what's in the news

1. Annual leave

The Supreme Court has held that employers who have shutdown periods can stipulate that annual leave be taken during those periods.

What does this mean?
Employers can insist on their employees taking their paid annual leave during periods when they are not required to work. This will be relevant to off-shore workers, teachers who are required to take their annual leave during non-term time, professional footballers, Parliamentary staff, and people who work full-time during the season in the tourist industry.

What should employers do?
Employers who have shut down periods are entitled to insist on their workers taking their annual leave during those periods. However, they should handle requests for annual leave fairly and consistently.

2. Marriage discrimination

The Employment Appeal Tribunal has held that an employer acted unlawfully when it treated an employee less favourably, not just because she was married, but because she was married to a particular man.

What does this mean?
Employees have the right not to be discriminated against by reason of their status, not only of being married, but also of being married to a particular person. The same applies to those in a civil partnership.

What should employers do?
Employers should avoid discriminating against married employees and those in a civil partnership.

3. Discrimination and Harassment

The Employment Appeal Tribunal has held that a culture of tolerance of racist banter which continues after established acts of racial harassment have taken place is capable of amounting to a continuing breach of mutual trust and confidence and, therefore, giving grounds for a claim for unfair constructive dismissal even if an employee resigns some time after the original incidents.

What does this mean?
Employers have a duty to prevent harassment in the workplace and can be liable to their employees if they do not take action.

What should employers do?
Employers should take steps to prevent discrimination and harassment in the workplace.  This may be by ensuring that clear written policies relating to discrimination and harassment are in place, by providing staff with training in these areas and by promoting a culture of compliance with such policies.

4. Bulgarian and Romanian workers

Restrictions on the rights of Bulgarian and Romanian workers to work in the UK have been extended until 31 December 2013.

What does this mean?
Bulgarian and Romanian nationals have no automatic right to work in the UK despite their countries being members of the EU. Those seeking to work in the UK are in most cases required to apply, before commencing work, for an ‘accession worker authorisation document’ and to work in accordance with the conditions in that document.

What should employers do?
Employers who wish to employ Bulgarian and Romanian workers should continue to comply with requirements such as work permits and, if necessary, take legal advice before doing so.

5. Equal pay

The Court of Appeal has held that claims for equal pay can be brought either through an Employment Tribunal or through ‘the ordinary courts’ (the County and High Courts) and that when an ordinary court exercises its discretion to strike out a case the fact that an employee would be deprived of their right to pursue a claim is a relevant factor which should be taken into account and given considerable weight in most cases.

What does this mean?
Employees only have six months to present an equal pay claim in an Employment Tribunal but six years to bring a claim through the ordinary courts. In most cases an employee will still be able to bring an equal pay claim through the ordinary courts even though the time for presenting a claim in a tribunal has expired.

What should employers do?
Businesses who acquire employees under TUPE should obtain appropriate indemnities to protect themselves against liability for any potential equal pay claims arising in the six years prior to the acquisition of the employees.

6. Equal Pay
The Employment Appeal Tribunal has held that a pay differential between employees at the time of their recruitment can justify the continuing differential in subsequent years.

What does this mean?
Employers are free to pay staff who are recruited into similar roles different amounts where there is good reason for it as long as the decision is not tainted by sex. It is, therefore, permissible to pay different amounts where one of the individuals has more experience than another. Having made the decision to pay different rates there is no obligation on the employer to harmonise the levels of pay at a later date.

What should employers do?
Employers should base decisions on pay on objective grounds and be prepared to justify their decisions should the need arise.

7 . National Minimum Wage: Live-in Domestic Staff

The Employment Appeal Tribunal has held that live-in housekeepers  may be  exempt from the National Minimum Wage  if  they live in their employer’s home and are treated as a member of their employer’s family.

What does this mean?
Domestic workers do not need to be paid the National Minimum Wage if they live in their employer’s home and are treated as a member of the family. As to whether a worker is integrated into a family there is no one factor that is decisive but particular regard will be had to the provision of accommodation and meals and the sharing of tasks and leisure activities. Other matters such as the general dignity with which the domestic worker is treated could be taken into account, as could the degree of privacy and autonomy they are afforded and the extent to which, if at all, they are exploited.

What should employers do?
Employers who employ live-in domestic staff and wish to pay them less than the National Minimum Wage should genuinely treat such workers as part of the family. Domestic workers who are exploited are unlikely to be regarded as being family members and would, therefore, be entitled to be paid the National Minimum Wage.

8. TUPE

The Court of Appeal has held that a transfer on an administration cannot be caught by TUPE rules, unlike on insolvency proceedings. As such administrations will not be “insolvency proceedings” for the purposes of the exemption to TUPE.

What does this mean?
Businesses who purchase companies who have been placed into administration will take on the liability under TUPE for the company’s employees. Employees will transfer under TUPE and  will be protected from transfer- connected dismissals.

What should employers do?
Businesses who are considering purchasing a company in administration should be aware of their potential liabilities in relation to staff and take specific legal advice where necessary.

9. TUPE
The Employment Appeal Tribunal has held that for there to be a service provision change under TUPE, the activities carried out by different providers before and after the transfer must be for the same client.

What does this mean?
There will be no service provision change where there is not only a change in contractors, but also a change of client.

What should employers do?
Businesses  who are considering selling should be aware that a change of client may mean TUPE rules do not apply and take specific legal advice as to their liabilities where necessary.

10. TUPE
The Employment Appeal Tribunal has held that there can be no service provision change under TUPE where the activities carried out by the subsequent contractor for the client are not fundamentally the same as those carried out by the first contractor.

What does this mean?
There will only be a service provision change where the activities carried out by an organised grouping of employees remain fundamentally the same. In Enterprise Management Services Ltd v Connect-Up Ltd and the Claimants, a company entered into a framework agreement with the Council which gave them preferred bidder status amongst certain schools. The result was that the Company ended up providing services to the local schools in the area. The contract came to an end and another company was awarded the contract. The crucial difference being that this contact excluded service cover in relation to a matter which had accounted for 15% of the work carried out by the original company. This company also lost 40% of the schools which the original company had provided services to. The EAT held that there were significant differences between the activities and so there was no transfer under TUPE.

What should employers do?
Businesses should be aware that TUPE may not apply where any service provided after transfer is fundamentally different from the one provided before transfer. If in doubt, specific legal advice should be sought.

11. TUPE

The Court of Appeal has held that a particular transfer does not need to be in contemplation at the time that a dismissal is effected in order for the dismissal to be caught by  TUPE.

What does this mean?
Dismissal of staff by an administrator in order to achieve a sale of a company at a future date is sufficient for TUPE to apply and such dismissals will be automatically unfair as they will be for a reason connected with the transfer.

What should employers do?
Businesses who are considering purchasing another business from an administrator should take specific legal advice as to their liabilities under TUPE and consider what indemnities to seek.

