Failing to Prevent Bribery - Are You at Risk?

The Bribery Act 2010 came into force on 1 July 2011. It created a new offence which can be committed by a commercial organisation if it fails to prevent persons associated with it from committing bribery on its behalf. A business can provide a defence by showing that it had ‘adequate procedures’ to prevent bribery by such persons from taking place, however. Organisations that have not already done so should ensure they have the necessary prevention procedures in place.

What is deemed to be adequate will depend on the nature, size and complexity of your business. The key point is that to rely on the defence, the measures you adopt must be proportionate in view of the likelihood of bribery occurring – for example, a large firm which operates in overseas markets is likely to be more at risk than a small organisation undertaking business primarily in the UK. You should therefore carry out a risk assessment of the potential that exists for bribery offences to be committed, especially when entering into new business arrangements and new overseas markets.

Where appropriate, due diligence should be carried out so that you know exactly whom you are dealing with, especially when engaging others to represent you in business dealings.

Whatever anti-bribery procedures you do decide are necessary should be seen to have the backing of those at the top of the organisation and the policy should be communicated to staff and others who will perform services for you, with training provided where appropriate, so that it is clear that the business culture is one in which bribery is not tolerated. If the risks you face change, your procedures may cease to be effective, so it is important to make sure these are kept up to date.

Concern has been expressed that spending on hospitality could cause a business to fall foul of the Bribery Act. The position is that you can continue to provide bona fide hospitality and spend money on promotional or other business initiatives provided the expenditure is reasonable and proportionate given the sort of business you are engaged in. The expenditure should be made in order to promote your products or services, improve the image of your business or establish good relations with clients, with no intention of corrupting the independence of the recipient.

The Serious Fraud Office has advised that when considering whether expenditure on corporate hospitality can be considered to be a bribe, it will look at five factors:

1. Whether or not the organisation has issued a clear policy regarding gifts and hospitality;
2. Whether the expenditure in question was compliant with the policy and, if not, whether or not it had been sanctioned at the appropriate level within the organisation;
3. Whether or not the expenditure was proportionate with regard to the status of the recipient;
4. Whether or not the expenditure had been entered in the organisation’s books of account; and
5. The lawfulness of the receipt by the recipient under the laws of his or her own country.

Where an offence under the Act is committed with the consent or connivance of a senior officer of an organisation, that person (as well as the body corporate or partnership) is guilty of the offence and liable to be proceeded against and punished accordingly. The maximum penalty for individuals is 10 years’ imprisonment or an unlimited fine, or both. The maximum penalty for commercial organisations is an unlimited fine.

The Ministry of Justice has published guidance on the Act, including case studies illustrating what approach businesses might take in certain situations.

False Claims on a CV - What to Do

According to research by the Risk Advisory Group, more than half of CVs submitted by job applicants contain lies or inaccuracies. These range from gaps in employment history to false claims regarding qualifications and failure to mention fraud committed against previous employers.

Earlier research, carried out by MORI, revealed that almost a third of those questioned admitted to lying when applying for a job. Whether or not one can infer from this a rising trend in the problem, in an increasingly competitive job market there is pressure on applicants to make themselves stand out from the crowd.

So what can you do if you discover that one of your employees has secured a job by lying? There are two potential actions available to the employer either for breach of contract or under the law of misrepresentation.

Breach of Contract

If an employee continues to work for you without revealing the truth, then they are in breach of the duty of trust and confidence which is implied in every employment contract. If the breach is 'fundamental',an employer can dismiss the employee immediately, without notice or compensation. An example of a fundamental breach might be lying about the class of degree obtained. Care must be taken to make sure the breach of contract is sufficiently serious to justify such action.

Misrepresentation

Misrepresentation arises where an inaccurate statement of fact is made which induces the employer to enter into a contract of employment. The misrepresentation need not be the only inducement. For example, an employee who falsely claims to have a good academic record may have made other statements on their CV that are true. If the misrepresentation was a material factor in inducing the employer to offer the candidate the job, the employer may be entitled to compensation. This might include the cost of a replacement, recruitment agency fees and any training costs incurred.

In some cases there could be criminal consequences. A job applicant who lies may be guilty of obtaining a pecuniary advantage by deception under the Theft Act 1968, which specifically includes obtaining employment.

References

Giving false information on a CV can seriously affect an employee's future job prospects. If you are asked for a reference by someone who has been dismissed for lying on their CV, you should not give a reference that is inaccurate or misleading. You do have the option of not providing a reference at all.

What to Do

Employers are advised not to take at face value the information candidates put on their CVs. Carry out checks for those candidates short-listed for a job. There are organisations that can carry out the checks for you, or you can verify information with former employers yourself. Ask to see certificates relating to relevant qualifications. Letters to job applicants should make it clear that you attach great importance to the accuracy of the information included in a CV and stress your right to dismiss an employee who provides untrue or misleading information.

Health and Safety - Working With Display Screen Equipment

Many workers spend a large part of their day looking at a computer screen, laptop or touch screen. The Health and Safety (Display Screen Equipment) Regulations 1992 specifically deal with the health and safety issues associated with regularly working with Display Screen Equipment (DSE) – i.e. on a daily basis for continuous periods of an hour or more.

The Health and Safety Executive has a free leaflet, ‘Working With Display Screen Equipment (DSE)’, which gives advice for employers and employees on minimising risks and ensuring compliance with the law. This includes advice on screen position, workstation design, working patterns and the employer’s responsibility for providing eyesight tests for employees.

Employers have a duty to ensure the provision of appropriate eye and eyesight tests, on request, to DSE users and to any employees who are to become users. If the eye test shows that the user needs glasses specifically for DSE work, the employer must pay for a basic pair of frames and lenses.

The leaflet also advises employers with many users of DSE to appoint someone competent to act as an assessor. The assessor should be trained so that they can:

• identify who is covered by the Regulations;
• assess workstation risks and put control measures in place; and
• provide appropriate training to DSE users.

Written Statement of Employment Particulars

A contract of employment may be verbal but all employees, whether part-time or full-time, are entitled by law to be given a written statement setting out the main particulars of their employment, provided their employment lasts for one month or more. All the required particulars must be given within two months of the start of the employment, unless the employee is to work abroad for more than one month within two months of commencing employment. In this case, the information must be provided before the employee goes away.

It is not necessary to provide all the required information at the same time. It can be given in separate documents provided certain details are collected together in one principal statement. These are:

• the names of the employer and the employee;
• the job title or a description of the job;
• the date on which the employment began;
• if a previous job counts towards a period of continuous employment, the date on which the period started;
• the hours of work, including whether employees will have to work Sundays, nights or overtime;
• the remuneration and whether pay is weekly, monthly etc.;
• holiday entitlement; and
• the address(es) of the place or places of work and whether the employee might have to relocate.

