Protective awards

Under the provisions of section 188 the Trade Union and Labour Relations (Consolidation) Act 1992, employers are required to consult with appropriate representatives if they are proposing to dismiss as redundant 20 or more employees within a period of 90 days or less. Consultation must commence, where 100 or more employees are to be dismissed, at least 90 days before the first dismissal takes effect. If fewer employees are involved, the period is 30 days.

The purpose of the consultation is to consider ways in which the dismissals could be avoided, or the numbers to be dismissed could be reduced, or the consequences of the dismissals could be mitigated. As part of the consultation process, the employer must disclose a wide range of information to the employee's representatives, including the reasons for the proposals, the proposed method of selecting employees for dismissal, the proposed method of carrying out the dismissals, and the proposed method of calculating any redundancy payments that are to be paid in addition to the statutory entitlement.

If the employer fails to consult, an employment tribunal may consider a complaint to that effect and, if the complaint is well founded, may make a "protective award" in respect of the employees affected. A protective award requires the employees affected to be paid their remuneration in full for a period of time decided by the tribunal. The period may not exceed 90 days but its length must be "just and equitable in all the circumstances having regard to the seriousness of the employer's default".

On 20 February 2004, the Court of Appeal gave its ruling in the case Susie Radin Ltd -v- GMB and others, following a decision by an employment tribunal to make a protective award and a decision by the Employment Appeal Tribunal (EAT) to reject the employer's appeal. A further appeal to the Court of Appeal was permitted only to consider issues relating to the protective award. The decisions of the Court of Appeal supersede precedents set by EAT decisions in earlier cases.

The employment tribunal had found that the employer, who had made over 100 employees redundant, had failed to consult with the employees and the trade union. The business was closing completely and the employer believed that no useful purpose would be served by consultation. The tribunal found that the employer's failure to consult was serious and set the protective award period at 90 days. The EAT dismissed the appeal by the employer.

A further appeal was permitted to the Court of Appeal in order to give guidance to employment tribunals on the approach to be taken in relation to their exercise of discretion or the factors that should be reflected in any award.

The employer argued that the purpose of the discretionary protective award is compensatory, not punitive, and that the fact that consultation would have no difference to the outcome should have been considered in assessing the seriousness of the employer's default. The protective award, as set by the employment tribunal, would cost the employer some £250,000.

The Court of Appeal found that consultation is an "absolute obligation" and that it is "tolerably plain that the purpose of the protective award is to ensure that consultation in accordance with the requirements of s. 188 takes place by providing a sanction against failure to comply with the obligations imposed on the employer." The appeal was dismissed.

The Court of Appeal gave the following guidance to employment tribunals (ETs) in the exercise of their discretion whether to make a protective award and for what period:

1. The purpose of the award is to provide a sanction for breach by the employer of the obligations in s. 188: it is not to compensate the employees for loss which they have suffered in consequence of the breach.
2. The ET have a wide discretion to do what is just and equitable in all the circumstances, but the focus should be on the seriousness of the employer's default.
3. The default may vary in seriousness from the technical to a complete failure to provide any of the required information and to consult.
4. The deliberateness of the failure may be relevant, as may the availability to the employer of legal advice about his obligations under s. 188.
5. How the ET assesses the length of the protected period is a matter for the ET, but a proper approach in a case where there has been no consultation is to start with the maximum period and reduce it only if there are mitigating circumstances justifying a reduction to an extent which the ET consider appropriate.

(Source: www.courtservice.gov.uk/judgmentsfiles/j2329/radin-v-gmb.htm )
...back to 5 March 2004

Redundancy Pay, Guarantee Payments and tribunal awards

The following statutory limits will take effect from 1 February 2004. The increases are prompted by a rise in the retail price index in the year to September 2003 of 2.8%.