12. Employment Tribunal Awards Increase

From 1 February 2012 the limits for employment tribunal awards will increase. The maximum compensatory award for unfair dismissal will rise to £72,300. The maximum basic award for unfair dismissal will increase to £12,900 and the maximum week’s pay for basic award and redundancy pay purposes will rise to £430.

For further information on this article, please contact Pitmans Employment team.

Mark Symons
Partner, Head of Employment
T: +44 (0)118 957 0340
E: msymons@pitmans.com

1. Dismissing an employee for negligence

The Employment Appeal Tribunal has held that in cases of gross negligence dismissal will only be appropriate if the employer has carried out a reasonable investigation into the alleged negligence; if it was reasonable on the basis of that investigation for the employer to believe that the employee had been negligent; if the employer did in fact believe that the employee was negligent; and if dismissal was a reasonable sanction.

What does this mean?
A dismissal on grounds of negligence will be unfair if the employer fails to carry out a proper investigation into the allegations and fails to treat the employee fairly and reasonably.

What should employers do?
Always take specific legal advice before dismissing an employee or taking action short of dismissal, whether for negligence or for some other reason.

2. Payment in lieu of holiday leave

The Employment Appeal Tribunal has held that an employee is only entitled to holiday pay under regulation 16(1) of the Working Time Regulations if he or she has actually taken the leave in respect of which they seek to be paid, and has given notice of their intention to take leave in accordance with regulation 15.

What does this mean?
Employees accrue statutory holiday leave entitlement during periods of sickness absence. However, they will only be entitled to payment in lieu of holiday leave if they have given notice of their intention to take leave.

What should employers do?
Employers are, as a general rule, under no duty to advise their employees of their legal rights. Employers are, therefore, not required to advise their employees that if they don’t request time off they will lose any entitlement they may have to receive payment in lieu.

3. The Pensions Act 2011

The Pensions Act 2011 was passed on 3 November. The Act accelerates the timetables, set out in previous legislation, for increasing the state pension age to 66 and for equalising the state pension ages of men and women. The Act also contains a number of measures which amend the automatic enrolment provisions for workplace pension schemes.

What does this mean?
From April 2016 the state pension age for women will rise, equalising with the state pension age for men of 65 by November 2018. Between December 2018 and October 2020 state pension ages for both men and women will be increased from 65 to 66. In addition to these changes, the Chancellor announced on 29 November 2011 that the increase of the state pension age to 67 has been brought forward and is now set to take place between April 2026 and April 2028 instead of between 2034 and 2036.

Subject to employer staging dates, employees aged 22 years or older who have not reached pensionable age will need to be automatically enrolled into a workplace pension from 1 October 2012 if they earn £7,475 or more. However, there is an optional waiting period of up to 3 months before the duty to automatically enrol an employee commences.

What should employers do?
Employers should check their staging date. (Employers with fewer than 50 persons in their largest PAYE scheme will not be staged in until after the end of this Parliament.) More information on staging dates can be found here.

In the meantime, employers should start thinking about updating their employment documentation such as contracts of employment so as to allow for employee and employer pension contributions.

4. Disciplinary proceedings

The Employment Appeal Tribunal has reminded employers, in giving judgment in a recent case, of the need to act reasonably both when initiating and conducting disciplinary proceedings.

What does this mean?
Employers who make allegations against their employees without there being an adequate basis for making such allegations and who do not act reasonably when conducting disciplinary proceedings may be liable for unfair dismissal.

What should employers do?
Employers should always take specific legal advice before dismissing an employee or taking action short of dismissal.

5. Whistle-blowing

The Employment Appeal Tribunal has held that dismissal is fair where misconduct was the reason for dismissal and the dismissal was not connected with the making of a protected disclosure by the employee.

What does this mean?
Where a dismissal is connected with the making of a protected disclosure by the employee the dismissal will be automatically unfair. However, employees who make protected disclosures are not entitled to blanket protection and can still be dismissed for misconduct or other fair reasons.

What should employers do?
Employers should objectively assess the circumstances and consider whether they have grounds for a fair dismissal. Always take specific legal advice before dismissing an employee or taking action short of dismissal.

6. Vicarious liability

The High Court has held that there need not be an employment relationship for vicarious liability to exist.

What does this mean?
A party can now be vicariously liable for the wrongdoings of another, even if they are not employer and employee, as long as there is a close relationship between the two of them. Where the question of vicarious liability is an issue it will be necessary to look at all the surrounding facts and circumstances when considering the nature of the relationship. In particular, it will be necessary to consider the nature and purpose of the relationship, whether tools, equipment, uniform or premises are provided to assist the performance of the role, the extent to which the one party has been authorised or empowered to act on behalf of the other, and the extent to which the wrongdoer may reasonably be perceived as acting on behalf of the authoriser. The extent to which there is control, supervision, advice and support will be of relevance but not determinative.

What should employers do?
Employers should bear in mind that in theory they could now be vicariously liable for the actions of third parties such as independent contractors if the relationship is a particularly close one. Employers who are concerned that such liability may exist should take legal advice and, where appropriate, ensure that they have adequate insurance and indemnities in place to cover such liability.

7. Equal pay

Comparators who work at different places but are employed on common terms and conditions are able to bring equal pay claims before the Employment Tribunal. The employment judge’s decision that employees and their comparators who were employed on common terms and conditions could bring a claim for equal pay was upheld by the Inner House of the Court of Session. The employees in question were people who worked in schools, hotels, libraries and their comparators were gardeners, gravediggers and road workers.

What does this mean?
If a claimant can show that a comparator could move to the claimant’s place of work and continue to work on existing terms and conditions, common terms and conditions would apply and so could give rise to an equal pay claim.

What should employers do?
Employers should be careful when employing people at different establishments to ensure they are not comparators, or if they are, that they are paid equally. Legal advice should be taken when looking at this in relation to equal pay.

8. Trade union activities

Trade Union officials are entitled to special protection (automatic unfair dismissal rights) when conducting trade union activities. The Employment Appeal Tribunal has held that opinions expressed by a trade union official, at a meeting during a redundancy consultation process and, which were made on behalf of other workers as well as himself amounted to trade union activities.

What does this mean?
The employee was found to be dismissed for an automatically unfair reason as the reason for his dismissal was due to his trade union activities.

What should employers do?
Employers should treat disciplinary cases involving trade union officials with caution and always take specific legal advice before making a dismissal.

9. Employment Status

The Upper Tribunal dismissed an appeal from Weight Watchers (UK) Limited (the “Company”) regarding the status of their Weight Watchers leaders. The Company believed them to be self employed and not an employee for tax purposes. The Upper Tribunal disagreed and found they were employees. The Upper Tribunal looked at the degree of control the Company exercised over the leaders and the reality of the situation, not just the documentation in place.

What does this mean?
People who Weightwatchers thought were self employed are actually employees and thus they now face a huge tax bill. The Employment Tribunal has given a clear warning that they will ignore any documentation if they do not accurately reflect the true position.