As well as the principal statement, the following information must also be provided in writing:

• where the job is not permanent, the period for which the employment is expected to continue or, if it is for a fixed term, the date on which it is to end;
• the length of notice the employee must give or is entitled to receive;
• details of any relevant collective agreements;
• details of pensions and pension schemes;
• who to go to with a grievance;
• how to complain about how a grievance is handled; and
• how to complain about a disciplinary or dismissal decision.

The written statement need not include the following but, where it does not, it must say where the information can be found:

• sick pay and procedures;
• disciplinary and dismissal procedures; and
• grievance procedures.

If an employee is required to work outside the UK for a period of more than one month, then the statement of employment particulars must also specify:

• the period for which the employee is to work outside the UK;
• the currency in which remuneration is to be paid while the employee is working abroad;
• any additional pay and benefits; and
• any terms and conditions relating to the employee’s return to the UK.

If an employee is sent to work in another country in the European Economic Area, the terms and conditions of his or her employment must meet the legal minimum requirements in that country as regards:

• working hours and rest breaks;
• holiday entitlement; and
• minimum pay (including overtime).

Employers do have a degree of flexibility as to how to communicate the statement of employment particulars. If a written contract or letter of engagement provides the required information and is given to the employee within the appropriate time limits, then a separate statement of particulars is not required.

Under Section 38 of the Employment Act 2002, unless an employer can demonstrate that there are exceptional circumstances, employees could be entitled to an award of between two and four weeks’ pay if their employer fails to provide them with a written statement of employment particulars or of particulars of any changes in their terms of employment. This right only applies, however, if the employee has successfully brought another substantive claim.

Dismissing an employee for exercising or trying to exercise his or her statutory right to a written statement of employment particulars is automatically unfair dismissal with no minimum service requirement.

An example of a written statement of employment particulars form which meets the requirements of employment legislation is available from the GOV.UK website. Guidance on completing the form can be found at the end of the document.

A Guide to the Agency Workers Regulations

The Agency Workers Regulations 2010 (AWR) came into force on 1 October 2011.

All agency workers are entitled, from the first day of their assignment, to information on any job vacancies and to make use of collective facilities and amenities available to comparable workers and employees. These may include staff canteens, childcare facilities, transport services (such as local pick-ups and drop-offs and transport between sites – but not company car allowances or season ticket loans), staff common rooms, prayer rooms and car parking.

Employers should ensure that agency workers know how to access information relating to job vacancies and are aware of all relevant facilities. This can be done either by providing details directly to the worker, as part of an induction pack, or by providing details to the employment agency to pass on to the agency worker as part of the information on the assignment.

Agency Workers Who Have Completed a 12-Week Qualifying Period

Once an agency worker has worked in the same job for the same hirer for a period of 12 calendar weeks, they are entitled to the same basic employment and working conditions as if they had been recruited directly by the employer.

Because the working patterns of agency workers can be irregular, the AWR provide for a number of circumstances in which breaks do not prevent them from completing the qualifying period. Employers are therefore advised to study the rules for calculating this period in order to avoid errors.

Basic employment and working conditions include:

• basic pay;
• duration of working time;
• annual leave;
• night work; and
• rest breaks and rest periods.

The rights with regard to pay include:

• basic pay based on the annual salary the agency worker would have received if recruited directly – this will usually be converted into an hourly or daily rate, taking into account any pay increments the worker would have received;
• overtime payments – subject to the same requirements as if the worker had been recruited directly;
• payment for annual leave;
• bonus or commission payments linked to the amount and quality of work completed – e.g. achievement of sales targets;
• bonuses linked to personal performance or non-contractual payments that are made with such regularity that they are customary;
• vouchers or stamps which have a monetary value and can be exchanged for money, goods or services – e.g. luncheon vouchers, childcare vouchers but not salary sacrifice schemes; and
• paid time off for antenatal appointments.

Some payments may require those recruited directly to complete a period of service – e.g. enhanced entitlement to annual leave after 12 months. An agency worker will need to complete the same period of service to become eligible. This should be calculated from the start of the 12-week qualifying period.

The rights with regard to pay do not include:

• occupational schemes – sick pay, maternity, paternity and adoption pay;
• redundancy and notice pay;
• payment for time off to carry out trade union duties;
• guarantee payments, as they apply to directly recruited staff if laid off;
• advances in pay – e.g. for season tickets;
• payments or rewards linked to financial participation schemes such as share ownership;
• the majority of benefits in kind – e.g. reduced-rate mortgages or employer-funded training allowances;
• bonuses where there is no recognition of a worker’s personal contribution, such as a flat rate bonus paid to the workforce to encourage loyalty or reward long service; and
• additional, non-contractual bonuses – as long as these payments are not made so often that they have become customary.

Agency workers will be covered by the new automatic pension enrolment which is being phased in between October 2014 and October 2017, depending on the size of the company. For further information, see the website of the Pensions Regulator.

To ensure equal treatment after 12 weeks’ service, employers who use agency workers should have in place proper job descriptions and pay structures for the roles they perform. In addition, to facilitate calculation of the qualifying period, a record should be maintained showing the dates and hours worked, the location of their work and their job role. Employment agencies should be provided with information on the basic terms of comparable staff hired directly by the employer.

The AWR contain anti-avoidance provisions which prevent a series of assignments being structured so as to prevent an agency worker from completing the qualifying period. Breaks between assignments will not, therefore, necessarily prevent agency workers from gaining the same basic employment and working conditions as staff recruited directly.

Detailed guidance on the AWR can be found on the website of the Department for Business, Innovation & Skills.

The Equality Act 2010 - A Guide for Employers

The Equality Act 2010 replaced nine major pieces of discrimination legislation and other ancillary measures introduced over the last forty years. The core provisions of the Act came into force on 1 October 2010.

As well as harmonising existing discrimination laws, the Act aims to advance equality and to extend protection from unfairness and discrimination on grounds of disability; age; sex; sexual orientation; gender reassignment; race; religion or belief; marriage and civil partnership; and pregnancy and maternity. These are now called ‘protected characteristics’.

Whilst many of an employer’s obligations regarding discrimination in the workplace remain the same, there are some key changes that do need to be addressed as the Act extends some protections to characteristics that were not previously covered and also strengthens some aspects of equality law.

Types of Discrimination – Definitions

Direct Discrimination
Direct discrimination occurs where the reason for a person being treated less favourably than another is one of the protected characteristics covered by the Act. The new definition is broad enough to cover instances where someone does not have the protected characteristic but has suffered less favourable treatment because of their association with someone who does (discrimination by association) or where the victim of less favourable treatment is wrongly thought to have a protected characteristic (perception discrimination).

Indirect Discrimination
Indirect discrimination occurs when a policy or practice which applies in the same way to everyone has an effect which particularly disadvantages people with a protected characteristic, unless the person applying the policy or practice can justify it by demonstrating that it is a proportionate means of achieving a legitimate aim.

