Biggart Baillie Solicitors

Employment Newsletter - Autumn 2008

Inside this issue:

•  Spotlight on Redundancy
•  New Equality Bill Proposed
•  Maternity and Parental Leave Changes
•  Immigration - Licence for Employers
•  Minimum Wage and Personal Tax Allowance Update
•  Flexible Working
•  Agency Workers Update

Spotlight on Redundancy 
In light of the current market conditions, we thought it would be helpful to provide an overview of redundancy procedures.

The process differs slightly depending on how many employees are involved, but we shall proceed on the basis of the following scenario:

“Mechanics R Us Limited employs 20 mechanics and 2 administration assistants. They have decided that due to a downturn in the market and a decrease in customer demand, they can only afford to employ 15 mechanics. They still need both administration assistants but understand that they must make redundancies to keep the business afloat.”

As an employer, the Company has an obligation to consult with, and give advance warning to, individuals who may be made redundant.  In the scenario above, 20 employees are at risk of redundancy as the pool of selection will be “all mechanics”.

The Company must then consider the following:

Selection criteria
These must be objective and capable of being verified against any records held by the Company. The criteria may include: attendance records; time-keeping; disciplinary records; targets reached during the course of employment; and appraisals (if carried out by the Company). We would advise not to include length of service as this may imply some form of age discrimination.

First Meeting
The Company should arrange to meet all 20 mechanics and advise them of the following at the meeting:

• The reason for the proposed redundancies;
• The pool of affected employeesa nd the likelihood of 5 being made redundant (presented as a possibility rather than final decision);
• That alternative roles will be considered if there are any;
• The selection criteria that will be used;
• That the company will continue to look at ways to avoid redundancies and if any employee has any suggestions then to advise accordingly;
• Provide a written summary of the above and the selection criteria to the whole group of mechanics;
• Advise that the Company will be evaluating all 20 employees and then calling those with the lowest scores to a meeting to discuss potential redundancy.

At the group meeting, the Company should indicate that the redundancies have not been finalised and that meetings will be arranged to discuss matrix scores, any suitable alternative roles and for the employees to make representations. The matrix scores should be calculated after this group meeting.

First Letter and Individual Meeting
The Company should score all employees against the selection criteria and those with the lowest scores should be invited in writing to a further meeting. The Company should ensure that the lowest scores identified are thoroughly checked and that it is unlikely they can be challenged or changed.

The letter should also confirm that they have provisionally been selected for redundancy (which may result in the termination of their employment) on the basis of the selection criteria previously discussed and that a further meeting is required to identify ways in which the redundancy can be avoided. This will include examining alternative positions in the Company that may be appropriate to them.

At the meeting, the mechanics should be given the opportunity to comment on their scores, make suggestions on ways to avoid redundancy and to ask any questions about the redundancy process. If any of the mechanics make any submission about their scores, they should be consideredat the meeting by the Company – this may lead to scores being amended.

Written Confirmation
Assuming that the original 5 employees selected as “potentially redundant” are still those with the lowest score, then the Company should write to them and confirm their decision to make them redundant and notify them of their right to appeal the decision.

This is just a general overview of the basic requirements during a redundancy process. Our employment team are always at hand to answer any specific queries.

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New Equality Bill Proposed
This Bill is still in the initial draft stages in parliament and will not formally be proposed before November 2008. It’s aim is to create an easier law to manage and understand by bringing together nine major pieces of legislation and around 100 other laws, which deal with any form of discrimination (race, gender, disability, age sexual orientation, religion or belief) in a single Bill.

Key changes include:

• Plans to allow positive sex and race discrimination where appropriate;
• Harmonisation of all definitions of indirect discrimination throughout all forms of discrimination;
• Harmonisation of the standard for justifying direct discrimination by adopting the ‘proportionate means of achieving a legitimate aim’;
• Extend protection against harassment under the Race Relations Act 1976 to “harassment on ground of colour and nationality”;
• Ban “gagging clauses” which some companies have used to prevent staff from discussing their pay;
• A duty may be imposed on all public sector contracts to make figures showing the “gender pay gap” public;
• Tribunals may be authorised to make wider recommendations in discrimination cases;
• The Equality and Human Rights Commission (EHRC), trade unions and other bodies (with permission of the Court) maybe encouraged to bring representative discrimination law actions.