What should employers do?
Employers should ensure they regularly review their documentation to ensure they reflect what is actually happening in practice. Employers would also be well advised to ensure they have provisions in place that ensure they can recover tax and national insurance contributions from their employees.

For further information on this article, please contact Pitmans Employment team.

Mark Symons
Partner, Head of Employment
T: +44 (0)118 957 0340
E: msymons@pitmans.com

As part of its continuing efforts to stimulate the UK’s ailing economy and halt the trend towards increasing levels of unemployment, the Government has turned its attention to making wide-sweeping changes to the regulation of employment relations.

The aim is to make UK labour law more business-friendly by easing employers’ fears about the consequences which might arise should the employment relationship turn sour. It has been argued that increased flexibility and confidence will encourage employers to employ more people and thus boost the economy.

The latest part of this process saw the Business Secretary, Vince Cable, announcing plans which will, if implemented, “radically reform employment relations”.

The proposed reforms are as follows:

Reform
Introducing a fee tier system when filing a claim at the Employment Tribunal. The system will either be one of the following:

• A fee paid when a claim is lodged and then a further fee prior to any subsequent hearing; or
• A fee paid when a claimant is seeking more than £30,000.

We say
- It is unusual to impose fees which restrict access to the courts or Tribunals for that purpose rather than funding the courts or Tribunals. Such a system would, it is hoped, discourage employees from engaging in so called “fishing trips” to see what financial benefit they might squeeze out of their employer by using the threat of an Employment Tribunal claim as leverage; the requirement to pay a fee is likely to put off such Claimants. However, there are a lot of very determined individuals who are likely to find the money to do this.

Reform
- Increasing the qualifying period for unfair dismissal to two years on 6 April 2012. This will give employers more time to identify potential under-performers or trouble-makers and weed them out of their organisation with less fear of reprisal.

We say
- There must be doubt whether this will achieve its objective because one suspect’s employers may still let people slip over the two years and discrimination claims could still be brought by employees with shorter service.

Reform
- Closing a “loop hole” in the law on whistle blowing by ensuring that employees will no longer be able to “blow the whistle” on breaches of their own employment contract.

We say
- This would be a major change and protect employers from a sizeable proportion of the whistle blowing claims that are currently raised. The move will have even greater resonance due to the increase in the unfair dismissal qualification period. This is because where an employee is able to prove whistle blowing, their dismissal is automatically unfair and there is no need for them to establish the necessary period of continuous service; for this reason alone, for some time there has been a substantial benefit in employees pursuing whistle blowing claims.

Reform
- Consulting on the possibility of introducing “protected conversations”. This will provide employers with a level of comfort as they will be able to discuss certain issues with their employees, such as performance, without it being able to be used against them.

We say
- It will be interesting to see how protected conversations will interact with discrimination issues; if a protected conversation includes evidence of or an act of discrimination, will the conversation still be protected? One would expect that it would not protect acts of discrimination but will such a conversation protect evidence of discrimination? The Government has said discrimination will not be protected but until the Consultation is launched it is unclear how they will do this. There are too many ifs and buts at present to know whether the introduction of protected conversations could be a good thing.

Reform
- Seeking evidence on introducing a no fault dismissal for micro firms (those with less than 10 employees).

We say
- This would effectively allow such businesses to dismiss staff without justification providing that they pay affected employees a standard settlement. No comment has been made about when evidence is to be submitted yet; however it has been reported that Mr Cable is himself not a supporter of this reform.

Reform
Other measures set out by Mr Cable that are aimed at cutting employment related red-tape include:

- Seeking evidence on the possibility of simplifying TUPE.

- Seeking evidence on the merits of reducing the statutory consultation period required for when making collective redundancies to either 60, 45 or 30 days. Currently it is 90 days.

- The deadline for submitting evidence to both measures above is 31 January 2012.

- Consulting in relation to Compromise Agreements with a view to simplifying them.

- Reviewing and simplifying 17 National Minimum Wage regulations. These regulations will be merged into one consolidated set.

- Making CRB checks available online from 2013 and allowing them to be kept up to date subject to a fee.

- Reviewing and amending the laws on paternity and maternity leave to reflect the modern era. Parental leave is now shared and so the rules on parental leave need to be amended to allow flexibility.

We say
It is all very well considering bringing in all these changes to try to make life easier for employers but one of the main problems that employers have faced is the constant stream of legislation and case law on employment issues. Having to deal with further changes will impose its own burden.

Reform
- Enforcing a rule that all claims must go through ACAS first before they can be lodged at an Employment Tribunal, the aim being that most claims will be settled by conciliation.

- The possibility of a “Rapid Resolution Scheme”. A full consultation will take place before any decision is made.

- The Tribunal will also have the power to impose financial penalties on an employer who loses a claim. This is in addition to any damages awarded and can be up to £5,000 (with a 50% reduction if paid quickly). Any penalty will be payable to the Exchequer. This is hopefully not as unwelcoming as it sounds as it is down to the Tribunal’s discretion and is likely to only be awarded where exceptional circumstances are present.

We say
We see lots of evidence of the Employment Tribunals being stretched. Claimants may be keener to settle through ACAS if they can avoid a fee. It is hoped the overly-burdened Employment Tribunal system will be given some respite with the implementation of the above changes.

For further information about these proposals or if any of the proposals will affect you or your employees then please do not hesitate to contact Pitmans Employment team.

Mark Symons
Partner, Head of Employment
T: +44 (0)118 957 0340
E: msymons@pitmans.com

High-profile reports such as the BBC Panorama’s uncovering of shocking mistreatment of mentally ill patients at the Winterbourne View care-home or this week’s revelations of financial mismanagement at Japanese electronics company Olympus– causing a fall in share price by as much as 30% – demonstrate the power of whistleblowing and the negative effects a public disclosure can have on a business.

It is clear that employers have an interest in uncovering wrongdoing or dangerous practices within their organisations, whilst also managing what information (if any) is spread to the outside world. Encouraging the reporting of these matters through internal channels may help a business avoid serious accidents, fraud, regulatory breaches or financial scandals.

The law protects whistleblowers from dismissal or other detriment, including reprisals meted out by colleagues where the employer deliberately omits to take action to stop it, as illustrated by the recent Court of Appeal decision in NHS Manchester v Fecitt and others – a case that shows the law could still do more to protect whistleblowers from their own colleagues. In Fecitt, the claimants failed to establish that they were unlawfully victimised for making protected disclosures, despite the fact that they were subjected to unpleasant treatment by a number of other members of staff as a direct result of having made those disclosures.

Defending whistleblowing claims can involve significant management time and legal costs, which are usually non-recoverable, and there is no cap on the amount of compensation that can be awarded against an employer. Furthermore, an external disclosure of suspected malpractice, especially to the press, might lead to negative publicity for a company and damage staff morale. Any claim brought by a whistleblower who believes they have suffered reprisals is likely to have a similar effect.