Indirect discrimination can also occur when a policy would put a person at a disadvantage were it to be applied. For example, where a person is deterred from doing something, such as applying for a job, because a policy which would be applied would result in his or her disadvantage, this may also be indirect discrimination.

Indirect discrimination now covers all the protected characteristics apart from pregnancy and maternity.

Harassment
Harassment is unwanted conduct that is related to a relevant protected characteristic that has the purpose or effect of creating an intimidating, hostile, degrading, humiliating or offensive environment for the complainant or of violating the complainant’s dignity.

Harassment applies to all the protected characteristics apart from pregnancy and maternity and marriage and civil partnership. The definition means that employees can complain of behaviour they find offensive, even if it is not directed specifically at them and the complainant need not possess the relevant protected characteristic themselves.

Third Party Harassment
Under Section 40 of the Act, an employer was potentially liable for harassment of an employee by a third party, for example a customer or client. However, the third party harassment provisions have now been repealed with effect from 1 October 2013.

Victimisation
Victimisation takes place where one person treats another badly because he or she has, in good faith, done a ‘protected act’, for example taken action, or supported any action taken, for the purpose of the Act, including in relation to any alleged breach of its provisions. Victimisation also occurs where one person treats another badly because he or she is suspected of having done this or of intending to do so. A person is not protected where he or she maliciously makes or supports an untrue complaint. Only an individual can bring a claim for victimisation.

Under the Act, victimisation is technically no longer treated as a form of discrimination, so there is no longer a need to compare treatment of an alleged victim with that of a person who has not made or supported a complaint under the Act.

Specific Points to Note

Disability
The definition of disability remains essentially the same. A person is disabled if they have a physical or mental impairment which has a substantial and long-term adverse effect on their ability to carry out normal day-to-day activities. However, the Act removes the requirement to consider a list of eight capacities, such as mobility or speech, hearing or eyesight, when determining whether or not a person is disabled. This change will make it easier for some people to demonstrate that they meet the definition of a disabled person.

The Act replaces the concept of disability-related discrimination with a new protection from discrimination arising from disability. This means that a person discriminates against a disabled person if they treat them unfavourably because of something arising from, or in consequence of, their disability where the employer or other person acting for the employer knows, or could reasonably be expected to know, that the employee has a disability, unless the treatment can be shown to be a proportionate means of achieving a legitimate aim. This definition means that there is no need for a disabled employee to establish that his or her treatment is less favourable than that experienced by other, non-disabled employees.

The concept of indirect discrimination has been extended to the protected characteristic of disability.

As before, an employer has a duty to make reasonable adjustments to help employees overcome disadvantages arising from an impairment. Failure of the duty cannot be justified. The Act makes clear that this duty includes a requirement to provide an auxiliary aid, such as job application forms in large print for someone with a visual impairment or a specially adapted computer keyboard for an employee with arthritis, if this would overcome the substantial disadvantage to the disabled person.

Age
The Act protects people of all ages. However, different treatment because of age is not unlawful direct or indirect discrimination if the employer can justify it – i.e. can demonstrate that it is a proportionate means of achieving a legitimate aim. Age is the only protected characteristic that allows an employer to justify direct discrimination.

As of 6 April 2011, it is no longer lawful to compulsorily retire an employee on the grounds of age unless the dismissal can be objectively justified as a proportionate means of achieving a legitimate aim, which is not an easy test to pass.

Group risk insured benefits are exempt from the principle of equal treatment on the grounds of age, so employers who provide such benefits can cease to provide or offer them to employees aged 65 and above, even if they continue to work beyond that age. The age at which group risk insured benefits can be withdrawn will increase in line with increases in the State Pension Age.

Employers can continue to use the development bands of the national minimum wage without the threat of legal challenge on the grounds of age discrimination.

Gender Reassignment
A transsexual person now has the protected characteristic of gender reassignment.

The Act defines this as being where a person has proposed, started or completed a process to change his or her sex. Note that he or she is no longer required to be under medical supervision to come within the definition.

It is discrimination to treat transsexual people less favourably for being absent from work because they propose to undergo, are undergoing or have undergone gender reassignment than they would be treated if they were absent through illness or injury.

Pre-Employment Health Questionnaires
In order to protect job applicants with a disability from discrimination during the recruitment process, the Act prohibits the use of questionnaires on an applicant’s general health and related issues prior to a job offer being made. This includes prohibiting the use of such questionnaires before selecting a pool of applicants from whom the successful candidate will be chosen.

The measure does not prevent employers from asking job applicants any questions about their health but stipulates that they are only allowed to do so for specific purposes, for example deciding whether a job applicant can carry out a function that is essential (‘intrinsic’) to the work concerned.

Equal Pay
The Act allows an employee to bring a claim of direct pay discrimination using a hypothetical comparator where no actual comparator of the opposite sex exists.

Pay Secrecy Clauses
The Act makes pay secrecy clauses unenforceable and provides that individuals who discuss their pay with one another in order to find out if there might be pay discrimination with regard to any of the protected characteristics are protected from victimisation, even if their employment contract requires them not to discuss their pay.

Positive Discrimination
As with previous equality legislation, the Act allows an employer to take ‘positive action’ in certain situations. Positive action is lawful where it is necessary to prevent those who share a particular protected characteristic from suffering a disadvantage connected with that characteristic or if their participation in an activity is disproportionately low.

The Act also contains provisions that allow positive action specifically in the process of recruitment and promotion, in limited circumstances. These provisions mean that it is not unlawful to recruit or promote a candidate who is of equal merit, in relation to the specific job or position for which they have applied, to another candidate for the same post if the employer reasonably thinks that:

the candidate has a protected characteristic that is under-represented in the workforce; or

people with that characteristic suffer a disadvantage connected to that characteristic.

This kind of positive action is only allowed where it is a proportionate way of addressing the under-representation or disadvantage. The Act does not allow an employer to appoint a less suitable candidate just because he or she has a protected characteristic that is under-represented or disadvantaged.

Dual Discrimination
Section 14 of the Act contains provisions that would allow individuals who believe they have been treated less favourably on account of two protected characteristics to bring a combined claim. For example, a woman may feel she has suffered discrimination on account of both her sex and her age. However, the Government has decided not to implement this provision at the current time.

Genuine Occupational Requirements
Under the Act, there is now a single occupational requirement that must exist for direct discrimination in favour of a particular protected characteristic to be lawful. This applies to all the protected characteristics and differs from the previous exceptions for occupational requirements in that it makes clear that the requirement must pursue a legitimate aim and that the burden of showing that the exception applies rests on those seeking to rely on it.

