Welcome to LookOut, Anderson Strathern's regular update providing you with news and views on employment law.

Following a major consultation earlier this year by the Department for Business Innovation and Skills, Vince Cable has announced plans for significant reform of the Employment Tribunal system.

He also announced new proposed areas of reform on which consultation will now take place including a reduction in the period of collective redundancy consultation and fines for employers who have breached employment rights. These proposals, if implemented, will represent a substantial change to employment law, and the Tribunal system.

In the latest edition of LookOut we examine these proposals as well as the recommendations of a Department of Work and Pensions' review into fit notes and proposed measures to cut the rate of youth unemployment. We also provide a view on two recent cases regarding pensions for part-time employees and vicarious liability for the wrongful acts of non-employees.

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LookOut on … news

The LookOut lowdown on employment reform

Fit notes - a clean bill of health?

Unemployment continues to rise as Government proposes measures for the "lost generation"

LookOut on … cases

Employees unlawfully excluded from a pension scheme had no entitlement to remedy

To be or not to be an employee…liability is the question

LookOut on… news

The LookOut low down on employment reform

Vince Cable and the Department for Business Innovation and Skills have announced the Government's proposals for a shake up of employment law which could represent a significant change to the current Employment Tribunal system. Some of these proposals have already been announced or leaked, but some are new.

The proposals include:-

• Unfair Dismissal Qualification - the qualifying period of service for unfair dismissal will increase from one year to two years from April 2012;
• Extending the category of 'sit-alone' judge cases - unfair dismissal will be included in the range of cases where an employment judge can sit without two lay members;
• Withdrawal of payment of expenses - parties and witnesses will no longer be able to claim expenses for attending hearings. Tribunals will have new powers to order a party who calls a witness to cover the witness' costs;
• Review of Employment Tribunal rules - Mr Justice Underhill has been appointed to lead an independent review of the existing rules of procedure, including a proposal to double the current limits from £500 to £1,000 for a deposit order, and from £10,000 to £20,000 for costs;
• Employment Appeal Tribunal - appeals to the Employment Appeal Tribunal will be heard by a judge sitting alone unless the judge directs otherwise;
• Early conciliation - there is to be a requirement that all employment disputes are lodged with ACAS for pre-claim conciliation before they can proceed to tribunal;
• Without Prejudice - a consultation paper will be published in early 2012 on 'protected conversations' which will aim to allow employers to discuss issues such as retirement or poor performance in an open manner with staff without this being used in any subsequent tribunal claims;
• Redundancy consultation - a call for evidence, with a view to consultation, on reducing the minimum period for collective redundancy consultation from the current 90 days to 60, 45 or 30 days;
• Whistleblowing - complaints about breach of the employment contract are to be excluded from whistleblowing protection;
• Compromise agreements - the current problem with section 147 of the Equality Act 2010 will be resolved by making it clear that compromise agreements can be used to settle discrimination claims; and
• Financial penalties - Employment Tribunals will have new powers to levy a fine (payable to the Exchequer) on employers found to have breached employment rights.

AS view…

This announcement shows that the Coalition Government is serious about bringing in far reaching reform of the UK Employment Tribunal system following the major consultation carried out by BIS in January 2011. LookOut will keep you posted on developments.

For further information please contact Pamela Keys or Barry Nichol.

Fit notes - a clean bill of health?

The Department for Work and Pensions has published the results of a review of the current sickness absence system which was prompted by the fact that, according to the DWP, approximately 140 million working days are lost to sickness absence every year with around 300,000 people leaving work and claiming sickness benefit each year.

The review makes a number of recommendations on how the current system might be improved. One key recommendation being that the Government should issue further guidance on how doctors should fill out fit notes, which (readers will recall) were introduced as a replacement for the old medical certificate or "sick note". The fit note encourages doctors to say when the employee may be fit to return to work and to suggest adjustments which could aid a swifter return to the work place.

Ahead of the review being published, the DWP released its own research on the extent to which the fit note has improved assessments of sickness. The research findings highlighted that not all GPs appreciated the level of detail which they should include on the fit note. It is suggested that during the transition from the old regime GPs spent very little time preparing for the introduction of the fit note and may have underestimated the change in approach that was required. This resulted in many GPs overlooking how a fit note could be used to change patients' outcomes. The research suggests that some GPs have, over time, begun to understand how the fit note could be used in a better way.

The reported "pros" for fit notes include :

• helping to motivate patients back to work;
• helping some GPs to adopt a more direct approach to the issue of return with their patients;
• GPs being able to use the fit note as a consultation tool to help focus on the issue of returning to work with their patients; and
• results which suggest that patients with medical conditions such as ME, mild to moderate mental health conditions, and musculoskeletal conditions benefited the most from the use of the fit note.

The reported "cons" were:

• greater conflict with patients over the discussion of returning to work;
• GPs' unwillingness to damage the relationship they have with their patients;
• where the view is that "work is the problem" GPs are less likely to encourage a return to work;
• some GPs found it difficult to understand the various return to work adjustments; and
• some were less confident about suggesting options such as workplace adaption and amended duties.

Some of the recommendations from the sickness absence review were:

• making it easier to end an employment relationship where there has been long term sickness absence;
• the introduction of "protected conversations" allowing employers to have a without prejudice conversation with their employees regarding their long-term sickness absence; and
• the introduction of an Independent Assessment Service to provide an assessment of an individual's physical or mental function where the employee is on long-term sick leave. It is envisaged that this would "trump" the employee's own GPs' opinion.

AS view….

