Changes in Employment Law Affecting All Businesses

‘Why would anyone employ people?’ is a question often asked by employers when faced with yet more new employment legislation. There is no doubt that employment law is increasing both in amount and complexity. However, it can be managed with the right information and support.

The government makes changes to employment law twice a year in April and October – of course, we also have a vast amount of case law throughout the year as well! This year, 6th April sees the long-awaited changes to the Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPE”). This area of the law has become increasingly complex due to the vast amount of seemingly contradictory case law and European decisions, along with the fact that the actual legislation has remained as is, since 1981. Whilst many employers might think it doesn’t apply to them, it is important to be aware of the changes, as they can affect all who buy and sell a business or who are involved in ‘contracting in and out’.

The main changes set out in the Regulations are:

• The Regulations cover any ‘service provision changes’ i.e. first and subsequent contracting out and contracting in, where there is an organised group of employees whose main purpose is to carry out the contracted activities. The classic example is that of contract office cleaners. It doesn’t apply if the service is for a single specific event or for a short period of time. (Incidentally this has potentially serious implications for firms of solicitors where, for example, a solicitor works the majority of their time for one client who then decides to take their business to another firm – not that we’re just concerned for ourselves, of course!)
   
• Liability for redundancy, notice and other payments to employees of insolvent companies are not transferred to the transferee (the buyer).
   
• The transferor (the seller) is obliged to provide what is called ‘employee liability information’ to the transferee at least two weeks before the transfer. This has to include information about the identity and age of the employees, their contracts of employment, any disciplinary and grievances in the last two years, any Court /Tribunal cases brought by employees in the last two years (including any the transferor thinks they might bring) and whether there is any collective agreement in place which will affect the transfer. Failure to provide this information will enable the transferee to bring a claim against the transferor if any loss is suffered as a result of their failure, with a minimum award of £500.
   
• Variations to contracts of employment because of the transfer, are void unless they are for ‘an economic, technical or organisational’ reason or the transferor is insolvent and it is agreed with the appropriate employee representatives.
   
• Both the transferor and the transferee are jointly liable for a failure to consult and inform employees’ representatives about the transfer. (On this point a recent Employment Appeal Tribunal decision stated that when assessing compensation for a failure to consult, the Tribunal should use the same approach as that of a failure to consult in the case of multiple redundancies – i.e. 13 weeks’ pay for each affected employee).

Further changes on 6th April include minor amendments to the Information and Consultation of Employees Regulations 2004 to take account of the proposed changes to occupational and personal pensions. There are also some changes to the Working Time Regulations 1998. Some workers work a set number of hours a week but then voluntarily work longer hours. Before 2006, these extra hours were not classed as ‘measured time’ and were ignored for the purposes of the Regulations. So, for example, the restrictions on the weekly working time (maximum 48 hours) did not apply in respect of the extra hours. From 6 April they do.

The really big change this year, though, which will affect all businesses, is the Employment (Equality) Age Regulations 2006 – the anti-age discrimination legislation – which comes into effect in October. The Government has now produced its final draft of the Regulations - a vast document which can be viewed on the Department of Trade and Industry website for those of you who are in need of some bedtime reading! For those who are faint-hearted (or have better things to do) we, at Raworths, are providing guidance for employers on how to prepare for the age discrimination legislation in our regular seminars on employment changes. The seminars are on 27, 28 and 29 March at Raworths’ offices. In addition to guidance on age discrimination we will be providing a mercifully brief overview of the TUPE changes and practical help on how to manage ‘problem’ employees.

March 2006

If you wish to attend one of our seminars (which are held both in the morning and at lunchtime) please contact Deborah Boylan by email deborah.boylan@raworths.co.uk or by telephone 01423 566666.