News

Queens Speech Employment Proposals
The Queen's Speech contained a number of proposed bills which will impact on employers and employees. These included:

• Equality Bill

The Government's intention to pursue the Equality Bill was confirmed. The Bill imposes an obligation on the public sector to "narrow the gap between the rich and poor and tackle discrimination". It is also intended to introduce transparency into the workplace to help address the differences in pay between men and women.

EHRC's response to the inclusion of the Equality Bill was:- "The Equality Bill is an essential piece of legislation that will make Britain a fairer place to live. We welcome the commitment made by the Government to carry over the Equality Bill, but enough parliamentary time must be given to this Bill so that it gets onto the statute books before a general election is called".

• Financial Services and Business Bill

The Bill is intended to reform and strengthen regulation of the financial services industry and will give the FSA a legal right to "tear up" employment contracts for bankers if the terms encourage excessive risk-taking or include multi-year guarantees.

• Bribery Bill

The Bill will create a new offence for companies that negligently allow employees or agents to pay bribes, subject to a defence that the company has adequate procedures to prevent bribery.

• Implementation of the EU Agency Workers Directive

The Directive grants agency and temporary workers who do the same job for 12 weeks, equal rights to permanent staff on pay, holidays and basic employment conditions. Legislation will be introduced to implement the Directive and will also grant agency workers the same opportunities as permanent employees to apply for permanent positions within the companies they work for.

• Support for unemployed young people

The Government is to guarantee an additional 10,000 places in education for unemployed 16-17 year olds; to offer work or training for unemployed 18-24 year olds without first having to wait until they have been out of work for a year; and to provide new graduates, who are still out of work after six months, with access to high quality internship or training, as well as help to become self-employed.

Taxation on payments into pension – do you know the position has changed?
Some employers may not yet be aware of new pension taxation rules which can impact on the treatment of termination payments. It has often proved tax efficient for employees receiving a termination payment to pay part of that payment into a pension scheme. However, the introduction of anti-forestalling measures by the Government, in the run-up to the restriction on pensions relief for individuals with an annual income of £150,000 or more, may well impact on any decision as to whether this is still tax efficient.

The Chancellor's 2009 Budget made clear that the Government intends to restrict higher rate tax relief on pension contributions for individuals with an annual income of £150,000 or more from 6 April 2011. In the run-up to that, where individuals:

• have an annual taxable income (the term income includes employment income, savings, pension income, rental and any income from investments) of £150,000 or more in the current tax year or the previous two tax years;

• increase their regular pension contributions or make irregular pension contributions after 22 April 2009; and

• make pension contributions (employee and employer) which exceed £20,000 in a tax year

anti-forestalling measures which have been introduced result in irregular or one-off payments into pension being taxed at 20% (to the extent that in aggregate pension contributions exceed £20,000 in that year). This rate may be increased to 30% in 2010 to account for the new 50% income tax rate. Employees who ordinarily have an annual income of less than £150,000 may be caught by the anti-forestalling measures if their normal income plus the termination payment amounts to over £150,000 in the relevant tax year.

Care should, therefore, be taken if advising employees on the consequences of them paying all or part of a termination payment into their pension. This may result in the employee incurring a substantial additional charge. Best to recommend independent tax advice!

The new right to request time to train
The Department for Business, Innovation and Skills ("BIS") has just published guidance explaining how the new right of employees to request time out to attend training will operate. The right will apply to those employed in companies with 250+ employees from 6 April 2010 and is expected to be extended to all employees from April 2011.

Key elements of the new right are:

• the purpose of the study/training must be to improve the employee's effectiveness in the employer's business or the performance of the employer's business;
• it only extends to employees with a minimum of 26 weeks' service;
• an employee may only make one application every 12 months;
• it will operate in a very similar fashion to flexible working applications.

To read the BIS guidance click here

Recent Cases

Employees can recover "Stigma" loss arising from their pursuit of a discrimination claim
Chagger v Abbey National plc
The Court of Appeal has held that where there is a discriminatory dismissal, a dismissing employer can be liable for "stigma" damages where other employers are unwilling to employ the dismissed employee due to the fact that he/she has previously brought discrimination proceedings.

Mr Chagger (C) is of Indian origin and was employed by Abbey National (AN) as a trading risk controller. He was selected for redundancy in 2006 from a pool of two. The other employee in the pool was a white woman. C successfully brought claims for unfair dismissal and race discrimination in the Tribunal. However, the Tribunal, (and later the EAT), held that it would be wrong to make AN liable for any stigma loss suffered by C as a result of other employers refusing to employ him as a consequence of his discrimination claim against AN. The EAT held that any losses relating to these refusals would have been as a result of the third parties' actions and not those of AN.

C appealed to the Court of Appeal who upheld his appeal, agreeing that AN should be liable for the stigma losses suffered by C having brought a discrimination claim. The Court ordered AN to pay a total sum of almost £2.8million in damages to C. More than three quarters of this sum related to future earnings based on the conclusion that C would be unable to work in the financial services industry ever again.

Comment
This case provides some clarification on assessing future damages in discrimination dismissal cases. Whilst the amount in this case is considerable, it will not be the norm.

C had made 111 job applications and used 26 recruitment agents without success. He also gave evidence about four companies which he believed had refused him employment at least in part because he had taken proceedings against AN. The Tribunal were impressed with his job search and explained that the records of his attempts to were "the most thorough, extensive and well-documented any member of the Tribunal could recall having ever seen." The Court of Appeal recognised this and agreed that Tribunals should only compensate for stigma loss where the employee can show compelling evidence that they have been prejudiced as a result of having brought a claim.

Whilst the facts of this case may be exceptional, employers should still be aware that they can be liable for stigma loss resulting from discrimination dismissals. This is to reflect the difficulties employees experience when making claims against their employers due to the time, money and stress involved. Stigma loss will usually be one of the factors forming part of the Tribunal's assessment of how long it will take the employee to find a new job.