News

Employee Fraud
 
In the current economic climate we are seeing two trends.  One is that historic frauds are being uncovered now that margins are tighter.  The other is that employee fraud is on the increase.  The risk to your business from historic events can be reduced by the preparation of an effective plan to respond to the discovery of fraud.  The risk of future employee frauds can be reduced by the introduction of counter-fraud measures, in addition to having a response plan in place. 
 
Counter fraud measures would include ensuring that financial and internal controls are in place, educating your staff in the ways fraud can be committed and obtaining their co-operation in being vigilant and reporting suspicious activity, perhaps on a confidential basis.  A code of practice will help to establish an anti-fraud culture.
 
The response plan is very important.  The initial steps taken in a fraud investigation can often determine whether your business can recover its losses, either from the fraudulent employee, or from insurance policies or other third parties.  The plan should include details of who should make up the investigation team, which should include lawyers, IT experts, HR and PR representatives and forensic accountants.  This will mean time is not wasted in wondering who needs to be involved, and ensure a response is rapid enough to freeze the fraudulent employee's assets if this is an option available.  It will also identify a member of senior management who will make the key decisions in consultation with the investigation team to ensure the steps taken achieve the best possible result.  The plan will have determined what steps are necessary and identify steps which should not be taken to ensure insurance policies are not invalidated. 

Proposed "Nameless" Cv's Slammed By Hr

Just when you thought you had heard it all, a new radical proposal has been made to ban names from job applications in a bid to prevent employers gleaning any information as to the applicant's sex, race or age prior to interview. This suggestion was put forward as a proposed amendment to the Equality Bill which is due to come into force in autumn 2010.

The CIPD have commented that: "It's a good idea, but there's a danger of the Bill becoming too restrictive with clauses like this… I'd be happy to see it promoted as good practice guidance."  HR directors however appear outraged at the suggestion, with Hazel Mitchell, HR director at broadcaster ITN, stating: "This is bureaucracy gone mad. The key to all this is a fair and thorough recruitment process, from initial selection through to hire. Perhaps if MPs had some 'real life' HR experience, unnecessary clauses like this would not be dreamt up."

Comment:
The Government Equalities Office, which introduced the Equality Bill last month, said it would consider the suggestion when the Bill reaches committee stage. Interestingly the practice was likened to students putting down a number instead of their names on exam papers to ensure marking is unbiased.  

Government To Outlaw Blacklisting Of Union Members

The Government has announced that it will introduce regulations to prevent the use of blacklists to deny workers employment as a result of their union membership or activities. The Government has the power to make such regulations under section 3 of the Employment Relations Act 1999.

Consultation on this issue previously took place in 2003. Although the Government decided against creating legislation at that time in the absence of any hard evidence that blacklisting was still taking place, they did commit themselves to revisiting the issue if any evidence of blacklisting emerged.

In March of this year, the Information Commissioner reported that 40 construction companies had subscribed to a database containing details of the union activity and other employment information of over 3,000 workers in the construction industry. This database has now been closed.

Comment:
The Government will now be holding a short consultation in early summer to take account of the developments in March and any other developments since the previous consultation in 2003 with a view to laying Regulations before Parliament in the autumn.

This announcement has been welcomed by the unions but some believe that the Government should have acted sooner and that they were mistaken in believing that blacklisting no longer took place.

Recent Cases

Age Discrimination: Length Of Service As A Redundancy Criterion
Rolls Royce Plc V Unite The Union

You may recall in October last year, we reported on the High Court decision in this case of Rolls Royce (RR) v Unite the Union (Unite).  RR had a collective agreement with Unite in which employees in a redundancy situation received one point for each year of continuous service as part of a wider selection matrix.  In a joint action to the High Court for declarator on whether the terms where discriminatory, RR argued that length of service as a criterion was indirectly discriminatory on the grounds of age, while Unite argued that the criterion was a proportionate means of achieving a legitimate aim in terms of fairness to the workforce (and so could be justified in terms of the Age Regulations).  The High Court agreed with Unite and held that, while the criterion was age discriminatory, it was objectively justified and the selection matrix would provide RR with a defence against an age discrimination claim.

On appeal, the Court of Appeal has agreed with the High Court and held, by a majority, that the inclusion of a length of service criterion in the redundancy selection policy constitutes a proportionate means of achieving a legitimate aim. Lord Justice Wall held that the legitimate aim was to reward loyalty and create a stable workforce in the context of a fair redundancy selection process.  He thought that it was proportionate to use length of service as a criterion because it was just one of several criteria used and was not determinative. The Court also unanimously gave the provisional view that the use of length of service as a criterion could be considered a 'benefit' under Regulation 32 of the Employment Equality (Age) Regulations 2006 (this was another point which had been argued in the High Court).

Comment:
This is the first case that has considered the inclusion of length of service in selecting employees for redundancy, and the Court of Appeal judgement is therefore significant.  The key factors in this case were that length of service was part of a wider scheme of measured performance and that it had been included in collective agreements following negotiation with a recognised trade union. Although this decision confirms that the use of the criterion could be objectively justified, employers should still be wary of including length of service as part of a redundancy selection matrix.  If it is used, measurable criteria must also be included in the matrix to provide balance and to minimize the risk that the criteria would be discriminatory.

Religious Discrimination In Trinidad And Tobago...

The Trinity Cross of the Order of Trinity, which was established by the Queen in 1969 to recognise distinguished service and gallantry, has been declared unlawful by the Privy Council in London.  Muslim and Hindu communities in Trinidad and Tobago complained that the honour's Christian name and cross insignia were discriminatory.  The Privy Council ruled that the honour discriminates against non-Christians and that the award's name, together with its appearance, was a breach of the right of equality and the right to freedom of conscience and belief under Trinidad and Tobago's Constitution.

The Trinity Cross has been received by many of the islands' leading politicians and diplomats and also by cricketers Garfield Sobers and Brian Lara and the novelist V.S. Naipaul.  The Privy Council did not make the ruling retrospective and so recipients will not be stripped of their honours.

A parliamentary review of British honours has recommended that future honours contain no reference to Christianity.

Comment:
This case, although not an employment issue, highlights the need to be aware of potential discrimination claims in areas where you may not necessarily expect to see them arise!