And now it is not just civil penalties that companies need to be wary of in respect of whistleblowing. The Bribery Act 2010 came into force on 1 July 2011 and contains a new strict liability corporate offence that means criminal sanctions may be applied where an organisation fails to prevent bribery by a person “associated” with it. An available defence is to show that the organisation had in place “adequate procedures” designed to prevent bribery. The government guidance on the Bribery Act stresses that it is important for organisations to have in place effective whistleblowing policies and procedures that encourage employees to report bribery. 
 
Unfair dismissal of whistleblowers

The law states that the dismissal of an employee will be automatically unfair if the employee’s protected disclosure materially influences (in the sense of being more than a trivial influence) how the employer subsequently treats that employee.

There is no qualifying minimum period of service – a factor which will take on even greater significance when the qualifying period for “ordinary” unfair dismissal is extended to two years on 6 April 2012 – and tribunals are not restricted by the usual upper limit on compensation. Whistleblowing claims are sometimes used tactically for this reason.

Unlawful detriment of whistleblowers

It is unlawful to subject any worker to a detriment (including threats, disciplinary action, loss of work or pay, or damage to career prospects) on the ground that they have made a protected disclosure.

The concept of a “worker” in the whistleblowing legislation is broad and includes, amongst others, agency workers, freelance workers, seconded workers, homeworkers and trainees, as well as employees.

Responding to a whistleblowing claim

Whilst the claimant generally has the burden of proving that a disclosure was protected, if an employer was the subject of a claim and wished to argue that a disclosure was not protected because it was not made in good faith, it will bear the burden of proof on that issue. Ideally this would be specifically set out in the company’s response to the Employment Tribunal claim form (or ET3 as it is known).

Since employers will, in most cases, bear the burden of proof on the issue of causation, they should ensure that the ET3 and subsequent witness statements do not merely rebut the claimant’s allegations, but establish a positive case as to why the claimant was dismissed or treated in a particular way.

If the employer has a particularly strong case on causation, it is sometimes worth considering whether there might be a tactical advantage in conceding that there was a protected disclosure. As well as narrowing the issues and therefore keeping costs down, this may help the business’ PR strategy, by avoiding the need for protracted evidence at the hearing on the actual details of the disclosure itself, much of which is likely to be damaging or at least embarrassing to the company if it is reported in the media. However, on the down side, this strategy does put all the employer’s eggs in one basket.

Another potential shield to a claim is for an employer to assert that the disclosure made by the employee does not qualify for protection because it does not meet the requirement of being a disclosure of information. This might be relevant in circumstances where an employee seeks to rely on complaints raised against their employer. A letter that contains a statement of position as part of an ongoing unresolved conflict between the parties does not contain qualifying disclosures while a document that discloses facts about the circumstance of such conflict would contain qualifying disclosures.

Compensation and remedies in whistleblowing cases

There is no upper limit on the amount of compensation that can be awarded in unfair dismissal or detriment cases under the whistleblowing legislation. However the basis on which compensation is assessed in each type of case is different.

Compensation and remedies for unfair dismissal

The usual remedies for unfair dismissal apply (re-instatement, re-engagement and compensation). However, the usual upper limit unfair dismissal compensation (currently £68,400) does not apply to whistleblowing cases, which is one of the reasons they are attractive to employees and feared by businesses. Compensation for an unfair dismissal claim (whether or not caused by a protected disclosure) cannot include compensation for injury to feelings. However, injury to feelings compensation can be claimed for any detriment up to the point of dismissal.

Where a tribunal finds that an employee has been unfairly dismissed for making a protected disclosure, it is not unusual for them to also find that the employee has been stigmatised or “black-listed” in some way on the job market because of their disclosure. This can result in the tribunal being more inclined to make a substantial award for future loss of earnings, on the basis that the employee may not realistically be able to find future employment in their industry, or at a similar level of seniority or remuneration.

Compensation in detriment cases

Where the employee has succeeded in showing unlawful detriment, the tribunal must make a declaration to this effect and may award compensation, which is uncapped. This will be assessed on a similar basis to a discrimination claim; the aim being to award a sum of money that will put the claimant into the position he or she would have been in had the wrong not taken place. As such, the assessment of compensation involves some degree of speculation, as the tribunal must decide what would have happened if the discriminatory act had not taken place, so that it can award the sum that would put the claimant in that position. It will also need to speculate as to what may happen in the future.

Tribunals may award compensation for injury to feelings as well as financial losses.

Practical steps to reduce business risk

A whistleblowing policy setting out procedures by which staff can confidentially report concerns about illegal, unethical or otherwise unacceptable conduct is absolutely essential, particularly given the recent implementation of the Bribery Act 2010. It is vital that businesses ensure that their policies enable workers to bypass the level of management at which the problem may exist; the policy should set out the various levels of management to which an individual might go to express their concern depending upon the seriousness of the malpractice and who the individual thinks may be involved in it.

It would be sensible to publicise the policy internally and train management in its principles and operation. At all times it should be made clear that victimisation or subjection to any other detriment of a whistleblower will lead to disciplinary action.

We would recommend that you investigate disclosures promptly, and keep the whistleblower informed as to the progress where possible; silence or apparent inaction may lead the whistleblower to become suspicious and make a disclosure to an external recipient.

It is important to remember that your business will not be able to rely on confidentiality clauses to prevent external disclosures, as such terms are unenforceable if the disclosure is protected. Indeed, taking action against a whistleblower for breach of confidence may in itself amount to an unlawful detriment.

If you would like to put assistance in putting together a whistleblowing policy for your business or have any issues concerning protected disclosures then please do not hesitate to contact us to discuss how the Pitmans employment team can assist.

Jamie Lynch
Solicitor
T: +44 (0) 118 957 0506
E: jlynch@pitmans.com

Mark Symons
Partner
T: +44 (0) 118 957 0340
E: msymons@pitmans.com

1. Directors liability for discrimination

The Employment Appeals Tribunal has held that directors of an organisation can be liable for discrimination.

What does this mean?
Directors who discriminate against their staff could find themselves personally liable to pay compensation. This is in addition to any compensation the organisation may have to pay.

What should employers do?
Employers should take steps to prevent discrimination in the workplace.  This may be by ensuring that clear written policies relating to discrimination and harassment are in place, by providing staff with training in these areas and by promoting a culture of compliance with such policies. Organisations should also consider putting insurance schemes in place to protect Directors against claims in such circumstances.

Pitmans provide in house workshops or webinars to assist in compliance.

2. Changes to unfair dismissal rules

The Government has announced that the qualification period for the right to claim unfair dismissal will be extended from one to two years from 6 April 2012.

What does this mean?
From 6 April it will be easier and less costly for employers to dismiss staff who have been employed for less than two years. In turn this may make it less risky for businesses to take on staff in the first place.