Organised Religion
Where employment is for the purposes of an organised religion, an employer is permitted to apply a requirement to be of a particular sex or not to be a transsexual person, or to make a requirement related to the employee’s marriage or civil partnership status or sexual orientation, but only in narrowly defined circumstances.

The Burden of Proof
In any claim where someone alleges discrimination, harassment or victimisation under the Act, the burden of proving his or her case starts with the claimant. Once the claimant has established sufficient facts, which in the absence of any other explanation point to a breach having occurred, the burden then shifts to the respondent to demonstrate that no breach of the provisions of the Act has occurred.

Extension of Employment Tribunal Powers
Previously, an Employment Tribunal could only make recommendations for the benefit of the individual claimant. The Act extends this power so that Tribunals can now make recommendations that an employer takes steps to eliminate or reduce the effect of discrimination on other employees.

Claims relating to a discriminatory act that occurred wholly before 1 October 2010 will be dealt with under the previous legislation. Where the discrimination, harassment or victimisation occurred before 1 October 2010 and continued on or after that date, the claim will be dealt with under the Equality Act.

Further information and Codes of Practice supporting the Act can be found on the website of the Equality and Human Rights Commission.

The Corporate Manslaughter Act

The Corporate Manslaughter and Corporate Homicide Act 2007 established a new statutory offence of corporate manslaughter (corporate culpable homicide in Scotland).

An organisation is guilty of the offence if the way in which it manages or organises its activities causes a death and amounts to a gross breach of a relevant duty of care to the deceased. A substantial part of the breach must have been in the way activities were managed by the senior management of the organisation.

The new offence builds on the responsibilities that employers and organisations already owe to their employees and members of the general public, with regard to the premises they occupy and the activities they carry out.

Previously, an organisation could only be convicted of manslaughter if a ‘directing mind’ – i.e. a senior manager or director – was also personally liable. However, this did not reflect the reality of the way decisions are made in large organisations and there were very few prosecutions as a result. The new offence is concerned with the corporate liability of the organisation itself, allowing this to be assessed on a wider basis and providing greater accountability for serious management failings across the organisation. It will continue to be possible to bring prosecutions for gross negligence manslaughter against individuals, where there is sufficient evidence and it is in the public interest to do so.

When determining whether an organisation is guilty of the new offence of corporate manslaughter, the courts will look at management systems and practices across the organisation and whether an adequate standard of care was applied to the fatal activity. Juries will be required to consider the extent to which an organisation was in breach of its health and safety requirements and how serious those failings were. They will be able to consider the culture that exists within an organisation regarding health and safety issues. Lax management attitudes that result in a lower standard of care than could reasonably be expected will be punished.

An organisation convicted of the new offence may receive:

• an unlimited fine;
• a publicity order requiring an organisation to publicise its conviction and certain details of the offence; and
• a remedial order requiring the organisation to address the cause of the fatal injury.

The sentencing guidelines state that ‘fines for companies and organisations found guilty of corporate manslaughter may be millions of pounds and should seldom be below £500,000. For other health and safety offences that cause death, fines from £100,000 up to hundreds of thousands of pounds should be imposed. In deciding the level of fine, account must be taken of the financial circumstances of the offending organisation.’

As is usual with new legislation, cases brought under the Act took a while to reach court, with the first prosecutions involving small companies.

In a further case, Lion Steel Equipment Ltd., which manufactures storage products, was convicted following the death, in May 2008, of one of its employees, Steven Berry, who fell through a plastic roof at an industrial unit in Manchester. The company had 142 employees, and over the three years from 1 October 2008 to 30 September 2011 its turnover was in the region of £10 million per annum, with a profit before tax of between £187,000 and £317,000.

The company was fined £480,000, which is the largest fine levied under the Act to date, even though the guidance on sentencing refers to a fine of less than £500,000 seldom being appropriate after a conviction. The fine is payable in four instalments with the final payment due in September 2015.

Several factors were taken into account in determining the level of the fine, including the timeliness of the company’s guilty plea and the financial position of the company. The judge commented, “I would regard it as a most regrettable consequence, which would add to the terrible consequences of Mr Berry’s death, if the effect of an order of this court were to imperil the employment of his former colleagues and those who would have been had he lived.” The judge was satisfied by an accountant’s report that a fine of more than £100,000, payable in a short period, could have a serious impact on the viability of the business. On the other hand, the judge was of the view that the commission of the offence did require a significant punishment and was satisfied that, with a longer payment period, a loan could be raised on the buildings.

In a recent case concerning the death of an 11-year-old child who was hit by a speedboat whilst attending a friend’s birthday party at a lake, the company that operated the site pleaded guilty to charges under the Act.

Charges against one of the company’s directors were dropped.

After hearing that the leisure company had a ‘lax attitude’ to health and safety and that the speedboat driver had no recognised qualifications, the decision of the judge was to fine the company ‘every penny it has’ – £135,000 including costs.

This case was the fifth conviction under the Act and illustrates that the courts will take very seriously breaches of health and safety laws that lead to someone being killed.

Employers are advised to keep their procedures under review, especially those with direct health and safety implications. Successful defences to charges of corporate manslaughter will inevitably depend on being able to prove that the organisation takes a responsible attitude to health and safety, with appropriate risk management procedures in place that are enforced rigorously.

Age Discrimination - Life After the Abolition of the Default Retirement Age

The Default Retirement Age (DRA) has now been abolished and it is no longer permissible for an employer to dismiss an older worker on the ground of retirement unless this can be objectively justified under the Equality Act 2010.

This does not mean that employees will never be able to retire, but that an employer cannot lawfully force an employee to retire at a set age unless the age can be objectively justified under the Equality Act. If this is not possible, the employer faces the double threat of a claim for age discrimination and for unfair dismissal.

Employers therefore have two options. These are:

• to stop retiring people and use other dismissal options where necessary; or
• to use an Employer Justified Retirement Age (EJRA).

For a set retirement age to be objectively justified, its use must be a proportionate means of achieving a legitimate aim. This is not an easy test to pass, and businesses who do wish to have in place an EJRA are advised to seek legal advice before choosing this option. An EJRA will normally be appropriate for occupations where retirement at a particular age can be justified on health and safety grounds – for example for airline pilots or fire fighters. Employers must provide evidence that the chosen EJRA is necessary – not based merely on assumptions – and be able to demonstrate that no alternative or less discriminatory action could achieve the same result. Employers who have chosen to use an EJRA must follow a fair procedure, giving the employee adequate notice of their impending retirement and, if circumstances permit, consider any request to work beyond the EJRA as an exception to the normal policy. However, it is important to have procedures in place to ensure consistency of treatment of employees who request to stay on.

Older employees can retire voluntarily at a time of their choosing and draw any occupational pension to which they are entitled under the rules of the scheme. If an employee has given formal notice that they wish to retire, the employer is under no obligation to permit them to withdraw their notice should they change their mind. If, however, an employee has only told their employer that they plan to retire, they can change their mind before formal notice is given.

