On Notice May 2008 Authors: Paul Callegari +44.20.7360.8194 paul.callegari@klgates.com Noel Deans +44.20.7360.8187 noel.deans@klgates.com www.klgates.com Age discrimination cases are now starting to make their way through the Tribunal system and in this month’s edition of On Notice we report on two such cases. Although both decisions are from the Employment Tribunal, and so not binding on other cases, they do show how Tribunals are applying the new law. We also summarise potentially significant changes to the Sex Discrimination Act 1975 and highlight a case at ECJ level regarding whether a public statement made by an employer that it would not consider job applicants of a particular nationality can constitute race discrimination. Finally, we cover changes to the legislation dealing with the duty on employers to consult on changes to pension schemes. Jackie Cuneen +44.20.7360.8184 jackie.cuneen@klgates.com Lisa Goodyear +44.20.7360.8256 lisa.goodyear@klgates.com Susannah Jarvis +44.20.7360.8271 susannah.jarvis@klgates.com Danny Tsang +44.20.7360.8144 danny.tsang@klgates.com Louise Waldron +44.20.7360.8250 louise.waldron@klgates.com K&L Gates comprises approximately 1,500 lawyers in 25 offices located in North America, Europe and Asia, and represents capital markets participants, entrepreneurs, growth and middle market companies, leading FORTUNE 100 and FTSE 100 global corporations and public sector entities. For more information, please visit www.klgates.com. Discriminated against for being too young In Wilkinson v Springwell the Newcastle-upon-Tyne Employment Tribunal decided that the employer had breached the Employment Equality (Age) Regulations 2006 in dismissing the employee on the basis that she was too young for the job. Miss Wilkinson was aged 18 at the time of her dismissal. She had been employed as an office administrator. During her probationary period the employer told her that she was not fulfilling all of her duties and that her performance needed to improve. At the same time, the employer asked another office administrator, who was older than her, to take on some of her work load. Miss Wilkinson was then dismissed and alleged that she had been told by her manager that she was too young for the job. The employer denied that it had dismissed Miss Wilkinson on the basis of her age, but claimed it was due to her ability to do the job (capability). The Tribunal found that the employer had made a stereotypical assumption that there was a link between Miss Wilkinson’s age, her experience and her ability to do her job. Her age was the predominant reason for her dismissal. The Tribunal also took into account the employer’s failure to complete an age discrimination questionnaire. This case serves as a reminder that employers need to be able to demonstrate that a dismissal is truly related to an individual’s performance or ability to do the job. An employer cannot simply say that an employee’s age and experience show whether or not he or she is capable of doing the job, there must be actual evidence of poor performance. For more information on this case, please contact Paul Callegari. Age-related flexible benefits packages Swann v GHL Insurance Services UK Ltd, a majority decision of the South London Employment Tribunal, is a significant decision for employers who provide their employees with funds to purchase items from flexible benefits packages. This case also serves as an example of what might, in practice, constitute the “objective justification” defence to an age discrimination claim. GHL Insurance Services UK Ltd provided its employees with a flexible benefits fund with which to purchase items from a flexible benefits package. This included an option to join a private health insurance scheme, where the premiums were calculated according to age and gender. Mrs Swann (who was 51 when she brought her claim) was a part-time employee. She brought a claim for age discrimination because her premiums under the optional private health insurance scheme were higher than those for an equivalent younger employee. On Notice The Tribunal rejected her claim. It decided that the relevant act by the employer was providing the flexible fund to the employees, not providing the option to join the private health scheme. The act of providing the fund was “age-neutral” since the employees all received the same fund to invest as they saw fit (purchase of the health insurance was just one of a range of benefits). There was therefore no discrimination and this alone dealt with Mrs Swann’s case. The definition of harassment is changed so as to remove the need for a link to be made between harassment and the sex of the person being harassed. This significantly widens the scope of the definition. Claims may now be made by someone who is not herself the subject or intended victim of the unwanted conduct, but the effect of which nonetheless violates her dignity or creates an intimidating, hostile, degrading, humiliating or offensive environment for her. However, the Tribunal went on to say that had the employee simply been offered the option of purchasing the private health insurance alone that, by contrast, would have been discriminatory on grounds of age since older employees would have had to pay more. Nevertheless, the Tribunal said, the employer would have been able to rely on the justification defence, in that the