Age Discrimination – Changes to Benefits

Unlike other forms of discrimination, such as race or sex discrimination, the Employment Equality (Age) Regulations 2006 do allow a defence of justification in cases of direct discrimination, where this is ‘a proportionate means of achieving a legitimate aim’.

In the first major case involving the Regulations, which were introduced in October 2006, the Employment Tribunal (ET) has dismissed a £4.5 million age discrimination claim brought against a City of London law firm (Bloxham v Freshfields Bruckhaus Deringer).

Peter Bloxham, 54, was head of restructuring at Freshfields Bruckhaus Deringer. He brought a claim of age discrimination against his former partners because he had lost out financially as a result of transitional arrangements made when the firm’s pension scheme was being reformed. Had he been a year older, his retirement pension would not have been affected.

The ET found that Mr Bloxham had suffered less favourable treatment compared with partners aged 55 or over and that the treatment would be discriminatory unless justified. However, when considering the test of justification, in the ET’s view, Freshfields did have a legitimate aim in reforming its pension arrangements. Without reform, the scheme in place meant that younger partners would be disadvantaged as they would contribute more but receive smaller pensions. The firm had carried out a lengthy consultation before introducing the changes and no less discriminatory method of achieving the desired reform had been put forward then or since. The ET therefore found that the firm not only met but comfortably passed the test. Its unanimous judgment was that Mr Bloxham’s complaint was ‘not well founded’ and it dismissed his claims of direct and indirect age discrimination.

Says Antony Arbuthnot, “The outcome in this case will be welcomed by employers who find themselves in a similar situation. It has been reported that Mr Bloxham has decided not to appeal against the decision.”

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Company Cleared of Discrimination Against Pregnant Employee

The dismissal of an employee is automatically unfair if the reason for it is that she is pregnant.

The Employment Tribunal (ET) has ruled that a woman who was employed as a press officer at a Northamptonshire hotel was not unfairly dismissed because the decision to outsource her job had been taken before her employer was made aware of her pregnancy.

Samantha Remedios claimed that she had been sacked by Macepark (Whittlebury) Limited, which owned the hotel, after the company found out that she was expecting a baby. She had worked at the hotel for 11 months before being dismissed and her work had been praised by her manager. In Mrs Remedios’s opinion, she was sacked because she was honest about her pregnancy during a routine appraisal interview, but the ET found that the reason for her dismissal was that her services were no longer needed.

However, the ET did criticise the terminology used in a letter sent to Mrs Remedios by the company’s Human Resources manager, calling it ‘nothing short of shambolic’, and made it clear that had Mrs Remedios acquired the employment rights that are gained after being in continuous employment with an employer for one year, the company would have been forced to pay her compensation.

The ET also criticised the company’s decision to let the hotel manager conduct Mrs Remedios’s appeal against the general manager’s decision to sack her, on the ground that a subordinate is unlikely to overturn the decision of a senior manager.

It is unlawful to dismiss or demote an employee or to refuse her vocational training because she is pregnant or on maternity leave. Treating a woman less favourably because of pregnancy or maternity leave is unlawful sex discrimination. It is also unlawful sex discrimination for an employer to turn down a job applicant because she is pregnant. For advice on any discrimination matter, please contact Antony Arbuthnot.”

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Company Road Safety – Police Get Tough

Employers who forget that their health and safety responsibilities extend to employees driving on company business should take note of a shift in the way police will investigate road accidents in future.

Research by the Health and Safety Executive shows that 20 people are killed and 250 are seriously injured each week in traffic accidents involving someone driving for business reasons. This has prompted the Metropolitan Police and several other forces to adopt a policy of investigating company road-safety procedures when an accident involving a work vehicle occurs.

Police will investigate whether the company has carried out basic checks, such as making sure employees using their own cars for business purposes have a valid driving licence, are insured to drive on business and have an MOT certificate for their vehicle. In addition, they intend to investigate the reasons for a vehicle involved in an accident being on the road.

Research by the Parliamentary Advisory Council for Transport Safety has found that employers often fail to consider the dangers posed by employees driving whilst tired. Practices such as expecting employees who drive on company business to work long hours or putting pressure on them to fulfil as many appointments as possible in a given period could be regarded as contributory factors by police investigating the reasons for an accident.

The Corporate Manslaughter Act, due to come into force in April 2008, will make it easier to bring cases against organisations that are negligent in carrying out their health and safety obligations and this causes someone’s death.

Contact Antony Arbuthnot for advice on implementing a company road-safety policy.

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Is a Director an Employee?

When a company becomes insolvent, whether or not a shareholder and director is an employee, within the meaning of section 230 of the Employment Rights Act 1996 (ERA), for the purposes of a claim for statutory redundancy payment from the Secretary of State for Trade and Industry, can be difficult to ascertain. The Employment Appeal Tribunal (EAT) considered this issue in the case of Nesbitt and Nesbitt v Secretary of State for Trade and Industry.

Mr and Mrs Nesbitt were directors of APAC Computer Training Ltd. They managed the company on a day-to-day basis and between them owned 99.99 per cent of the shares. From the start, they had written contracts of employment with the company, in the same form as those of other company employees. They were paid salaries commensurate with their roles as the senior managers of the business but did not receive directors’ fees or dividends.

In the course of 2006, the company became insolvent and on 3 July of that year the remaining employees, including Mr and Mrs Nesbitt, were made redundant by the liquidator. The couple applied to the Insolvency Service for redundancy payments under the insolvency provisions of the ERA. Their claims were rejected on the ground that they were not employees within the meaning of the Act.

The Employment Tribunal agreed with the Insolvency Service on the basis that the Nesbitts were in joint control of the company.

The EAT overturned this decision on appeal. In its view, the fact of the Nesbitts’ control over the company was not sufficient of itself to deprive them of employment status if they otherwise satisfied all the criteria for employment. Mr Justice Underhill stated, “I believe that the law is that the fact that a claimant under the employment protection legislation is a majority shareholder and a director of the company which employs him does not affect his status as employee unless the tribunal finds that the company is a ‘mere simulacrum’… and thus, by the same token, that the contract between it and the putative employee is a sham.”

In this case, apart from the level of control they had over the company, all the indications were that Mr and Mrs Nesbitt were employees. They had proper employment contracts (equivalent to those issued to other employees), they received all their remuneration by way of salary and they ‘behaved like employees’.

Says Antony Arbuthnot, “One of the relevant factors to be taken into consideration in cases such as this is the contract of employment. We can assist you to ensure that your employment terms make sure you have the appropriate contractual relationship with your company.”

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The information contained in this newsletter is intended for general guidance only. It provides useful information in a concise form and is not a substitute for obtaining professional advice.