Great care must be taken if an older employee is performing badly. Procedures for dealing with performance issues must be fair and applied consistently across all age groups. To avoid a claim of unfair dismissal, any dismissal must be for one of the potentially fair reasons for dismissal under the Employment Rights Act 1996. Care must also be taken that any decisions taken by the employer do not discriminate against an employee who has a condition that constitutes a disability under the Equality Act. In such cases, the employer has a duty to make reasonable adjustments to remove any barriers to the employee’s performance.

Group risk insured benefits are exempt from the principle of equal treatment on the grounds of age, so employers who provide such benefits can cease to provide or offer them to employees who reach the State Pension Age, even if they continue to work beyond that age. The age at which group risk insured benefits can be withdrawn will increase in line with increases in the State Pension Age.

In addition, under the pensions auto-enrolment rules, employers are not obliged to enrol workers who have reached the State Pension Age.

Whilst the abolition of the DRA gives employees greater choice and flexibility over when to retire, the move has been criticised as having a negative impact on an employer’s ability to plan workforce requirements to meet future business needs.

The Advisory, Conciliation and Arbitration Service has published guidance for employers, entitled ‘Working Without the Default Retirement Age’, which contains useful advice on a possible framework for workplace discussions that will help identify an employee’s future aims, and gives examples of ways of raising the issue of retirement without asking questions that could be seen as discriminatory.

Workplace Stress - An Employer's Duties

The 14th edition of the Absence Management survey report, which is produced by the Chartered Institute of Personnel and Development (CIPD) in conjunction with healthcare provider Simplyhealth, found that in 2013 stress continued to be one of the most common causes of long-term absence from work. Two-fifths of respondents overall reported that stress-related absence had increased over the past year for the workforce as a whole, while one-fifth reported that it had increased for managers and one in eight that it had increased for senior managers. Workload was again ranked the most common cause of stress, followed by management style. Nearly one third included non-work factors and significant organisational changes among their top three causes of stress at work, whilst fewer cited relationships at work as a major cause of stress compared with last year's survey.

Work-related stress occurs when a worker reacts in an adverse way to excessive pressures or demands in the workplace. It can affect a person's mental and physical health. A distinction can be made, however, between abnormal pressure that is beyond the worker's ability to cope as distinct from normal pressures of work that an employer is entitled to expect people to handle without adverse effects.

Dealing with stress is a difficult issue for employers. In addition to specific duties under health and safety legislation, they owe their employees a common law duty to take reasonable care to safeguard their health and safety, and this includes a duty to control stress levels at work. Employers are only in breach of their duty if they have failed to take reasonable steps in the circumstances to prevent the stress. It is foreseeable injury arising from an employer's breach of duty that gives rise to a liability, and foreseeability depends on what the employer knows (or ought reasonably to know) about an individual employee. However, taking positive steps to ensure that the working environment is free from the sort of pressures that can have an adverse effect on employees makes good business sense as doing so is likely to have a beneficial impact on the productivity and efficiency of a business.

Larger employers should make sure that managers are trained to recognise the signs of stress and know how to respond, and that they conduct themselves in a way that minimises stress and promotes a happy working environment. Employers should be aware that they can be found vicariously liable for the actions of their employees in certain circumstances.

An employer who is actively managing potential causes of work-related stress and preventing day-to-day pressures from becoming excessive is unlikely to be found in breach of their duty. The legal duty to carry out risk assessments includes arrangements for managing risks posed by work-related stress. It is therefore important to examine your workplace to spot the signs of existing work-related stress and to identify any potential sources of stress that could put employees at risk. These assessments should be kept under regular review. Do you, for example, monitor employees' working hours to make sure they have appropriate rest breaks? Do sickness absence figures or staff turnover rates reveal a problem with high stress levels that should be tackled? Do you have policies in place to identify and deal with any instances of bullying and harassment?

Employers have a legal duty to consult with duly elected safety representatives of employees on health and safety matters, or with employees themselves where there are no formally elected representatives, and there is no exemption from this requirement for 'small' employers. However, you might also consider carrying out periodic employee satisfaction surveys seeking views on workplace morale and attitudes to stress, and asking for suggestions on ways of combating any problems.

If you become aware that an employee is suffering from work-related stress, you are required to take reasonable steps to prevent it. It is often helpful to agree an action plan with the employee concerned. Case law suggests that an employer who offers a confidential advice service to employees suffering from stress, with referral to appropriate counselling or treatment services, is less likely to be found to have failed in their duty of care, provided reasonable steps are taken at the same time to alleviate the problem – for example by reducing that person's workload or making changes to the way they work.

Employers are reminded of their specific duty under the Equality Act 2010 to make reasonable adjustments to the work or workplace where an employee is disabled, the definition of which can include persons who are experiencing mental health problems caused by stress where their illness is having a substantial and adverse effect on their ability to carry out normal day-to-day activities, the effect is long-term and the condition is likely to recur.

The message to employers is clear: stress cannot be ignored. You should have in place a formal stress policy and make sure that if and when stress-related complaints are made they are treated seriously, investigated fully and appropriate action is taken at once. Active intervention is required. Monitor the situation to see if the remedial action is working and continue to do so until the situation is resolved.

Useful guidance on this topic, 'Work-Related Stress – What the Law Says', has been developed by the CIPD in conjunction with the Health and Safety Executive, the Advisory, Conciliation and Arbitration Service and Health, Work and Well-being.

Settlement Agreements

Following changes made by the Enterprise and Regulatory Reform Act 2013, compromise agreements have been renamed ‘settlement agreements’ and new provisions (Section 111A) have been inserted into the Employment Rights Act 1996 (ERA) making settlement agreement discussions inadmissible as evidence in ordinary unfair dismissal cases so that offers to end the employment relationship on agreed terms can now be made on a confidential basis.

Employee safeguards that applied to compromise agreements also apply to settlement agreements. For a settlement agreement to be legally binding, the following conditions must be met:

• The agreement, though not necessarily the initial offer, must be in writing;
• The agreement must relate to a particular complaint or proceedings;
• The employee must have received advice from a relevant independent adviser as to the terms and effect of the proposed agreement and, in particular, its effect on his or her ability to pursue an Employment Tribunal (ET) claim;
• The independent adviser must have a current contract of insurance or professional indemnity covering the risk of a claim by the employee in respect of loss arising from the advice;
• The agreement must identify the adviser; and
• The agreement must state that the applicable statutory conditions regulating the settlement agreement have been met.

However, whereas compromise agreements could only be used to resolve ongoing workplace issues, as a mechanism for preventing possible future complaints to the ET, settlement agreements can be used to end an employment relationship on agreed terms.

