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News of the World and Employment Law

The sudden closure of the News of the World has led to a great deal of employment law comment about the litigation that News International is likely to face. From unfair dismissal claims, through the collective consultation provisions, culminating in a learned analysis of ‘stigma’ damages that may be recoverable by journalists whose professional reputation has been damaged by the ‘goings on’ at the News of the World.

It strikes me that the online employment law community cares rather more about the employment law implications of the News of the Word closure than News International does.  I don’t want to pick apart all of the online analysis. Most of it is straightforward; some of it I disagree with – but these are complicated areas of the law and it would be possible to write quite an extensive essay on each aspect of the closure and still not cover all of the possible legal angles.

For me, the significant point is that if you are a certain kind of business then the mere technicalities of employment law do not stop you from doing what you want to do. NI did not have to get permission to close the News of the World – and the fact that they are almost certainly in breach of their S.188 collective consultation requirements did not enable the NUJ, the News International Staff Association or any of the staff themselves to prevent the closure. Essentially, breaching employment law leads to an additional financial cost for the employer – but does not prevent the employer from doing what it feels needs to be done.

And what is that financial cost? There are some 200 employees who have been given notice (just a rough figure, there may be more, and I am assuming that none of those 200 are freelancers). If we assume that 200 staff will go – what is a breach of employment law going to cost? (warning; complete guesswork follows)

Let’s assume everyone gets a maximum unfair dismissal award of £68K and a statutory redundancy payment of £5k. Add to that 200 protective awards of 90 days’ pay for each of the 200 journalists. I’m going to assume an average salary of £70,000 which pus the protective award at something like £17,000 per employee.

That gives us total compensation per employee of £90,000. Multiply that by 200 and you get £18,000,000.

That is the absolute top end of what the breach of employment law (plus statutory payments) can cost. In reality there will be fewer than 200 staff actually dismissed because some will find jobs elsewhere in News International. Not every journalist will expect to be out of work long enough to notch up the full compensatory award, but even those who do will not get that much because of the ‘Polkey deduction’. NI would argue that even if they had consulted, the paper would still have closed and the redundancies would still have happened.

Journalists are likely to accept compromise agreements for considerably less than the full amount. Better to get a certain payout now rather than an uncertain payout after an exhausting legal battle. Besides most of them would rather get on with their career than spend their time fighting for compensation in the Employment Tribunal.

So the total bill will actually be much less than £18,000,000. Half that maybe?

£9,000,000 still strikes me as a lot of money. But the total turnover of the Murdoch Empire is just over $32 billion.

The point is that if closing the News of the World suddenly and in a hurry is something that is seen as strategically important for the empire as a whole, then the overall cost of doing so is not that great.

For those of us in employment law, that’s a bit frustrating. We’d like to think that our expertise would be crucial to any employer looking to make such large scale redundancies.  But the fact is that when the financial stakes are this high, employment law hardly features on the list of things that senior executives are worried about.

I’m sure that lots of people will enjoy reading all of the articles about employment law and the News of the World closure – and the situation is a good way of illustrating the principles that normal employers would be keen to abide by.

When push comes to shove, however, News International has bigger things to worry about.

Darren Newman

Government Guidance on the Agency Workers Regulations

At the end of last week the Government published draft guidance on the Agency Workers Regulations 2010. For a two week period, everyone is being asked to suggest ways in which the guidance can be improved and I’d urge everyone to take a look at it and see if it makes sense to them.

On this issue I am less of a detached and cynical observer of Government publications than usual. For the past few months I have been part of a group that the officials at the Department for Business have been working with to help draft the guidance and make it as user friendly and accurate as possible. A number of us – some independent like myself; others representing either temporary work agencies, hirers, trade unions or employers bodies have been meeting regularly at the Department to discuss particular aspects of the Regulations and make suggestions as to how the guidance can most helpfully explain how the Regulations work.

This has been a fascinating process and I want to pay tribute to the BIS officials who have worked so hard to produce the draft that was published last week. These are complicated and controversial Regulations and the meetings often reflected that, with lots of lively (always good humoured) debate and disagreement. Usually we were working with an initial draft produced by the Department which we would then pick apart and criticise, making suggestions for how it could be improved, or re-written. I know from my own experience that it can be pretty dispiriting to work hard drafting something and then have it casually pulled to pieces by others, but if the officials were frustrated by the process, they didn’t show it. All constructive suggestions were welcomed, and the guidance was re-drafted (often more than once) to take account of them.

In short the whole process has left me very impressed with the skills and patience of the civil servants involved and with the knowledge, experience and professionalism of my colleagues on the working group. It was a pleasure to work with them all and I’ve learnt a lot from the exercise. I’m sure the guidance can be improved further, and that’s what this final consultation is about, but I wouldn’t want anyone to think that it had been produced in some ivory tower by a detached civil servant speaking from on high.  An awful lot of work has been put into this guidance and if it doesn’t do the job then a lot of us have to share the blame for that.