What should employers do?
Employers should be aware that the change will not impact on the right of employees to claim unfair dismissal if they have less than two years’ service where the reason for dismissal is one which is ‘automatically unfair’ such as whistleblowing nor will it affect discrimination claims. For this reason it is advisable for employers to take specific legal advice before dismissing an employee whatever their length of service.

3. Stress in the workplace

A survey carried out by The Chartered Institute of Personnel and Development has revealed that stress is, for the very first time, the most common cause of long-term sickness absence.

What should employers do?
Employers have a duty to assess and take measures to control risks from work-related stress. They should have a policy in place for dealing with stress, carry out return to work interviews to establish the reason for absences and ensure that line managers receive training so that they know how to respond to signs of stress.

4. Reasonable adjustments

The Employment Appeals Tribunal has held that a refusal by an employer to spend very large sums on adjustments for a disabled employee was not discriminatory.

What does this mean?
Employers are entitled to take into account the cost of making adjustments for their disabled staff when deciding what, if any, adjustments to make. Employers can also take into account how effective a change will be in avoiding the disadvantage the disabled worker would otherwise experience, the practicality of making the change, the resources and size of the organisation and the availability of financial support.

What should employers do?
Employers should cost and keep a record of the costing of any adjustments they consider in case they need to demonstrate at a later stage that the cost of making an adjustment is more that can reasonably be expected of them. However, caution is advised when relying on cost as a reason for refusing to make an adjustment and especially where it is the only reason for the refusal. Therefore employers should seek legal advice before making a final decision to refuse to make such an adjustment on grounds of cost.

5. Retraction of dismissals and resignations

The Court of Appeal has held that where an employer provided an intended, unambiguous written notice of termination to an employee, the employer was not subsequently entitled to unilaterally withdraw the notice of dismissal on the basis that the notice was premature and/ or a mistake. In this case the employer mistakenly believed, at the point of dismissal, that they had a mutual agreement for an alternative arrangement where the claimant would become self-employed after the dismissal.

What does this mean?
Once an employer has given an employee notice of dismissal, or an employee has given notice of resignation, the notice can only be withdrawn if both parties consent to the withdrawal.

What should employers do?
In such circumstances, employers should ensure that they are in full possession of the facts and have agreed all relevant matters with the employee and have clear evidence of that agreement in writing before taking action.

6. Variation of contracts following a TUPE transfer

The Employment Appeals Tribunal has held that following a TUPE transfer an agreed variation to an employee’s salary resulting from a mistaken belief that there was an error in pay which needed to be corrected was valid and effective.

What does this mean?
An agreed variation of an employment contract is only effective following a TUPE transfer if the transfer itself was not the sole or principal reason for the variation.

What should employers do?
This was an unusual case involving a genuine mistaken belief that had no relationship with the TUPE transfer and therefore broke the link between the transfer and the variation in question. If seeking to change terms and conditions of employment, employers should ensure that the reason for seeking to make the change is not connected to the transfer.

7. Ill-health early retirement

The Deputy Pensions Ombudsman has said that a local authority employer cannot rely ‘blindly’ on its medical advisers when deciding if an employee is eligible for an ill-health early retirement pension.

What does this mean?
It is for a local authority employer, not a medical practitioner, to decide whether one of their employees is eligible for an ill-health early retirement pension.

What should employers do?
When deciding whether an employee is eligible for an ill-health early retirement pension a local authority employer should base its decision on all of the appropriate evidence and not just the advice contained in a medical report.

8. Intellectual property infringement

Employers can be liable for intellectual property infringement by their staff. With this in mind the Intellectual Property Office has published guidance for businesses on how they can tackle intellectual property infringement in the workplace. The guidance provides practical advice on how to spot intellectual property rights infringement issues, and how employers should deal with them. Click here for a copy of the guidance.

Sally Britton a partner specialising in Intellectual Property can assist you in this area. Over the last 12 months Sally has seen numerous infringements by employees which could have been avoided by basic training and raising of awareness. For further information please contact Sally.

9. Conduct and capability overlap

The Employment Appeals Tribunal has held that where a dismissal letter cited ‘misconduct’ as the reason for dismissal but a subsequent response by the employer to a claim for unfair dismissal cited ‘capability’ as the reason, an earlier tribunal was not prevented from dealing with the claim on the basis of misconduct. This was because the decision to dismiss had at all times been based upon the same set of facts and the change of label, therefore, caused no prejudice to the employee.

What does this mean?
Incorrectly citing the wrong ground for a dismissal will not necessarily be fatal to a case as long as the facts upon which the dismissal is based are clear and the claimant is not disadvantaged.

What should employers do?
It is far better to get the labels right in the first place as this will be a better deployment of employers’ resources. Employers should therefore take specific legal advice if they are unclear about the appropriate use of legal terminology.

10. Mitigation of loss

The Employment Appeals Tribunal has held that where a wronged employee rejected an offer of a new position, which would have addressed the difficulties which had given rise to her discrimination claim, she was not entitled to receive any compensation for loss of earnings.

What does this mean?
Courts and tribunals expect claimants to take reasonable steps to mitigate their losses. If they fail to do so they will ordinarily be deprived of compensation for any losses suffered as a consequence of their failure to take such steps as are reasonable.

What should employers do?
An employer who is faced with a claim may, in some instances, reduce the likelihood of having to pay compensation for loss of earnings by offering alternative employment to the employee in question. However note that in this case, the alternative employment was deemed ‘suitable’ for the claimant.

For further information on this article, please contact Pitmans Employment team.

Mark Symons
Partner
T: +44 (0) 118 957 0340
E: msymons@pitmans.com

Angela Shields
Director
T: +44 (0) 118 957 0450
E: ashields@pitmans.com

The use of twitter by law firm Pitmans LLP, @PitmansEmploy, highlights an unusual point of interest to HR people. On 31 October 2011, the retail headline was how Morrisons has followed Tesco by discussing the use of the “Swedish Derogation” with respect to the pay of its temporary agency staff. One comment that may be overlooked is that in their manufacturing and logistics division, Morrisons intend to employ more workers directly.

The use of shorter fixed term employment contracts by employers does appear to be increasing in these difficult economic times. Fixed term employment contracts can specifically cover a task to be performed, a project to be completed or a specific period such as maternity leave.

So, what are the benefits and risks to the strategy? What should employers be looking out for?

In terms of benefits, the employer can obtain the resources it needs during periods of high activity. In manufacturing of retail products, for example beauty products, this may be in August to October – preparing the products for the Christmas sales push.  In retail, the resources are required from October to January covering the Christmas and sales periods. 

The employer can employ the individuals directly without the use of agency staff therefore avoiding any risks contained in the Agency Worker Regulations 2010. Reduced information sharing with agencies will follow as will the need for monitoring of whether the agency workers have accrued their 12 week qualifying period for rights.