The communications that take place in order to reach a settlement agreement that relates to an existing employment dispute will normally be on a ‘without prejudice’ basis – i.e. they will be inadmissible as evidence before the court or ET – provided they constitute a genuine attempt to resolve the dispute and there is no fraud, undue influence or other ‘unambiguous impropriety’. Prior to the introduction of Section 111A of the ERA, this ‘without prejudice’ confidentiality did not apply where there was no existing dispute between the parties. The change has been made in order to allow greater flexibility in the use of confidential discussions as a means of ending the employment relationship. Section 111A, which runs alongside the ‘without prejudice’ principle, provides that even where no employment dispute exists, the parties may still offer and discuss a settlement agreement in the knowledge that their conversations cannot be used as evidence in any subsequent unfair dismissal claim. However, the protection will not apply where there is some ‘improper behaviour’ in relation to the settlement agreement discussions or the offer, unless the ET decides that it would be just to exclude the evidence.

The Advisory, Conciliation and Arbitration Service (Acas) has produced a statutory Code of Practice, ‘Settlement Agreements under Section 111A of the Employment Rights Act 1996’, which focuses on the confidentiality aspect of Section 111A of the ERA. This sets out the legal requirements with regard to such agreements and also provides general guidance on best practice, such as a recommendation that employers allow employees to be accompanied during the negotiations by a work colleague, trade union official or trade union representative, together with some examples of what would constitute ‘improper behaviour’ in this context.

In addition, Acas has published a booklet entitled ‘Settlement Agreements: A Guide’, which contains non-statutory guidance (including template letters) designed to help employers and employees understand what settlement agreements are, what their effect is, when they might best be used and how they can be negotiated.

Whether or not these changes will have the desired effect of enabling employers and employees to have honest and open discussions about ending the employment relationship remains to be seen. If a settlement agreement cannot be reached, damage will have been done to the employment relationship, which might make moving forward difficult for both parties. Employers will have to handle the process carefully to avoid being faced with allegations of improper, or possibly discriminatory, behaviour by an employee who wishes to rely on the communications as evidence in an ET claim.

Informing and Consulting Employees

The EU Information and Consultation Directive 2002 establishes minimum requirements for consulting and informing employees on a wide variety of subjects. The Information and Consultation of Employees Regulations 2004 implement the Directive in the UK.

Since 6 April 2008, the Regulations have applied to public and private undertakings that carry out an economic activity where there are more than 50 employees. The undertaking does not have to be operating for gain.

The requirement to inform and consult employees does not operate automatically. It is triggered either where a valid written request to agree consultation arrangements is made by 10 per cent of the employees (subject to a minimum of 15 employees) or if the employer chooses to start the process.

Employers must initiate negotiations for an agreement no later than three months after a valid request is received and have six months from the date of the written request to reach a negotiated agreement. An agreement must establish how the employer will inform and consult employees or their representatives on an ongoing basis but the legislation does allow the flexibility to agree consultation arrangements which suit the individual needs of the undertaking.

Where no agreement is reached, standard information and consultation provisions will apply giving employees the right to information and consultation as set out in the original Directive. These give employees the right to:

• information on the recent and probable development of the undertaking or establishment’s activities and economic situation;
• information and consultation on the situation, structure and probable development of employment within the undertaking and on any measures likely to be taken, particularly with regard to any threat to employment; and
• information on decisions likely to lead to substantial changes in work organisation or in contractual relations, including collective redundancies and business transfers (as defined in the relevant legislation).

Information must be given at an appropriate time and in an appropriate way so that representatives of the workforce are able to conduct an adequate study and, where necessary, prepare for consultation. In other words, it is not merely a matter of involving staff in discussions as to how best to implement decisions that the management has already taken.

The consultation will have to take place at the relevant level on both sides, which will vary with the nature and severity of the matter being discussed.

Employers who have already established procedures for informing and consulting with employees can satisfy the requirements of the Regulations if they gain the agreement of their employees to carry on existing good practice. If a valid employee request is made in such circumstances, the employer has the option of organising a ballot of all employees. If at least 40 per cent of employees and a majority of those taking part in the vote endorse the initial request, the employer is obliged to negotiate a new agreement. Existing arrangements will be considered suitable if they:

• are in writing;
• cover all employees of the undertaking;
• have been approved by the employees; and
• set out how the employer is to give information to employees or their representatives and seek their views on it.

The Regulations allow employers to restrict information on grounds of confidentiality if it is in the legitimate interest of the business to do so. Also, they are not required to disclose information to representatives where this would be prejudicial to or seriously harm the functioning of the undertaking.

Employers who fail to comply with the Regulations could face a fine of up to £75,000.

The Advisory, Conciliation and Arbitration service has an advisory booklet on this topic.

TUPE - Post-Transfer Obligations and Collective Agreements

The Court of Justice of the European Union (CJEU) has ruled that Article 3 of the European Acquired Rights Directive, which is transposed into UK law by the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE), must be interpreted as meaning that a ‘static’ rather than a ‘dynamic’ approach should be taken to collective agreements when there is a transfer to which TUPE applies (Alemo-Herron and others v Parkwood Leisure Limited).

Parkwood Leisure Limited had taken over a company that acquired employees of the London Borough of Lewisham’s Leisure Department following a transfer under TUPE. The employees argued that Parkwood was bound to honour pay increases negotiated with the National Joint Council for Local Government Services under a collective agreement reached after the TUPE transfer had taken place.

This ‘dynamic’ interpretation of the burden on transferees taking over employment contracts that incorporate terms fixed from time to time by collective agreements had been the favoured approach in domestic case law, but the Employment Tribunal ruled that the decision of the CJEU in a German case, Werhof v Freeway Traffic Systems, required a ‘static’ interpretation and it therefore dismissed the employees’ claims.

The Employment Appeal Tribunal (EAT) overturned this decision, finding that a contractual term entitling council employees to pay in accordance with collective agreements is protected when there is a transfer under TUPE so as to give a right to pay increases negotiated after the transfer. Whilst the Directive provides that member states may limit the transfer of collective agreements to a minimum of one year or until the earlier date of termination or expiry of the agreement or the coming into force of a new collective agreement, the EAT found that the TUPE Regulations have no corresponding provision limiting a worker’s rights. Member states are free to introduce domestic laws that are more favourable to workers than is required by the Directive they implement and Regulation 5 of TUPE imposed ‘dynamic’ obligations upon transferees. Even though the new employer was not a party to the negotiations, the employees’ terms were still so determined because it was in their contracts of employment.

The Court of Appeal disagreed and upheld Parkwood’s appeal against the EAT’s decision. In the Court’s view, the decisions in earlier domestic case law were wrong and should not be followed. A ‘static’ approach to collective agreements was required.