Absence management has always been a difficult area and it appears that there is still no easy solution. The age old problem of GP reports has not, in our view, been resolved or significantly eased with the introduction of the fit note. GPs remain in the difficult position of having to report on the fitness for work of their own patient which can be difficult where the GP and the patient have conflicting ideas about the employee's medical condition and fitness for work. An independent body assessing fitness for work may assist in some cases although it is difficult to see how that would differ materially from an independent occupational health provider giving a view as is the case now. The remit and authority of the Independent Assessment Service would have to be clear.

For further information please contact Alan Glazer or Lizzy Campbell.

Unemployment continues to rise as Government proposes measures for the "lost generation"

The most recent quarterly CIPD Labour Market Outlook Report, based on a survey of just over 1000 HR professionals, has shown that, on the whole, the labour market will continue to weaken over the next three months. Whilst the private sector does look set to grow, this is now thought to be at a slower rate than in previous quarters. Alongside this the CIPD reports that since April the public sector has cut jobs at five times the rate predicted by the Office for Budget Responsibility (OBR). As a result, the number of jobs lost between 2010/11 and 2015/16 is likely to be more than forecast by the OBR.

The CIPD Report shows that overall recruitment intentions have fallen significantly since the last quarter in light of the current economic climate, with:

• a third of those surveyed expecting to make redundancies over the next three months (with the proportion being highest in the public sector);
• expectations on the recruitment of migrant workers lower than in the previous two quarters; and
• fewer respondents planning to "offshore" UK jobs to other parts of the world.

Recently steps were announced to reboot recruitment of young people as youth employment numbers topped one million. Under new proposals, from in April 2012 employers will be offered subsidies to take on 16-24 year olds not in employment, education or training for 8 week placements in a scheme that Labour says replicates the Future Jobs Fund that was scrapped as an early part of the Coalition's cuts agenda.

AS view…

It seems that hardly a day goes by without further news of increasing unemployment figures and we wonder whether a scheme that will impact in April is likely to make any significant difference as UK employers attempt to ride out the storm of the recession. Whilst reports that a slower rate of redundancies is expected in the coming months will be welcome news to employees, the concern remains that private sector growth is slowing and cannot keep up with the rate at which public sector jobs are being lost. Measures to offer hope to the young unemployed may be welcome but without growth or incentives to create real jobs we wonder what long term effect they will have.

For further information please contact Louise Tierney or Jill Urquhart.

LookOut on ……cases

Employees unlawfully excluded from a pension scheme had no entitlement to remedy

The Court of Appeal in Copple and others v Littlewoods plc and others has dismissed an appeal by female claimants for equality of pay in respect of the right to join their employer's pension scheme.

Prior to a change in the scheme rules, the claimants were denied the right to join the pension scheme of their employer because they worked on a part-time basis. The Equal Pay Act 1970 established the principle of equal pay and thus the pension scheme was in breach. However Lord Justice Elias held that as the claimants had not been able to show that they would ever have joined the pension scheme if they had been permitted to do so, they would not be entitled to back-dated membership. On the other hand, if the claimants had shown they had wanted to join the scheme, by either joining it at the first opportunity or by a declaration of entitlement then back-dated membership would have been allowed.

AS view….

It is common for part-timers to have been excluded from membership of an employer's pension scheme at some point in the past and this is often the subject of complaints to the Pensions Ombudsman. The key issue here is that while such exclusion may be discriminatory the onus is on an employee to show that, on a balance of probabilities, they would have joined the scheme had they been given the chance to do so.

For further information please contact Steven Dunn.

To be or not to be an employee…liability is the question

The High Court has ruled in JGE v The English Province of Our Lady of Charity & Anor that a Roman Catholic diocese can be held liable for the wrongful acts of a priest it has appointed. The Portsmouth Roman Catholic diocese is being sued by a woman for the injury she suffered when allegedly abused and raped by a priest, Father Baldwin (now deceased), while she lived at a children's home run by the diocese in the 1970s. The High Court was asked to determine whether the diocese could be held liable for Father Baldwin's acts under the principle of vicarious liability.

In coming to the decision, the High Court judge underlined that there is a two part test for the establishment of vicarious liability. First of all, whether the relationship between the person committing the wrong and the potentially vicariously liable party is such that liability could be established and, secondly, whether the wrong was done in the course of the duties for which the vicarious party should be held accountable. The judge highlighted that employment clearly meets the criteria for the first part of the test to be satisfied. However he went further in holding that in non-employment cases the existence of 'crucial factors' such as

• the purpose of the appointment,
• representative authority; and
• provision of equipment, premises and training

can mean that both parts of the test are met and vicarious liability is therefore established.

AS view…

This ruling highlights an important consideration for employers in relation to the status or the perceived status of those working within their businesses. The diocese, in seeking to deny the existence of any vicarious liability, put forward the argument that as Father Baldwin was not an "employee" they could not be held liable for his acts. Likewise, many employers who take on self-employed, voluntary or agency workers may feel that they are distanced from being held vicariously liable for the acts of those individuals. This decision shows that this is not always the case and employers must be aware that the label often attached to various types of workers or individuals can be insufficient to escape the responsibilities and legal obligations which come with these quasi-employer/employee relationships.

For further information please contact Chris McDowall or Claire Hendry.

This bulletin is for general information only and does not constitute legal, investment or other professional advice. Please contact us should you require advice on any particular legal issue. Anderson Strathern LLP accepts no responsibility for any loss that may arise if reliance is placed on any information or opinions expressed in this bulletin.