discrimination would have been objectively justified. The premiums were quite legitimately arrived at by reference to actuarial assessments of risk. Further, the employer’s aim was to improve its recruitment and retention of staff and the employer had taken professional advice and canvassed its employees’ views on how to offer the most suitable scheme. It is now unlawful for an employer to fail to take reasonably practicable steps to protect employees from harassment by third parties where such harassment is known to have occurred on at least two other occasions. For more information on this case, please contact Noel Deans. Changes to Sex Discrimination Act 1975 relating to pregnancy and maternity leave discrimination and harassment The Sex Discrimination Act 1975 (Amendment) Regulations 2008 came into force on 6 April 2008. These make some important amendments to the Sex Discrimination Act 1975 in order to implement properly the Equal Treatment Amendment Directive. In March 2007 the High Court decided (in EOC v Secretary of State for Trade and Industry) that the Government’s previous attempt to implement the Directive had failed in certain respects. The main changes are as follows. The definition of discrimination on grounds of pregnancy or maternity leave is changed so as to remove the need for a pregnant employee (or an employee on maternity leave) to compare her treatment to that received by a comparator who is not pregnant (or on maternity leave). Finally, changes have also been introduced aimed at ensuring women may claim benefits such as a company car, life assurance and medical cover during periods of additional maternity leave. However, the choice of words in the regulations has resulted in an unforeseen, but potentially significant consequence, in that it may be arguable that these regulations will require employers to pay pension contributions and provide pension benefits for periods of maternity leave where the individual is not actually receiving statutory maternity pay. For more information on these changes, please contact Jackie Cuneen or Louise Waldron. Advocate-General’s Opinion on whether a public statement of intent regarding recruitment can itself constitute direct race discrimination The A-G has given his Opinion in the case of Centrum voor Gelijkheid van Kansen en voor Racismebestrijding v Firma Feryn. The A-G’s Opinion (which is usually followed by the ECJ) stated that a public statement by an employer of a discriminatory recruitment policy constitutes direct discrimination under the Race Directive. The director of a Belgian door-fitting firm had stated in newspaper interviews that he would not recruit workers of Moroccan origin. The Belgian equivalent of the EOC began proceedings against the company seeking a declaration that it had breached discrimination legislation. The Belgian court held that the statement by the director did not constitute actual discrimination. April 2008 | 2 On Notice Rather, it was evidence of potential discrimination which could be used if a person of Moroccan origin applied for and failed to get a post with the company. The matter was referred to the ECJ for a preliminary ruling. The A-G disagreed with the Belgian court’s decision and stated that such an interpretation – requiring an individual victim of discrimination to be identified – would risk undermining the effectiveness of the principle of equal treatment. It may be that, on reading such a statement, workers of Moroccan origin would be deterred from applying for employment. The statement itself constitutes direct discrimination. The ECJ is expected to give its ruling on this matter later in the year. For more information on this case, please contact Lisa Goodyear. Extension of duty on employers to consult on changes to pensions As of 6 April 2008 the requirements of the Occupational and Personal Pension Schemes (Consultation by Employers and Miscellaneous Amendment) Regulations 2006 have been extended to employers with at least 50 employees. These employers will now be required to consult with employees before making certain changes to their occupational or personal pension schemes. For personal pension schemes, these changes include ceasing, reducing or increasing by certain specified levels any employer contributions payable under direct payment arrangements. For occupational pension schemes, the changes include increasing the age at which benefits become payable to members under the scheme, preventing new members from being admitted, and introducing member contributions where no such contributions were previously payable. Any such company currently considering changes to pension benefits should take advice as to whether the contemplated changes fall within the ambit of the regulations before implementing that change. In particular, the minimum 60 day consultation period would have to be incorporated into the timetable for change. For more information on these changes, please contact Danny Tsang or Louise Waldron. K&L Gates comprises approximately 1,500 lawyers in 25 offices located in North America, Europe and Asia, and represents capital markets participants, entrepreneurs, growth and middle market companies, leading FORTUNE 100 and FTSE 100 global corporations and public sector entities. For more information, visit www.klgates.com. 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