The Supreme Court referred the matter to the CJEU, which rejected the Advocate General’s earlier opinion and supported the ‘static’ approach. In its view, Article 3 of the Directive must be interpreted as precluding a member state from providing, in the event of a transfer of an undertaking, that ‘dynamic’ clauses referring to collective agreements negotiated and adopted after the date of transfer are enforceable against the new employer where the latter does not have the possibility of participating in the negotiation process.

This decision will be welcomed by employers considering acquiring undertakings that were previously part of the public sector. As the Government is carrying out a consultation exercise with a view to simplifying the TUPE legislation, it may decide to set a limit on how long collective agreements will continue to bind transferees.

Drug Policy - Recognising the Signs and What to Do

Substance abuse amongst staff can affect all areas of employment, whether it be a decrease in productivity, increased absenteeism or the increased likelihood of accidents and injuries. The failure to identify and deal with a problem is an unnecessary risk for businesses and can prove costly.

The Law
The Misuse of Drugs Act 1971 makes it an offence for any person to permit the production, supply or use of controlled drugs or substances on their premises, unless they have been prescribed by a doctor.

Employers also have a general duty under health and safety legislation to ensure, as far as is reasonably practicable, the health and safety and welfare at work of their employees and to make sure that no one else is put at risk as a result of the work activities of an employee.

Under the Management of Health and Safety at Work Regulations 1999 employers have a duty to assess the risks to the health and safety of their employees. If you knowingly allow an employee to carry on working whilst under the influence of drugs and this puts others at risk, you could be prosecuted.

In addition, health and safety law applies to driving activities as it does to other work activities and the risks must be managed accordingly. Drivers must not be under the influence of drugs while driving, attempting to drive or when they are in charge of a vehicle.

What to Look Out For
Possible signs of drug misuse include:

• impaired performance such as lack of concentration, a tendency to become confused and poor judgement;
• sudden mood changes and unpredictable behaviour;
• poor time-keeping;
• unusual irritability and deteriorating relationships with others;
• lower personal standards – self-neglect;
• increased time off work;
• dishonesty and theft.

There may, of course, be other reasons for such behaviour patterns but it is sensible to consider the possibility that misuse of drugs could be the cause.

What to Do
Even if you are confident that your business does not currently have a problem, drug misuse that affects the workplace is a growing threat. It is advisable to have an agreed, written policy setting out the company’s position.

Employees should be well informed as to the policy and know that it applies to everyone in the company. It should form part of your overall health and safety policy. Make sure you consult with employees and with safety representatives.

The policy should include a definition of drug misuse, have clearly stated aims, name the persons responsible for carrying out the policy and give clear guidelines as to what employees must do to comply with the rules.

If an employee suffers from drug addiction, you should support them, not punish them. Offer them counselling and encourage them to seek voluntary help. Addiction could be viewed as an illness in an unfair dismissal case so disciplinary procedures may not be appropriate. The policy should contain a statement assuring employees that problems will be dealt with in confidence, subject to the provisions of the law. It should, however, be made clear that a breach of the law (for example the possession of or dealing in drugs at work) will be reported to the police immediately. Make clear the circumstances in which disciplinary action will be taken.

It is important to train key staff to be aware of the signs of drug misuse and how to handle the situation sensitively.

Review your policy regularly and check that it is widely understood. If you have a staff handbook, it should contain details of the policy. Make awareness of the policy a part of the induction programme for new employees.

Where it is justified, some employers screen employees for illegal substances as part of their drug policy, particularly in safety critical industries. With the widespread advance in non-intrusive methods of testing, this is likely to become more common. However, this is a very sensitive area because of the legal issues involved and we would recommend you take advice to ensure there is no breach of your employees’ rights. Also, the results of any drug tests must be handled in accordance with the Data Protection Act 1998.

Damages for Wrongful Dismissal

The Supreme Court has ruled (Edwards v Chesterfield Royal Hospital NHS Foundation Trust) that a consultant surgeon who suffered a loss as a result of findings of personal and professional misconduct made against him in disciplinary proceedings that were conducted in breach of his employment contract cannot seek to recover damages in the ordinary courts for loss suffered as a result of the breach.

Michael Edwards was dismissed for gross professional and personal misconduct following a disciplinary hearing regarding allegations made against him by a patient. His contract of employment contained a clause to the effect that matters of professional misconduct or incompetence would be dealt with under a procedure negotiated and agreed by the Local Negotiation Committee. He contended that the General Medical Council had investigated and dismissed the allegations made against him and had his employer followed the correct disciplinary procedure as laid down in his contract of employment, it too would have exonerated him.

Mr Edwards brought a claim of unfair dismissal to the Employment Tribunal (ET). He then changed his mind and withdrew the claim, deciding instead to pursue a claim through the courts for losses arising from a breach of contract. He was seeking more than £4 million in damages for loss of past and future earnings because he claimed his employer’s actions had ruined his career.

The Court of Appeal had found that the law does not preclude an action for unlimited damages for breach of an express contractual obligation such as the agreed disciplinary procedure in this case. However, in a majority decision the Supreme Court held that dismissal damages could only be recovered where the loss could be said to precede and be independent of any subsequent dismissal. No separate contractual claim is available where the breach of contract relates to the manner of the employee’s dismissal, as was the case here. Unless the employment contract expressly contains agreement to the contrary, the remedy for wrongful dismissal as a result of a breach of disciplinary procedures lies in a claim to the Employment Tribunal under the provisions of the Employment Rights Act 1996. In the Court’s opinion, Parliament could not have intended that where disciplinary procedures have contractual status, any breach could give rise to a common law claim for damages.

This decision will come as a relief to employers as claims that the manner in which a dismissal was carried out was unfair will be dealt with by the ET where the maximum compensation award for unfair dismissal is limited to the statutory cap of £72,300 (£74,200 after 1 February 2013).

Pensions Auto-Enrolment - Basics

The Pensions Act 2008 introduced a requirement for employers to automatically enrol certain workers into a pension scheme, unless they are already members of a qualifying scheme. Auto-enrolment is being introduced in gradual stages, with the date an employer must implement it – the ‘staging date’ – being determined by the number of people in its PAYE scheme on 1 April 2012. Employers with 120,000 or more eligible workers have been subject to the requirement since 1 October 2012. It currently applies to all employers with 1,250 or more workers, then extends to those with 800 or more workers from 1 October 2013 and 500 or more workers from 1 November 2013. By 1 July 2014, employers with 62 or more workers will be subject to the requirement. Automatic enrolment will have been extended to all employers by 2018.

The Pensions Regulator will contact employers between six months and one year before their staging date.

The duty to auto-enrol a worker into a pension scheme applies to all workers who:

• are aged 22 or more but below the stage pension age;
• earn more than £9,440 (the personal allowance for Income Tax for 2013/2014); and
• are contracted to work in the UK.