Finally, it is worth emphasising that this is just guidance. Ultimately what matters is not what the guidance says but what the Regulations mean. Lots of stakeholders will have a particular view as to how the Regulations should be interpreted and will be disappointed or annoyed if the guidance is not sufficiently clear on that point. There are certainly areas where the guidance glosses over a difficult issue or is vague on a specific point. That is unavoidable where the Regulations themselves are difficult or vague. In the end, it is impossible to give coherent guidance on a fundamentally incoherent legal provision and the Regulations contain a couple of those. Guidance can’t solve that problem. On balance though, I hope that people will welcome the guidance that has been produced, and the process that led to it.

Darren Newman

Ranting about Positive Action

I have no political objection to positive action, but I do think that the provision being brought in on April 2011 is badly drafted and that employers should not touch it with a bargepole. If you want to hear me ranting about just how badly drafted S.159 is you can listen to the latest XpertHR podcast (no subscription required). Enjoy

Darren Newman

Discrimination, Reasonable Adjustments and Twitter

I’ve spent the last couple of weeks studiously keeping out of an employment law argument. That’s not like me at all, but this one involves Duncan Bannatyne and I already have that T-shirt.

Now that the row seems to have run its course, however, I did just want to make a couple of comments about what happened because I think it has something important to say about what discrimination is and our attitudes towards it.

You can read all about the row here, but in brief it centers on the reporting by XpertHR* of an employment tribunal case: Williams v Bannatyne Fitness Ltd. This is not an important case (except to those directly involved). It’s merely an illustration, an opportunity to see how employment law gets applied by the tribunals in practice, as opposed to the more rarefied atmosphere of the Employment Appeal Tribunal or the Court of Appeal.

In this case the tribunal found that while the claimant had not been victimised and that the refusal to offer him any further hours of work was for genuine economic reasons rather than for any reason connected with his disability or his complaints, the employer had failed to make a number of reasonable adjustments in the way they handled his grievances and also failed to make an adjustment in the location of his pigeon hole.

The XpertHR report was a straightforward explanation of the facts of the case and the conclusions of the employment tribunal. I’ve looked at both the report and the tribunal decision itself and there are absolutely no grounds for complaint in the drafting of the report. It’s absolutely accurate.

There has been a bit more of a debate however about the headline to the report and the Tweet that linked to it. These stated ‘Bannatyne Fitness club discriminated against Thalidomide victim’. It’s been suggested that that is an inflammatory and even an unfair way of describing what happened.

I can see why some people would say so – but I disagree. First of all from a strictly literal and legal standpoint the phrase is technically correct. A failure to make reasonable adjustments is defined as discrimination in the Disability Discrimination Act 1995 (S.3A(2)) which applied in this case and in the Equality Act 2010 (S.21(2)) which will apply in any future cases. So the tribunal did find that Bannatyne Fitness Ltd had discriminated against a Thalidomide victim. That’s a fact. The tribunal may be wrong, of course, but until that is established on an appeal, XpertHR are entitled to report the tribunal’s findings. That’s what they do, after all, and the tribunal decision is a matter of public record.

The reaction of some people has been to say: ‘yes, but not really’. They point out that Bannatyne Fitness actually won on what may be regarded as the main aspects of the case. There was no victimisation, and the refusal to give him further work was not linked to disability. The suggestion is that the issues they actually lost on were minor – mere technicalities. The ‘real’ allegation of discrimination did not succeed, and the Tweet, and the headline to the article are therefore misleading.

It is certainly true that the claimant did not succeed in the part of his case to which the greatest amount of financial loss would have been attached – and may have come away from the case feeling disappointed with the outcome. The employer, on the other hand, might well have seen the outcome as a qualified win – which would no doubt explain their anger at the way in which XpertHR drew attention to the failure to make reasonable adjustments and came right out and labeled it as discrimination.

But it is! Reasonable adjustments are not some technicality, they are at the heart of what disability discrimination is all about. Refusing to move a pigeon hole so that someone who has no arms can reach it may sound like a minor matter, but that does not mean that it was minor or trivial to the individual affected. The same is true of the failures in relation to the handling of his grievance. The failures may have been a mere oversight, and there is no reason to believe that they were motivated by any sort of malice or hostility – but that is not the point. Discrimination is not about malice or hostility, it is about less favourable treatment and, in the case of disability, it is about making adjustments. If you fail in that then you are discriminating. That may be the sort of error that any employer can fall into – but that is why it is a good idea to report the finding – to help employers avoid making that sort of mistake.

As for the headline and the Tweet, well yes it is provocative to phrase things in that way. But I think it’s justified. Employers need to understand the importance of these issues and that even a simple oversight or a lack of common sense can lead to discrimination. Discrimination is not confined to the bad guys. Good employers can discriminate too if they are not careful. A lack of hostility to a group is no guarantee that you will not inadvertently discriminate and I think the headline ‘Bannatyne Fitness club discriminated against Thalidomide victim’ can help shock us into being more aware of that.