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Maternity and Parental Leave Changes
The Maternity and Parental Leave etc. and the Paternity and Adoption Leave(Amendment) Regulations 2008 amends the provisions of the Maternity and Parental leave etc Regulations 1999 and the Paternity and Adoption Leave Regulations 2002. These will apply to parents of children expected to be born or placed for adoption, on or after 5 October 2008. The amendments remove the distinctions between the rights of employees on ordinary maternity leave and those on additional maternity leave. This means a woman may have a claim if she is not afforded the same benefits/terms and conditions of employment, (except those relating to pay),during additional maternity leave as she is during ordinary maternity leave.

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Immigration - Licence for Employers
As all employers must now obtain a licence before employing a foreign national, we thought it may be helpful to outline how to apply for one.

Companies will have to apply for a licence online, which will cost £300 (if you are deemed a small sponsor) or £1,000. However, in order to obtain a licence, you will have to meet both "eligibility" and "suitability" criteria set by the Home Office.

The eligibility criteria requires businesses to provide the Home Office with a number of documents to prove that the organisation is genuine and has an operating or trading presence in the UK. If the Home Office is satisfied that a Company has passed the eligibility criteria, then they will apply the following “suitability” criteria to determine whether it has sponsor rating of either “A” or “B”:

Eligible sponsors must :

• have effective human resource systems in place;
• not have been given a civil penalty for immigration offences;
• ensure the authorising officer, level 1 user and key contact (this will be an employee(s) you appoint to deal with specific sponsor roles who will have access to the sponsor management system that will be set up by the Home Office) does not have any criminal convictions listed by the Home Office; and they
• satisfy the Home Office that they have no evidence of previous non-compliance.

If a company successfully obtains a licence, the Home Office will issue certificates of sponsorship, which cost £170. However, this does not guarantee that a work permit will be granted for your foreign national as there are still further tests/criteria that an employee must meet before a permit is ultimately granted. Any employer should satisfy themselves that a foreign nationa lwould comply with and meet any further tests/criteria set by the Home Office before issuing a certificate of sponsorship.

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Minimum Wage and Personal Tax Allowance Update
From October 2008:

• the adult National Minimum Wage (for those aged) will increase from £5.52 to£5.73;
• for 18-21 year olds theNMW will increase from£4.60 to £4.77; and
• for 16-17 year olds theNMW will increase from£3.40 to £3.53. 

However, Gordon Brown appears to have given in to recent union demands that 21-year old workers should be moved onto the adult rate of the NMW. Following Labour’s 2008 National Policy Form in July this year, it was agreed that official labour party policy should be changed reduce the age to 21 for workers entitled to the adult rate of NMW. It is hoped that this will take effect on 1st October 2009.

Personal Tax Allowance (2008/2009)
From 7 September 2008:

• The basic personal allowance for the 2008 –2009 tax year increased by £600 from £5,435 to £6,035; and
• The basic rate limit (22% tax band) has reduced from £36,000 to £34,000.

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Flexible Working
In our last newsletter, we mentioned that the Government had hoped to extend the right to request flexible working to parents with children under the age of 18. Unfortunately, the Bill failed to be passed in the House of Commons. However, the Government has recently indicated that this right will be extended to all parents with children under the age of 16 by April 2009.

One further change to the current arrangements will be the removal of the employer’s obligation to give written notice to an employee agreeing the flexible working arrangements. However, the obligation to give written notice to an employee whose flexible request is refused will not be removed.

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Agency Workers Update
The Temporary and Agency Workers (Equal Treatment) Bill had hoped to ensure that an agency worker had the right not to be treated less favourably than direct workers, by an employment business, employment agency or end user, in respect of their working conditions. However, the Bill was withdrawn in May this year as a result of an agreement that has been struck between the Government, unions and employers that will see agency workers in the UK receive equal treatment after 12 weeks employment.

An agreement was reached onthe following points:

• After 12 weeks in a given job there will be an entitlement to equal treatment.
• “Equal treatment” will mean at least the basic working and employment conditions that would apply to any worker who had not been engaged via an employment agency or business.
• It will not cover occupational social security schemes.

The Government will also be consulting further in relation to the following:

• Mechanisms for resolving disputes regarding the definition of equal treatment and compliance with the new rules;
• Arrangements to enable the industry and the publics ervices to reach the appropriate agreements on the treatment of agency workers;

The Government hopes to discuss the agreement with its European partners to agree the terms of the Agency Workers Directive that will enable this agreement to be brought forward into legal effect in the UK. The Government hopes the EU agreement will be obtained in time for the next parliamentary session.

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Contacts for Employment Newsletter - Autumn 2008

Paul Brown
Partner, Glasgow

• More on Paul
• Email Paul

Other contacts:

• Michael  McLaughlin, Partner