Time off for public duties

The Employment Appeal Tribunal (EAT), in the case of Riley-Williams v. Argos Ltd, considered the issues surrounding the statutory right to time off without pay for public duties. In this case, Mrs. Riley-Williams had been appointed as a magistrate and was seeking sufficient time off from her employment to perform her duties. The Bench to which she was appointed preferred magistrates to attend for a minimum of 36 half-day sessions. The Lord Chancellor's Department requires a minimum of 26 sessions, the equivalent of 13 full days of absence. Argos Ltd had no policy on time off for public duties. Mrs. Riley-Williams believed that her employer was not prepared to allow her the number of days needed and resigned, claiming constructive dismissal.

The employer was prepared to allow her five days unpaid leave, but she had to take the remaining days from her annual holiday entitlement. As a result, the employment tribunal had ruled against her constructive dismissal claim, on the basis that the employer had not "prevented" her from carrying out her duties as a magistrate.

The EAT decided that this "prevention" test was incorrect. The test defined in the legislation (section 50 of the Employment Rights Act 1996) is whether or not the employer "permitted" the employee to take the time off. In determining whether the amount of time off allowed is reasonable, the Act defines three considerations:

• the amount of time off that is required for the performance of the duties,
• how much time off has already been allowed for trade union duties and activities, and
• the effect of the employee's absence on the running of the employer's business.

In addition to these statutory issues, the EAT also looked at the "civic dimension" to the right to time off for public duties. In the context of the duties of a magistrate (justice of the peace), the Magistrates Association's website states: "The magistrates' courts service depends on local people to sit as justices of the peace. It is considered to be important for business to be seen to take part in its local community. Court business takes place during working hours so there is a need to ask for employers to give employees time from work to fulfil this valuable task. There can be significant benefits to both employer and to employee. Whilst the business expresses its culture of service in the community, the magistrate employee will have new learning opportunities and a focus beyond work, through which to gain transferable skills to bring back into the workplace."

The EAT concluded that the five days offered by the employer was not reasonable when weighed against a requirement for 13 days. The case was remitted to a new employment tribunal so that the constructive dismissal issue could be re-heard.

At the end of its written decision, the EAT made two important points to employers:

• In the experience of the lay members of the tribunal, time off for public duties is rarely the subject of dispute, and is often granted with pay. As a result, the responsibility of employers is usually discharged to the satisfaction of themselves and their employees in recognition of their civic responsibilities.
• It was the absence of any policy for statutory time off that prompted this case. Employers were urged, in agreement with trade union or employee representatives as appropriate, to put in place policies for the handling of applications for time off for public duties and for all the other statutory time off provisions.

(Source: www.employmentappeals.gov.uk/judge_fr.htm , in the case Riley-Williams v. Argos Ltd)
...back to 11 July 2003

Working for the employer during the Maternity Pay Period

We asked the Revenue's press office for guidance on another question that also arose because of the inadequate information now provided in booklets E15, E16 and their recent supplements. On page 30 of last year's CA29 SMP Manual, a worked example was provided that explains what happens if an employee works in one of the first six weeks of the MPP. It shows that the employee loses a week of SMP at the lower rate first, so that SMP is still paid at the earnings-related rate for six weeks.

The CA29 SMP Manual has been replaced for 2003/04 by the E15 Supplement. On this question, page 24 simply says "You cannot pay SMP/SPP for any SMP or SPP pay week in which your employee works for you. Even if your employee only works for you for half a day they will still lose a whole weeks' SMP/SPP." The former guidance and the worked example no longer appear. Does this omission mean that the former guidance was wrong?

The Revenue gave the following response:

"The information that any SMP lost is always lost at the lower of the two rates was omitted by mistake. Inland Revenue intend to include a message on the Internet and the next edition of the Employers Bulletin to alert employers to this."
...back to 6 June 2003

Fraudulent declarations for SPP

In a further question to the Inland Revenue press office, we asked what an employer should do if an SPP self-certificate appears to be fraudulent, i.e. the employee has signed the declaration but the employer believes that one or more of the three statements do not apply to the employee. This is probably the most common question that arises during training courses over the use of self-certificates as evidence of entitlement to SPP. Payroll managers know that some employees will, without fail, endeavour to obtain SPP fraudulently.

