Increasing complex employment legislation, coupled with broad definitions of "workers" and high awards, are putting pressure on companies. Who would be an employer? asks Rachel Dineley.
In negotiating the minefield of employment legislation, what are the major danger areas? Should you go further than simply complying with legislative requirements, and apply "best practice" to minimise your exposure to potentially costly claims?
Unfair dismissal
All employees with one year's service or more have the right not to be unfairly dismissed (including forced resignations). They can apply to an employment tribunal to get their job back or be given a comparable job or compensation. Most awards are for compensation, which is capped at £51,700 and based upon the employee's financial losses from dismissal, Action: Have a basic understanding of the reasons for which you can dismiss fairly (e.g. misconduct or redundancy). Follow fair and reasonable procedures.
Human Rights Act
The Human Rights Act enshrines in UK law the rights contained in the European Convention on Human Rights, including the rights to a fair trial, respect for private and family life, freedom of thought, conscience and religion, freedom of expression and freedom of assembly and association. Coupled with these rights is protection against discrimination. Rights are directly enforceable against employers that are public authorities or undertake a mixture of public and private functions in respect of actions which are public in nature. The Act impacts the private sector, too. Courts and tribunals must interpret UK legislation in a way which is compatible with Convention rights.
Action: Consider the human rights angle before disciplining or dismissing employees. Courts or tribunals will try to balance the rights of employees with the needs of employers, but are likely to be critical of heavy handed or intolerant employers.
Whistleblowing
The Public Interest Disclosure Act 1998 protects employees who make a "protected disclosure" against dismissal and "other detriment". Qualifying disclosures relate to commission of a criminal offence, failure to comply with a legal obligation, a miscarriage of justice, a risk to health or safety and the risk of environmental damage. Affected workers may complain to the employment tribunal for compensation.
Action: Introduce and follow a procedure for employees who wish to complain in good faith about workplace practices.
Disability discrimination
You must not unjustifiably discriminate against disabled job applicants or employees, and must make reasonable adjustments to accommodate them, so that they are not substantially disadvantaged in comparison to nondisabled employees. Employers clearly encounter serious practical problems in complying with the Disability Discrimination Act 1995's provisions, and employment tribunals have considerable difficulty in interpreting them. There is no limit to the compensation that a tribunal may award. Compensation may include elements for injury to feelings, and losses incurred as a consequence of the discrimination. Where this entails loss of employment and the disabled individual is unable to get suitable alternative employment, financial losses may be very high. In some cases, tribunals have awarded six figure sums.
Action: Be alert in handling all situations where "problems" could be attributable to a disability including mental as well as physical conditions. Take appropriate medical advice before making decisions.
Race discrimination
The Race Relations Act 1976 makes it unlawful to discriminate against job applicants or employees on racial grounds, which, at present, are limited to colour, race, nationality or ethnic or national origin. These may be broadened to meet European Union requirements in the future. There is no limit to the compensation that an employment tribunal can award. Compensation for injury to feelings has reached £30,000 in some serious cases.
Action: Create, implement, monitor and enforce clear policies and procedures to avoid discrimination at all stages of employment - recruitment, training, promotion. Train employees who manage these processes.
Sex discrimination
Following widely reported cases of sex discrimination including sexual harassment, few employers can be unaware of the risks associated with infringing the Sex Discrimination Act 1975. This provides that you must not directly or indirectly discriminate against people on the grounds of their sex. Discrimination legislation treats anything done by your employees as also done by you, whether or not you knew or approved. Therefore you are legally liable for acts of sexual or racial harassment committed by one employee against another. You may defend successfully if you can show that you took reasonably practicable steps to prevent the employee from committing acts of the kind in question. In 1999, an award of £37,500 was made in one case for injury to feelings.
Action: See race discrimination above.
Maternity and parental rights
All women employees are entitled to ordinary maternity leave of 18 weeks and, where they have accrued one year's service, an additional period of leave up to 29 weeks after the birth. Since December 1999, employees who are parents of children born or adopted after 15 December 1999 may take up to 13 weeks' unpaid leave. Employees with dependants are also entitled to reasonable time off to cater for domestic emergencies. You must not subject employees exercising or seeking to exercise these rights to detriment or dismissal. They may bring a claim for compensation to the employment tribunal.
Action: Ensure that line managers understand these new rights and the importance of responding appropriately to requests for leave.
Equal pay
Female employees are protected by the Equal Pay Act 1970. Women employed on "like work" with men, or undertaking work rated as equivalent or of equal value are entitled to be paid as well as their male contemporaries. The legislation is notoriously difficult to interpret and apply and is ripe for reform. In the meantime, you have the additional challenge of complying with the part-time workers legislation (see below). The particular risk associated with equal pay claims is the very substantial back pay which may be awarded where a group of female employees brings a successful claim.
Action: Consider whether you need job evaluations within your organisation to cater for inequalities in levels of pay.
Part-time workers
Since I July 2000, under the Part Time Workers (Prevention of Less Favourable Treatment) Regulations 2000, it has been unlawful to discriminate against parttime workers in relation to rates of pay, overtime, contractual sickness and maternity pay, occupational pensions, access to training, holiday and other leave entitlement and selection for redundancy. It can only be a matter of time before the case law is developed and poorly paid part-timers seek to compare themselves with full-timers working on comparable contracts, and seek remedy at the employment tribunal.
Action: Consider the terms under which part-time workers work and whether they are less well paid than full-timers on comparable contracts.
Working time
The Working Time Regulations, introduced in 1998, regulate and limit hours of work. A claim in the employment tribunal may be based on the regulations, or support other claims relating to work-related stress and a breakdown in health. Stress-related claims are increasing and may form part of a more extensive claim for discrimination or for breach of contract and/or negligence (see below). In 1999, tribunals made awards of up to £15,000 for personal injury in discrimination cases..
Action: Consider the hours worked by staff in practice. If a long hours culture prevails, what is its impact on the health of staff? Feedback given by employees in annual appraisals or reviews should be taken into account here.
Common law obligations
Don't lose sight of your common law obligations. You have a long-established duty of care to take reasonable necessary steps to ensure your employees' safety. You also have duties under the contract of employment, including mutual trust and confidence. Broadly, this imposes a duty not to act so unreasonably as to undermine the relationship with the employee, entitling him or her to sue for breach of contract. It is not enough simply to rely upon and act in accordance with the wording of a contract of employment or relevant policy.
Minimising the risk
Employees are well informed about their rights, and you cannot afford to ignore them. You need to keep abreast of legal developments and plan ahead as far as possible. Legislation is sometimes introduced at very short notice, with an even shorter lead time for implementation. For example, the regulations introducing parental leave were finalised on 10 December 1999 and came into force on 15 December 1999. You should regularly review your contracts, policies and employment practices to ensure that you comply fully with legislative requirements. Specialist legal advice, practically applied, may prove invaluable.
Appropriate training will reap its own rewards. While publishing a policy, for example on equal opportunities, may appear an exercise in political correctness, managers soon appreciate the benefits of such a policy when trained to tackle the issues which it addresses.
In the next few years, discrimination laws will be broadened as a result of European Union directives as well as government initiatives. Employers will bear the burden of proof in sex discrimination cases, and legislation will be extended to encompass discrimination on grounds of sexual orientation, age and religion or belief.
Some employment risks are insurable. But avoiding the costly consequences of claims lies principally with employers. It may seem an onerous burden, but clear advice, good planning and proper training will help to ensure it is bearable!
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Rachel Dineley is an employment law partner with national law firm Beachcroft Wansbroughs, Tel: 020 7894 6541, email: rdineley@bwlaw.co.uk .