As an employee, the individual has some basic rights to which an employer must be aware. Employees recruited on contracts to complete specific tasks which are expected to last three months or less have a right to receive a minimum notice period of one week if their contracts are terminated before the expected expiry date and they have completed at least one month’s continuous service. They are also obliged to provide their employer with at least one week’s notice of early termination. Employees on contracts of up to three months also have the right to receive statutory sick pay, guarantee payments and payments on medical suspension after one month’s continuous.

A fixed-term employee has the right not to be treated less favourably than a comparable permanent employee:

• As regards the terms of their contract; or
• By being subjected to any other detriment by any act, or deliberate failure to act, of their employer.

Three areas are singled out in the Fixed Term Employees Regulations to emphasise that this right applies in relation to:

• Any period of service qualification relating to any particular condition of service.
• The opportunity to receive training.
• The opportunity to secure any permanent position in the establishment.

There are opportunities for an employer to argue an objective justification for any difference in treatment between a fixed term employee and a permanent employee. When considering whether particular treatment can be objectively justified, employers need to establish whether there is a legitimate reason for treating a fixed-term employee differently or less favourably. Less favourable treatment should be examined on a case-by-case basis to consider whether it can be justified, with due regard given to the needs and rights of individual employees and the need to balance those rights against business objectives.

An employer needs to be aware that an expiry of a fixed term contract does constitute a dismissal and is subject to the rules of unfair dismissal.  An employer won’t need to follow the ACAS Code of Practice on Disciplinary and Grievance Procedures (unless the termination or non-renewal is for a capability or conduct reason) but in the same vein should not ignore the principles of a fair procedure when declining to renew a fixed term contract.  This will involve: discussing the expiry date of the contract, writing to the fixed term employee, holding a meeting with them and, if necessary, following an appeals process regarding the non-renewal of the fixed term.

What can the employer do to protect itself when using a fixed term employment contract?

1. Audit the fixed term contract’s terms and benefits highlighting any differences with permanent employment contracts.
2. Ensure the terms offered are the same, pro-rated or can be objectively justified.
3. Maintain appropriate records of the fixed term contract’s terms and benefits.
4. Record the use of fixed term contracts and the expiry dates well in advance so that fair procedures of non-renewal can be followed.
5. Ensure employee vacancy lists are centrally located so that both permanent and fixed term employees have access.

Finally, fixed term employees will be entitled to receive a statutory redundancy payment if they have at least two years’ continuous service and the reason for the non-renewal of their contract is redundancy.

For further information on this article, please contact Pitmans Employment team.

Angela Shields
Director
T: +44 (0)118 957 0450
E: ashields@pitmans.com

1.  Agency workers

The Agency Workers Regulations 2010 came into force on 1 October 2011. From 1 October 2011, all agency workers are entitled to access collective facilities and amenities available to comparable workers and employees as well as information on job vacancies.

Agency workers who have completed a 12 week qualifying period will be entitled to the same basic employment and working conditions as if they had been recruited directly by the employer.

Listen to Angela Shields’ interview on Radio 4’s Today programme to learn more.

What should employers do?
Employers should urgently review their internal monitoring processes for agency workers.  Additionally they should communicate and exchange relevant information with their preferred agency suppliers.

2.  Social media in the workplace

ACAS has published a guide to social media use in the workplace.

The guide includes practical tips on managing the impact of social networking in the context of managing performance, recruitment, discipline and grievances, bullying, defamation, data protection and privacy. It also gives guidance as to how employers should go about developing a social networking policy. A full copy of the guide can be found here.

3.  National Minimum Wage

By way of a reminder, changes to the National Minimum Wage came into force on 1 October. The new rates are as follows:

• the main rate for workers aged 21 and over increases to £6.08
• the 18-20 rate increases to £4.98
• the 16-17 rate for workers above school leaving age but under 18 increases to £3.68
• the apprentice rate, for apprentices under 19 or 19 or over and in the first year of their apprentice increases to £2.60

4.  Motoring expenses and NICs

The Upper Tribunal of the Tax and Chancery Chamber has held that motoring expenses are subject to NICs if they are not linked to mileage. 

What does this mean?
There is nothing to stop an employer from making lump sum payments to its employees in respect of motoring expenditure. However, payments that are not linked to mileage will attract NICs.

What should employers do?
Employers should urgently review their mileage policies in light of this ruling.

5.  Rest breaks

The Court of Appeal has held that an interrupted rest break does not necessarily contravene the Working Time Regulations.

What does this mean?
As a general rule workers are entitled to an uninterrupted 20 minute rest break if their daily working time exceeds 6 hours. However, there is an exception to this general rule in the case of workers who are ‘engaged in security and surveillance activities requiring a permanent presence’.

What should employers do?
Where the exception applies, employers should nevertheless wherever possible allow their employees to take an equivalent period of compensatory rest.

6.  The gender pay gap

At present, only public sector organisations are required to publish relevant gender equality data. However, the Government is asking the private and voluntary sectors to carry out gender equality analysis and reporting on a voluntary basis.

ACAS has published guidance, which explains how organisations can participate in the initiative and how they can tackle gender equality issues in the workplace if they are unsure how to proceed. A full copy of the guidance can be found here.

7.  Whistle-blowing

The Employment Appeals Tribunal has held that a complaint made by an employee, during a meeting, about his manager who was pressurising him to produce financial models which he believed were misleading amounted to a disclosure of information for the purposes of the ‘whistle-blowing’ legislation.

What does this mean?
Employees who ‘blow the whistle’ on wrongdoing, even in the less formal manner described here, are protected from being victimised. (A dismissal resulting from whistle-blowing amounts to an ‘automatically unfair’ dismissal.)

What should employers do?
Before taking action, employers should consider their own actions leading up to any decision to dismiss and should take specific legal advice before dismissing an employee whatever the reason for wanting to dismiss them.

8.  References

The Court of Appeal has held that a reference which suggested that an ex-employee had recording and record-keeping issues was not unfair even though those issues had not been investigated as the reference made it clear that was the case and the reference was, overall, balanced.

What does this mean?
Flagging up concerns or allegations as to an employee in a reference does not necessarily mean that the reference is unfair.

What should employers do?
Employers should ensure that any references they provide are true, accurate and fair. If they include negative comments about matters which have not been investigated, take legal advice first; consider steps to ensure that the ex-employee has the right of reply and/or discuss the reference in advance with the ex-employee and seek agreement before issuing it.

 *** STOP PRESS ***

The Chancellor of the Exchequer, George Osborne, has announced the following changes to employment law:

1.  The qualifying period for unfair dismissal will be increased from one year to two years with effect from 1 April 2012.

2.  Fees will be introduced for tribunal claims from April 2013.

*** STOP PRESS ***

For further information on this article, please contact Pitmans Employment team.

Angela Shields
Director
T: +44 (0)118 957 0450
E: ashields@pitmans.com

1. Amendments to the Agency Workers Regulations

The Agency Workers Regulations 2010, which are due to come into force on 1 October, have been amended by the Agency Workers (Amendment) Regulations 2011.

