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Your business and employment law

December 2012

With the new year upon us, we take stock of the 6 significant developments in employment law from 2012 and the 6 key areas to watch out for in 2013.

What happened this year?

1. Is compulsory retirement still possible?

Mr Seldon's former law firm convinced the Supreme Court that their justifications for retiring him at the young age of 65 were persuasive. Employers who still wish to retain a retirement age need to consider carefully their reasons for doing so and whether those meet the objective justification test but it seems UK and European case law supports thoughtful employers who retire employees legally. Can employers justify the compulsory retirement of employees? With the pressure to bring back a default retirement age (albeit at 67 or 70) maybe the tide is turning.

2. Sick leave during holiday

The legal position has been clarified to an extent. Employees are entitled to claim back untaken holiday if it occurs during a period of sick leave and their right to 'carry over' accrued but untaken holiday during periods of sick leave cannot, to many employers' relief, continue indefinitely. Sick employees need not request carry over of holiday entitlement.

3. Auto-enrolment

In October 2012, the pension auto-enrolment provisions came into force and large employers (with over 250 employees) must automatically enrol 'eligible job holders' into a pension scheme. Smaller employers need to start preparing as their time will come between now and 2017. Auto-enrolment update - new employer pension duties come into force.

4. Team moves and restrictive covenants

It is becoming increasingly hard for employees to engineer team moves but it remains essential for employers to review restrictive covenants in contracts of employment regularly and always following a promotion. Failure to do so can result in the covenants being unenforceable. Fiduciary duties and the importance of updating employment contracts.

5. The rights of non-employees

Members of LLPs are not workers and cannot claim protection under the UK whistleblowing legislation.

6. Should the case be brought in the UK?

Territorial jurisdiction for statutory employment claims was considered by the Supreme Court this year. There are a number of factors to determine before concluding if an employee is entitled to bring a discrimination and unfair dismissal case in the UK. This year's decisions have assisted employees who may wish to explore new angles to enable them to bring their cases in the UK courts. Ravat v Halliburton

What should you look out for in 2013?

1. Employee ownership.

Despite the fact 92% of the responses to the government's consultation were not in favour of the change, the government has decided to press ahead and a new category of employee will be born in 2013. The 'employee owner' will give up their rights to claim unfair dismissal and redundancy pay and in return be allocated shares to the value of between £2,000 and £50,000 which would be free of Capital Gains Tax. Employee owners.

2. Unfair dismissal compensation may be reduced

The government may reduce unfair dismissal compensation from £72,300 (£74,200 from 1 February 2013) to the national median average earnings (currently £25,882) or to an individual’s net annual salary (between 1 – 3 times median earnings).

The results are likely to help employers take into account their financial exposure but also encourage employees, especially high earners, to consider whether discrimination and whistleblowing claims might be financially more appealing than an unfair dismissal claim.

3. Preparing for 2014 flexible working for everyone

The right to request flexible working will extend to all employees from 2014 and employers need to start preparing in 2013. Flexible working to be extended to all employees

How should employers respond to competing requests where, for example, they receive similar requests from a working mother and an employee who wants to do more charity work? We deal with this and consider the option of changing your entire business model in our New Year seminar How flexible is your workforce?

4. Changes to the Enterprise and Regulatory Reform Bill

4.1 Negotiating an employees' exit

Compromise agreements will be renamed 'settlement agreements' and the government will publish a draft letter and template for employers to use. By following the new rules and the documentation, an employee will be prohibited from referring to the discussions in a future unfair dismissal claim. The discussions can however still be referred to in discrimination and whistleblowing claims and employees will still need to seek independent advice to implement 'settlement agreements'. The changes may cause greater complexity for both parties. Employment law changes

4.2 Abolishing discrimination questionnaire

The removal of this formal procedure in March 2013 will create further uncertainty for both parties as to how best to request and respond to questions about discrimination.

5. Changes to the Employment Tribunal rules

From April 2013, the tribunal rules will be simplified, costs awards against unsuccessful parties will be increased to £20,000 and frivolous claims should be reduced at the initial stages. Proposed new employment tribunal rules.

Fees will be introduced for the first time in the Employment Tribunal to discourage employees from bringing spurious claims. The price of justice - The new fee regime in the employment tribunal.

6. Board equality

New regulations will come into force on 1 October 2013 requiring quoted companies to disclose the number of men and women at different levels in their company and this is likely to have a significant impact on those companies. The debate continues within the UK and EC regarding the imposition of legal quotas for women on boards (both in non executive and executive positions) and in other roles in the business. Glass ceilings glass walls and the boardroom.

For further information or to discuss the issues raised, please contact Emma Clark or David Widdowson on +44 (0)20 3051 5711.


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