The earnings thresholds for automatic enrolment are reviewed annually by the Department for Work and Pensions. The contributions made must total at least 8 per cent of the eligible worker’s ‘qualifying earnings’. This comprises a contribution of 3 per cent from the employer and 4 per cent from the worker, the remaining 1 per cent being the result of tax relief on the contribution. To give workers time to adjust to making contributions, however, lower contribution requirements apply until 1 October 2018.

Employers are required to tell workers what type of scheme has been chosen and inform them that they have the right to opt out. They must also register details of the scheme with the Pensions Regulator. Workers who opt out must be automatically re-enrolled every three years.

An employer can bring forward the staging date if desired, and can defer it for up to three months. In the latter case, however, the employer must still be able to arrange contributions to the scheme for employees who have specifically opted in.

Employers must keep most records for a period of six years, although those relating to opting out need only be kept for four years.

The Pensions Regulator recently confirmed that it has issued a compliance notice to an employer which had not complied with the requirements. It has also issued warning notices of a less formal nature to more than three dozen employers.

Further information can be found on the website of the Pensions Regulator.

Get the Christmas Party Right

It’s that time of year again. Love them or hate them, the invitations to office Christmas parties will be arriving soon if they haven’t already. For employers, parties pose a particular threat. Here are some tips on making sure your Christmas office party doesn’t bring New Year blues:

1. Health and Safety
It is important to carry out an assessment of all possible risks and take reasonable steps to reduce them, as you would for any work activity. Avoid rubber…well, balloons in particular. One person in 20 suffers from an allergy to latex. Also, make sure your Christmas tree is well secured. Over 1,000 people annually are injured by Christmas trees. Anything involving a naked flame is a bad idea. Check that decorations are put up safely and do not pose a fire hazard.

2. Smoking
Regrettably for smokers, the smoking ban is not suspended for the festive season.

3. Drink
Many people consider work the curse of the drinking classes, especially where the alcohol runs free. One of the biggest causes of post-festive season litigation is people letting their hair down (as they see it) and things getting out of control. Employees should be made aware that normal disciplinary procedures apply. Employers can be held responsible for employees' actions after consuming alcohol provided by the employer, so take care!

By the way, the law on serving alcohol to minors is also not suspended for the festive season and many people do not drink on religious grounds. Make sure soft drinks are available.

4. Drugs
Permitting the use of controlled substances on your premises is a criminal offence; the good news is that you’ll probably only get a fine if prosecuted. Your employees probably wouldn’t come to visit you in prison anyway.

5. Mistletoe
You’d have to be brave, foolish or both to risk it.

6. Driving
An employer has a duty of care towards staff; it is probably a better investment to pay for a few taxis than a few extra pints.

7. Chit Chat and Banter
Beware of letting your good humour get the better of you! Many an employee becomes disgruntled when promises alleged to have been made at the firm’s ‘do’ are not kept. As far as banter goes, the rule has to be to make sure you step in at the point when the Olympic champion for being thin-skinned would take offence. One person’s banter is another’s ground for a discrimination claim. The same goes for actual behaviour. To tolerate is to condone and to condone is a dangerous policy.

Dealing with Employee Absence

Employee absences can be both costly and disruptive.

It is advisable to have systems in place to measure and analyse these costs so that you can identify problem areas. Are there patterns of absence? Does a particular department have a below average record?

Unhappy, demoralised employees are more likely to take time off work. Workplace stress is still the most common cause of long-term sickness among non-manual workers. Creating a friendly working environment, where staff feel valued as part of a team and where flexible, ‘family friendly’ policies are in force is likely to pay dividends, keeping absenteeism to a minimum.

To manage absence effectively, make sure staff are well informed as to your sickness policy and procedures. Make sure these are seen to be followed and keep accurate records. These must be kept for at least three years after the appropriate financial year-end.

When hiring new staff, make sure you check their attendance record with the previous employer. If new staff are absent it is good practice to make sure you know if there are problems preventing them from settling in. How staff are treated in the first weeks of a new job is vital. Inadequate training can leave them feeling disillusioned.

It is sensible for employers to ensure that contracts of employment allow them the right to get an independent medical assessment in the event of an employee taking more than a few days off work. You may consider requiring all potential employees to undergo a medical examination with an occupational health adviser.

As a matter of company policy always carry out a ‘return to work’ interview. This may range from ‘hope you’re better, we missed your contribution’ to an identification of underlying problems that will affect your management strategy. It may also deter malingerers.

Long-term sickness must be handled sensitively. You must have an employee’s permission to apply for a medical report. It is vital to keep in touch so that the employee doesn’t feel isolated. Consider referring them to an occupational health specialist. This can identify ways of helping them return to work and give you information as to how long the absence is likely to last.

Disciplinary action for unacceptable absence must be distinguished from dismissal on health grounds. Employers need to be aware of the full range of conditions that count as a disability for the purposes of the Equality Act 2010. Where an employee is suffering from a condition covered by the Act, reasonable adjustments must be made to help them return to work.

As regards the accrual of holiday pay when a worker is on long-term sick leave, the Government is in the process of amending the Working Time Regulations 1998 (WTR) to enable workers to carry forward four weeks of their statutory holiday entitlement to the next leave year if they are unable to take it in the current year owing to long-term illness. This is necessary in order to ensure that the WTR comply with recent European judgments on the correct interpretation of the EC Working Time Directive, which the WTR implement into national law.

In KHS AG v Winfried Schulte, the European Court of Justice (ECJ) ruled that the precise terms of the provisions regarding the carry-over of untaken holiday leave for workers who are on long-term sickness leave are a matter for individual Member States. However, the carry-over period for taking any entitlement to holiday accumulated during the sickness absence must be more than any leave reference period, but national law which limits the period to, say, 15 months may be lawful under EU law. The ECJ stressed that the entitlement of every worker to paid annual leave must be regarded as a particularly important principle of EU social law from which there can be no derogations and whose implementation by member states must be confined within the limits expressly laid down by the Working Time Directive.

In Neidel v Stadt Frankfurt am Main, a firefighter in Germany retired after a long period of sickness absence. His request for payment in lieu of leave not taken was rejected on the Ground that German civil and public law makes no provision for financial compensation for leave not taken. The matter was referred to the ECJ, which confirmed that workers in Herr Neidel’s position do have a right to payment in lieu of any untaken holiday they have accrued, but this only relates to the statutory minimum four-week period of paid leave specified in the Directive, even if the member state’s national law entitles workers to a more generous annual leave entitlement. It is up to individual member states whether or not they extend the entitlement over and above the minimum allowed.

Dealing with long-term absences, in particular, is a difficult area of the law. Each case must be decided on its own merits and proper procedures must be followed. Employers who have not done so for a while are advised to review stress management and long-term absence policies and procedures so that potential problems are identified early on and remedial action is taken as soon as possible.