The amendments correct a number of drafting errors by widening the definition of an ‘agency worker’; changing the circumstances in which an agency worker will not be entitled to be paid the same as other staff recruited directly by a hirer; and by changing the circumstances in which an agency will be liable for any failure on the part of a hirer to comply with their obligation to provide the same basic working and employment conditions to agency workers as they do to the staff they recruit directly.

2. Employed or Self-Employed?

The Supreme Court has held that when deciding whether a person is employed or self-employed, the terms of any written agreement can be disregarded if they do not reflect what the parties have really agreed. 

What does this mean?
Employers who try to circumvent employment law will not be able to rely on written contracts which state that their workers are self-employed if such contracts do not reflect the reality of the situation. This is the case even if Revenue and Customs have already agreed that such workers are ‘self-employed’.

What should employers do?
There are some basic questions, the answers to which will ‘indicate’ whether or not a worker is employed or self-employed but this method is not conclusive. Therefore, businesses who are in doubt as to the status of their workers should take legal advice.

3. The National Minimum Wage

The Employment Appeals Tribunal has held that when an employee is required to sleep on their employer’s premises, the time spent sleeping does not count as ‘work’ for the purpose of the National Minimum Wage Act 1998.

4. Equal pay

The Court of Appeal has held that in a claim for equal pay an employee is entitled to receive equal terms.
 
What does this mean?
When deciding an equal pay claim the Employment Tribunal will compare each individual term of the employment contracts which relates to remuneration. The fact that a female employee may be paid more than a male comparator overall, when all elements are totalled, is not relevant.

What should employers do?
Employers should ensure that female and male employees receive comparable pay in terms of basic and overtime pay unless there is a genuine material reason for a difference.

5. Religious discrimination

High profile cases relating to the religious discrimination of Christian workers are heading towards the European Court of Human Rights. The cases relate to i) the wearing of a cross on a necklace while at work, ii) the insistence that a Christian employee officiate at civil partnerships notwithstanding her wishing not to do so on religious grounds, and iii) the dismissal of a Christian relationship counsellor for refusing, on religious grounds, to provide help and counselling to same-sex couples.

What should employers do?
Rulings already made by the UK and European courts in relation to religious discrimination of Christians have created a body of contradictory and confusing case law. The Equality & Human Rights Commission (EHRC) submits a report in reference to these cases this month, but until the law in this area is clarified there is little that employers can do other than ‘play safe’ and seek legal advice before making decisions that may upset staff with religious beliefs.

6. Dress codes

In the context of sex discrimination, the law relating to dress codes is well established in general terms. Where staff are required to wear uniforms it is allowable for an employer to insist that male and female staff wear different uniforms.

There have been recent reports in the news that a sales assistant has been effectively forced to leave her job because she refused to abide by a dress code that required all female shop assistants to wear make-up. It is not yet known whether she will bring a tribunal claim, but if she does, the decision of the tribunal is likely to be of interest to many, particularly employers in the retail and hospitality sectors.

What should employers do?
Employers should ensure that when setting dress codes they take into account sex discrimination law. Employers should also bear in mind that other forms of discrimination may arise, for example on grounds of religion, race or transgender. Discrimination may also arise by reason of age where an employee is required to dress inappropriately or by reason of disability.

7. Preventing harassment in the workplace

The Employment Appeals Tribunal has held that an employer who seeks to rely on the defence that it took reasonable steps to prevent the sexual harassment of one of its employees by another employee will only succeed if it can demonstrate that it took reasonable steps to prevent such conduct prior to the incident complained of.

What should employers do?
Employers should take reasonable steps to prevent harassment in the workplace.  This may be by ensuring that clear written policies relating to sexual discrimination and harassment are in place, by providing staff with training in these areas and by promoting a culture of compliance with such policies.

Simply taking steps after the event to prevent the recurrence of harassment is not sufficient.

8. Termination date in the case of summary dismissal during a notice period

The Employment Appeals Tribunal has held that where an employee is summarily dismissed (with immediate effect) during their notice period, the effective date of termination is brought forward from the date on which the notice is due to expire to the date on which the employee is summarily dismissed.

What does this mean?
Summarily dismissing an employee who is serving a notice period will in some cases prevent an employee from accruing one year’s service, which is a prerequisite for an unfair dismissal claim. However, summary dismissal in such circumstances may be viewed as victimisation and thereby give rise to a claim of ‘automatic’ unfair dismissal for which no minimum length of service is required.

What should employers do?
Employers should always take specific legal advice before dismissing an employee.

For more information on this article, please contact Pitmans Employment team.

Angela Shields
Director
T: +44 (0)118 957 0450
E: ashields@pitmans.com

Mark Symons
Partner
T: +44 (0)118 957 0340
E: msymons@pitmans.com

The Issue

The Agency Workers Regulations come into force on 1 October 2011 and will change the way in which the hospitality sector view agency workers.

Take the example of a hotel that uses agency workers to cover the busy summer months. At present agency workers often receive the same basic hourly rates as directly recruited staff but are not given the same benefits (transport facilities, overtime, maternity benefits and bonuses for example). However, from the 1 October 2011 this will change.

The Legal Position

After completing 12 weeks of an assignment, an agency worker will be entitled to the same basic working and employment conditions (including pay, working time and holiday entitlement) as they would have received had they been directly engaged to do the same job. The scope of the Regulations only includes terms which are ‘ordinarily included’ in the hirer’s contracts – for example, as part of a pay scale or company handbook.

Breaks of up to six weeks between assignments with the same hirer will not break the 12 week qualifying period. However, the clock will restart if the worker begins a new assignment with the hirer in a ‘substantially different’ role.

An agency worker’s right to equal pay will not apply when the agency worker is employed on a permanent basis by their agency, receives a minimum level of pay in between assignments and signs a contract with the agency prior to the start of the assignment (this is known as a ‘derogation contract’).

From day one of an assignment, agency workers will have equal access to collective facilities, such as a canteen or transport services; unless different treatment can be objectively justified (cost alone is unlikely to be enough). Agency workers will also have equal access to information on employment vacancies.

Agency workers who believe that they are not receiving equal treatment may ask the agency (and then the hirer if the agency fails to respond within 30 days) for written details of the hirer’s basic working and employment conditions.

A reasonable and practical approach

All organisations need to be aware of what is covered by “pay” in terms of the Regulations. Pay includes holiday pay, overtime, shift allowances, unsocial hours premiums; performance bonuses directly related to the work of the individual agency worker, and lunch vouchers.

Pay excludes occupational pension and sick pay schemes; notice pay; redundancy pay; expenses; loyalty bonuses and benefits in kind such as company car allowances and health insurance.

The hotel would be potentially liable for failing to provide agency workers with the same transport service as direct recruits. If any of the agency workers stayed on and worked for 12 weeks they would also gain a right to overtime for the remainder of their assignment if this is provided to permanent workers.

There would, however, be no obligation to provide the loyalty bonus or pay expenses.

