabled within the legal definition, but ‘it may make it more likely that someone is disabled’. This summary is key because it seeks to prevent the introduction of the concept of ‘weight discrimination’ through the back door and in fact, reiterates the current position whereby, for example, an alcoholic could be protected from discrimination, not because they are an alcoholic, which is an excluded condition within the Act, but because of perhaps their associated liver disease which has a substantial and long-term adverse effect on their ability to carry out normal day-to-day activities; which is the absolute crux of the legal definition of disability. 
 
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