On Notice
January 2009
Authors:
Paul Callegari
www.klgates.com
In this month’s On Notice we consider the new Employment Act 2008 and other key legislative
changes scheduled for 2009, including the revision of the limits applicable to employment
+44 (0)20.7360.8194
paul.callegari@klgates.com
awards and payments. We also discuss EAT decisions concerning impulse resignations, the
Jackie Cuneen
deals with the relationship between the receipt of incapacity benefit and the award of future
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jackie.cuneen@klgates.com
earnings compensation. Finally, we would like to wish all readers of On Notice a healthy and
effect of the Working Time Regulations on rest breaks and the decision in Sheffield v Fox which
prosperous New Year.
Noel Deans
+44 (0)20.7360.8187
noel.deans@klgates.com
Lisa Perelman
+44 (0)20.7360.8256
lisa.perelman@klgates.com
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Employment Act 2008
The new Employment Act 2008 was passed on 13 November 2008 and will begin
to come into force on 6 April 2009. Its most important function is to repeal the
much-criticised statutory dispute resolution procedures and related provisions about
procedural unfairness in dismissal cases. The statutory procedures came into force in
October 2004 and introduced a 3-step mandatory process to be followed in disciplinary
and dismissal matters and grievances. Where either side fails to use the minimum
procedures an Employment Tribunal (ET) is required to increase or decrease any
award accordingly. The independent Gibbons Review concluded that the statutory
procedures had led to disputes becoming formalized (rather than resolving disputes)
and were complicating, rather than simplifying, disputes.
Accordingly, the statutory dispute resolution procedures will be repealed in their
entirety and new provisions will come into force in April 2009. Under the new regime,
any default on the part of any employer or employee to attempt to resolve disputes will
be measured against a revised ACAS Code of Practice on Disciplinary and Grievance
Procedures. Any failure to act in accordance with the ACAS Code will enable an ET
to either increase or decrease an award in its discretion by up to 25%.
Additionally, the Employment Act 2008 makes provision for more pre-claim
conciliation and for the time limits on post-claim conciliation to be removed, extends
ETs’ powers to reach a determination without a hearing and allows ETs to award
compensation for financial loss in certain types of monetary claim (for instance where
there has been a failure to pay a statutory redundancy payment).
For more information on this legislation please contact Noel Deans.
Revision of employment award limits and payments
This revision affects all awards where the event which gives rise to the entitlement to
an award (e.g. dismissal in the context of a statutory redundancy payment) occurred
on or after 1 February 2009. The increases include the following:
• The limit on the compensatory award for unfair dismissal will be raised from £63,000
to £66,200;
• The weekly rate of statutory sick pay (SSP) will increase from £75.15 to £79.15;
On Notice
• The prescribed weekly rate of statutory maternity
pay (SMP), statutory paternity pay (SPP) and
statutory adoption pay (SAP) will increase from
£117.18 to £123.06; and
• T he cap for a week’s pay used to calculate
redundancy pay and the basic award in cases of
unfair dismissal will rise from £330 to £350.
introduce implementing legislation in the 20082009 Parliamentary session, but many employers’
groups are putting pressure on the Government to
delay this and benefit from the long-stop date of 5
December 2011.
For more information on this legislation please
contact Jackie Cuneen.
For more information on these revisions please
contact Lisa Perelman.
Amendments to the Working Time Regulations
and flexible working
On 1 April 2009 the Working Time Regulations 1998
will be amended to increase statutory leave from 4.8
weeks to 5.6 weeks (including bank holidays). In
addition, the right for parents to request flexible
working will be extended to apply to all children
aged 16 and under.
The European Parliament has also voted to end the
UK’s opt-out from the maximum 48-hour working
week. Not surprisingly reaction in the UK from
employers has not been positive and the Government,
in the New Year, will enter into negotiations with the
European Council to try and delay the removal of
the opt-out.
For more information on these developments please
contact Lisa Perelman.
Directive on temporary agency workers
The Directive on temporary agency workers
was published on 5 December 2008 and must be
implemented in the UK by 5 December 2011.
The effect of this Directive is that agency workers
must have the right to equal basic working and
employment conditions with comparable permanent
employees. The UK, however, can provide that
an agency worker must be in a job for at least 12
weeks before such protection is afforded. The UK
Government had previously stated that it hoped to
Resignation on an impulse: requirement for
employer to allow an appropriate “cooling-off
“ period
In the case of Ali v Birmingham City Council
(UKEAT/0313/08) Mr Ali handed in his letter of
resignation on 25 April 2007 saying that he was
“under pressure, stressed out and couldn’t think
straight”. Mr Ali’s manager offered Mr Ali a 20
minute cooling-off period so that he could reconsider
his decision. Mr Ali appeared to still be upset after
this period and so was allowed a further 10 minutes,
however at the end of this time Mr Ali confirmed
that he wanted to resign with immediate effect.
This resignation was accepted. On 29 April Mr
Ali emailed his manager saying that he wanted to
return to work. However, Mr Ali was informed that
his contract would not be reinstated and that his
resignation still stood.