Darren Newman

*Since this is a bit of a contentious issue and in the interests of full disclosure, I should make it clear that I am a consultant editor for XpertHR. I’m not employed by them but I do have a close relationship with them and am naturally well-disposed towards their work. Nobody tells me what to think write or say, however, and this post reflects my personal view.

Retirement – As You Were

It appears that we can breathe a sigh of relief over the abolition of the Default Retirement Age. Tonight the Government has published a new draft set of Regulations which corrects the problem that was identified in the previous version.

Under the new transitional provisions the notification of retirement must be given before the commencement date of the Regulations (which still appears to be 6th April) and the employee must have ‘attained the age limit or will attain it before 1st October 2011′.

This means that there is no longer a provision preventing the retirement of employees who are already 65 by 6th April. As a result, valid notifications of retirement that have already been given will remain valid provided the employee is 65 by the end of September. There is more to the transitional provisions than that. For example, it is now clear that if the employer gives a one year notification on 5th April 2011 it can still agree an extension of the retirement date by up to six further months. That would put the last possible actual date of retirement as 4th (or maybe 5th) of October 2012. But let’s not worry about that too much just now. Frankly, if as an employer you have that sort of thing in mind, you should be taking very careful legal advice from someone who is very good at counting days on a calendar.  The main thing is:

Emergency over. Everything is (basically) fine. Move along now

PS kudos to Employment Law Clinic for being the first (I could find) to publish the Regs online

Abolition of Default Retirement Age – important update

The Regulations abolishing the default retirement age have now been laid before Parliament and they have an unexpected sting in the tail.

The way in which the transitional provisions have been drafted means that while it is still possible to force through the retirement of someone who reaches the age of 65 between 6th April and 30th September 2011, it will not be safe to retire someone who has already reached the age of 65 by the 6th April. (for a detailed explanation of this, see below).

Some employers may have already given a notice of an intended date of retirement to employees who are over the age of 65 and which takes effect after 5th April this year. As the Regulations currently stand, these retirements will leave the employer exposed to claims for age discrimination and unfair dismissal.

This is completely unexpected and may well be an error. There may also be time for the position to be corrected. Failing that however, it may be necessary to rethink current notices of retirement that have been issued. Bringing retirements forward to before 6th April is a potentially risky strategy and should only be done after taking full legal advice.

For those interested in just how this problem arises, here comes the legal stuff…

How the transitional provisions work

The Regulations come into force on 6th April 2011. From that time there is no longer any exception for retirement in the Equality Act; the statutory procedure for requesting a deferral of retirement is abolished; and the unfair dismissal provisions allowing for a fair dismissal by reason of retirement will also go.

That means that unless the transitional provisions apply, any dismissal which takes effect from the 6th April onwards and which is based on the fact that the employee is 65 or older will be a pretty clear case of age discrimination and unfair dismissal unless the employer can show that the policy of retirement is objectively justified (usually, it won’t be).

So it’s vital to know when the transitional provisions will apply. These are set out in Regulation 5. This says that the provisions on retirement will only continue to apply ‘in relation to the employment of a person’ if two conditions are met.

The first condition is that notification of retirement has been given in accordance with the Age Regulations before 6 April 2011. There’s no problem with that – that’s what we expected.

However the second condition which must be met is that ‘the person will attain the age limit during the period that begins with [6 April 2011] and ends with 30 September 2011’ (Reg 5(1)(b)) The ‘age limit’ is the age of 65, or the normal retirement age, whichever is the higher (let’s just assume we’re talking about hitting the age of 65 to keep things simple).

Do you see the problem?

The transitional provisions do not say ‘and has attained the age limit by 30th September’, they say ‘the person will attain the age limit during the period that begins with [6th April] and ends with 30th September’.

That means that an employee who is already 65 by the 6th April will not come within the transitional provisions! They have already attained the age limit and will not therefore ‘attain’ it between 6th April and 30thSeptember.

If they are not within the transitional provisions and are dismissed on or after 6th April, they will be able to sue for age discrimination and unfair dismissal – even if they have already gone through a full notification procedure. The date that matters is the date they are dismissed, not the date on which they were notified of the retirement.

This is of course a technical argument, but when you are interpreting legislation, technical arguments count. The provision is baffling and defies common sense, but it seems to me to be entirely clear. If the Regulations are not amended before being passed by Parliament, then employees who are already 65 or over will be protected against any retirement from 6th April onwards, even if they have already been given notice by their employer.

This is going to cause a lot of employers a serious problem. There are many employees who in recent years have had their retirement deferred and employers may have expected (as I did!) that they would be able to retire those individuals provided they gave them notice before the end of March and their employment ended by 30th September. Now that we have the Regulations, we can see that that is not right. Some serious (and urgent) rethinking is in order.

You can follow the ongoing debate on Twitter by using the hashtag #ukemplaw

UPDATE: For an excellent analysis of the background to this problem and some of its implications go to the Mrs Markleham blog