Agency Worker Policy

For those employers who rely on agency workers we recommend that you undertake the following:

- Assess the average length of assignments; the extent to which agency workers and direct recruits are carrying out the same job; and whether agency workers are currently receiving the same pay, working time and holiday entitlement as direct recruits.

- Put systems in place to respond to information requests made by agency workers.

- Ensure that systems are in place to make agency workers aware of job vacancies and to inform them about collective facilities.

- Consider whether to review terms of business with agencies to apportion liability for any employment tribunal claims and to deal with the exchange of information with agencies.

- If seeking to avoid the impact of the Regulations, consider other options such as limiting the length of agency workers assignments (bearing in mind the anti-avoidance provision below), increasing the number of directly recruited fixed-term employees or using in-house staffing banks.

Potential Risks

Agency workers may be awarded unlimited compensation for a breach of the equal treatment rights with both agencies and hirers potentially liable (although the hirer is solely responsible for any claims regarding “day one” rights).

If an employment tribunal finds that assignments have been structured specifically to deprive an agency worker of equal treatment rights (for example by, rotating 11 week assignments in “substantially different” roles) it can make an additional award of up to £5,000.

For further information please visit Pitmans Hospitality Sector, or contact:

David Loosemore
Solicitor
T: +44 (0)118 957 0240
E: dloosemore@pitmans.com

Amanda Dorling
Solicitor
T: +44 (0)118 957 0407
E: adorling@pitmans.com

At Pitmans we strive to keep you abreast of the latest developments in Immigration law that affect your business. In this update, Richard Devall and Jamie Lynch consider:

• Tier 1: The (General) category closes as the UK opens its doors to (Exceptional talent)

• Tier 2: Cap placed on (General) category whilst (Intra-company transfer) category undergoes a makeover

• Settlement: Government commences consultation on limiting individuals’ right to remain in the UK

Changes to Tier 1

Tier 1 of the points-based system is for high-value migrants, and currently contains 5 subcategories:

• (Exceptional talent)
• (Entrepreneur)
• (Investor)
• (Post-study work)
• (General)

The Tier 1 (General) category allowed highly skilled migrants to look for work or self-employment opportunities in the UK. Successful applicants under Tier 1 (General) were entitled to seek employment in the UK without a sponsor, and could take up self-employment and business opportunities here. However, as part of its drive to reduce new migration, the Government has now shut down this route to applicants who are outside the UK, and to individuals who are already within the UK under most other immigration categories.

Where one door opens another (albeit rather more limited) door opens. On 9 August 2011 the Tier 1 (Exceptional talent) category went operational allowing migrants who are internationally recognised as world-leading or potentially world-leading talent in the fields of science and the arts to ply their trade in the UK. Not satisfied with setting the bar at the level of “world-leading”, the Government have signalled their intention to further curtail the scope of this category by limiting the number of applications that can be made.

To police this limitation, every initial application must include an endorsement from a ‘designated competent body’; the Royal Society, the Arts Council of England, the British Academy and the Royal Academy of Engineering. There will be a limit of 1,000 endorsements between 9 August 2011 and 5 April 2012.

Changes to Tier 2

Tier 2 of the points-based system is intended to be utilised by skilled workers who have a job offer from an employer who is willing to sponsor them. Tier 2 comprises four categories:

• (General)
• (Intra-company transfer)
• (Minister of religion)
• (Sportsperson)

Effective from 6 April 2011, there will be a new immigration cap limiting entry clearances issued to Tier 2 (General) migrants.  The cap will be implemented by restricting the number of Certificates of Sponsorship that are issued to 20,700 in the year from 6 April 2011 to 5 April 2012. The cap does not apply to migrants earning £150,000 or more, or to those who are applying under the Tier 2 (General) category from within the UK.

The Tier 2 (Intra-company transfer) category allows skilled workers to move from an overseas branch of their employer to a UK-based office. There is currently no cap in place to restrict the amount of Certificates of Sponsorship that are issued under this category. 

Recent changes mean that the Tier 2 (Intra-company transfer) is further broken down into the following brackets:

• Short-term staff
• Long-term staff
• Skills transfer
• Graduate trainee

Those entering the UK as short-term staff may be granted permission to stay for a maximum of 12 months following which they will be expected to return home. Such individuals will not be able to apply to re-enter the UK under Tier 2 (Intra-company transfer) until a further 12 months have elapsed from the expiry of their previous leave to remain.

Long-term staff may be granted an initial period of stay of up to 3 years and 1 month. This period can be extended up to a maximum of 5 years, after which the migrant will be required to leave the UK. Again, once a long-term staff migrant’s leave to remain has expired, they will not be able to re-apply in the Tier 2 (Intra-company transfer) category for at least 12 months.

Business and individuals need to be aware that since 6 April 2010 it has not been possible for migrants entering the UK under Tier 2 (Intra-company transfer) to qualify for settlement (otherwise known as indefinite leave to remain).

Changes to Settlement

Under proposals announced by the Government in June 2011, the automatic right for migrants coming to work in the UK on a temporary basis to claim settlement will cease. Damian Green, the Immigration Minister, explained that the proposals were: ‘aimed at breaking the link between temporary and permanent migration.’ Mr Green added: ‘a small number of exceptional migrants will be able to stay permanently but for the majority, coming here to work will not lead automatically to settlement in the UK.’

Under the present settlement regime, many workers are allowed to apply to stay here permanently. In 2010, 84,000 people who entered the UK for employment were granted settlement. This compares to less than 10,000 who qualified for employment related settlement in 1997. The Government believes that their proposed changes are necessary to bring immigration down to “sustainable” levels.

The key proposals under consideration during the consultation period are as follows:

• re-branding Tier 2 as temporary, ending the assumption that settlement will be available for those who enter on this route;
• allowing certain categories of Tier 2 migrant, for example those earning over £150,000 or occupations of a specific economic or social value to the UK, to retain an automatic route to settlement;
• creating a new category into which, after three years in the UK, the most exceptional Tier 2 migrants may switch and go on to apply for settlement;
• allowing Tier 2 migrants who do not switch into a settlement route to stay for a maximum of five years with the expectation that they and any dependants will leave at the end of that time;
• introducing an English language requirement for adult dependants of Tier 2 migrants applying to switch into a route to settlement;
• restricting the maximum period of leave for Tier 5 Temporary Workers to 12 months; and
• closing or reforming routes for overseas domestic workers.

The Government has publicly committed itself to reforming all routes of entry to the UK in order to bring immigration levels under control and we anticipate that the changes outlined above are just the start of the impending overhaul of the immigration system. If you have any concerns about how these changes will affect your business then we are at hand to provide you with clear, practical guidance to ensure you can continue to achieve your business immigration goals.

Richard Devall
Partner
DD:  +44 (0) 118 957 0602
rdevall@pitmans.com

Jamie Lynch
Solicitor
DD:  +44 (0) 118 957 0506
jlynch@pitmans.com