The Employment Appeal Tribunal (EAT) held that
Mr Ali’s resignation had been effective and that it
did not therefore have jurisdiction to hear his claim
that he had been unfairly dismissed. As Mr Ali had
been given a reasonable opportunity to reflect on
his resignation, the EAT decided that his resignation
had been considered, rather than impulsive. This
was supported by the fact that Mr Ali had not tried
to withdraw his resignation until more than 4 days
after it was given.
When a resignation is tendered in the heat of the
moment, an employer should always ensure that
the employee is given an appropriate amount of
time to reflect on their decision. This case shows
that this period need not be a very long one, but the
appropriate opportunity will vary depending on the
January 2009 | 2
On Notice
circumstances of each case. An employer should
also allow time for the employee to reflect calmly
on their decision to resign when the circumstances
involve an immature employee, or where an ET
may consider that an employee is being pushed into
making such a decision by their employer.
For more information on this case please contact
Paul Callegari.
Guidance in relation to entitlement to
rest breaks
According to the Working Time Regulations 1998,
the majority of workers are entitled to a rest break
of 20 minutes when their working day is six or more
hours long. The worker is entitled to an uninterrupted
20-minute break which may be spent away from
the workstation but the employer does not have to
pay for this break. This is in addition to the usual
required daily rest periods of 11 uninterrupted hours
in every 24-hour period and weekly rest period of 24
uninterrupted hours in every seven-day period.
The regulations provide for exceptions to this
entitlement to a 20 minute break where the work
involves security or surveillance duties. In such
cases, the worker may be entitled to “compensatory
rest” which must be a period of rest of the same
length. There have been significant difficulties for
both employers and the courts in deciding when
this compensatory rest should be given. Should it
be given during a working period? Should it be an
additional 20 minutes added to the daily and weekly
rest periods? How soon should it be given?
More interestingly, the EAT decided that the
compensatory rest should be taken during shifts
of work as it is an entitlement over and above the
worker’s rest in between shifts (daily and weekly
periods discussed above). It must be taken during a
working period. If an employer is unable to grant
the compensatory rest, as is the case with certain
“special case” of employees, then it has to ensure
that it gives the worker appropriate protection for
his or her health and safety. The case was remitted
to a new ET to make findings on the basis of the
EAT’s decision, most importantly whether Mr.
Hughes could be granted compensatory rest during
a working period or whether he was a “special
case” to whom the employer would need to afford
appropriate protection for his health and safety.
This case is ambiguous and unclear as, unfortunately,
the EAT returned the case to the ET to consider
whether it was possible for Mr. Hughes to take
compensatory rest “which he can use as he pleases
and which falls outside his shifts”. This seems to
be the opposite of the EAT’s earlier conclusion that
compensatory rest must be taken within a working
period and may simply be a linguistic error given
the earlier reasoning. However, the decision raises
other concerns, namely that if a worker is to take
compensatory rest within his or her shifts then this
means that his or her hours are effectively reduced
but they are still paid the same amount. The EAT’s
guidance is ambiguous in relation to this at several
points throughout its judgment and it remains to be
seen how the ET will deal with the remitted case.
For more information on this case please contact
Lisa Perelman.
In Corps of Commissionaires Management Ltd v
Hughes (UKEAT/0196/08), a security guard made
a claim for compensatory rest. The parties agreed
that owing to his job in security he was one of the
exceptions and so was not entitled to the usual 20
minute rest break. The first issue that arose was
whether Mr. Hughes was entitled to a 40 minute
compensatory rest break as he worked a 12 hour
shift. The EAT decided that a worker is only entitled
to one rest period. Therefore in a 12 hour shift only
one period of 20 minutes is required.
January 2009 | 3
On Notice
Guidance on how the receipt of incapacity
benefit affects the potential award for loss
of future earnings in an unfair dismissal or
discrimination claim
The EAT case of Sheffield Forgemasters International
Ltd v Fox (UKEAT/0143/08) relates to two claims
upheld by the ET (one for disability discrimination
and the other for unfair dismissal). Both claimants
won their cases and successfully claimed for future
loss of earnings during a period when they were
in receipt of incapacity benefit. It was argued by
their employers that they ought not to receive a
loss of earnings award as they had been judged to
be incapable of work for the period the award was
made. Both ETs held that receipt of this benefit did
not preclude the award for future earnings and the
employers in each case appealed to the EAT.
The employers argued that an individual receiving
incapacity benefit is incapable of working and so
should not be awarded compensation for loss of
earnings during that period. The EAT decided that
the receipt of incapacity benefit did not preclude the
claimants from receiving loss of earnings for the
same period. They referred to the Social Security
(Incapacity for Work) (General) Regulations 1995
which provided for situations where an individual
was deemed to be incapable of work and therefore
eligible for benefits. On a reading of the Regulations
it appeared to the EAT that there were circumstances
in which a claimant can satisfy the test to receive
incapacity benefit (based on a points system) and
be deemed incapable of work when in fact they can
work. Accordingly, the EAT were satisfied that the
ET was entitled to find that the claimants were able
to work despite the fact that for the duration of the
period they had been on incapacity benefit.
Although this decision seems somewhat counterintuitive it is simply a consequence of the legislation
relating to incapacity benefits. A person can receive
incapacity benefits even if in reality they are capable
of working and therefore the receipt of these benefits
should have no effect on any award of compensation
for future earnings.
For more information on this case please contact
Paul Callegari.
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January 2009 | 4