The Revenue's E15 and E16 booklets both say "You should accept the declaration at face value". The DTI's PL517 booklet says, more realistically, "The employer should accept this declaration at face value unless they have very good reasons for believing it is false." However, there is no guidance in any of the DTI's or Revenue's booklets as to what an employer should do in this situation.

We pointed out that, in contrast, the CA30 SSP Manual gives clear instructions on the procedures that are followed if an employer refuses to pay SSP, perhaps because the employer believes that the SC2 is fraudulent, and the employee disagrees with that decision. Equivalent guidance in the context of SMP was also given in last year's CA29 Manual, but it has not been included in E15 or E15 Supplement.

The response from the Inland Revenue is as follow:

"Throughout the consultation on the new rights to paid paternity leave, both employers, employees and their representatives were very firm that they did not want employers to have to pry into their employees' private lives to establish whether they were entitled to this or not. With this in mind the government decided to adopt a self-certificate that employees should complete and that employers would be expected to accept at face value, as is stated in the Inland Revenue and DTI guidance. The new approach to employer guidance which the E15 and E16 and their supplements pilot is to provide what most employers should need most of the time. When drafting this guidance, which we did in extensive consultation with employers, we felt that the vast majority of employees would complete the form honestly and that many employers would not know their employees' personal lives well enough to know if they did not.

Throughout the guidance employers are advised to contact the Employer's Helpline if they are not sure what to do in any particular case that is not covered in the guidance. I would expect an employer who had received a declaration that they knew or suspected to be false to do that. If they did they would be told that they could refuse to accept the declaration and to not pay the SPP and refuse to allow leave. They would also be told that their employee had the right to challenge that decision and ask the Inland Revenue to investigate and make a decision about whether the employer was liable to pay SPP or not.

I do not think that it is fair to compare this with SSP. With SSP we know that employers can sometimes have well-founded concerns about whether their employees are incapable of work and employers are also encouraged to take an active role in helping their employees manage their sick absence so we have a well established procedure for referring cases for medical advice where necessary. With SPP we have no evidence to suggest that fraudulent declarations will be a problem and the issues involved in checking the entitlement are different.

Advice on handling disagreements was not included in the new guidance as it will not be needed in most cases. The employer is advised to tell their employee if they think that they are not entitled, and the SMP1, SPP1 and SAP1 explain to the employee what their options are. If the employee does ask the IR to make a decision, IR will explain the process to both the employee and employer at that time."

Note, however, that a fraudulent claim is not one of the reasons listed on form SPP1 for which it should be issued.
...back to 6 June 2003

Lower age limit for SMP

Over the past few weeks we have posed a number of questions to the Revenue's press office. The first asked at what point a young woman would become entitled to SMP. The question is not covered at all in booklet E15 or in the E15 Supplement. She has to be an "employee", defined in the legislation as a person over the age of 16. Does she have to be at least age 16 in the qualifying week to qualify for SMP, or when she started in the employment, or at some other particular time? We received the following (edited) response:

"The Social Security Contributions and Benefits Act 1992 (SSCBA) provides that one of the qualifying conditions for SMP is 26 weeks' continuous employment up to and including the qualifying week with an employer. An employer is defined as someone who is liable to pay secondary Class 1 NICs, or would be if the employee's earnings were high enough. Section 6 of the SSCBA brings in the requirement that the earner must be over the age of 16.

This means that, to qualify for SMP, the employee would have had to have been 16 or over on the latest day she could start being an employee for SMP purposes and still complete her 26 weeks' continuous employment. The same rule applies to SAP and SPP."

This guidance, therefore, means that a young woman must be at least age 16 at the latest point at which the qualifying service period can start, i.e. the Saturday of the week that started on the Sunday that falls 25 weeks before the Sunday of the qualifying week.
...back to 6 June 2003

Union learning representatives

The new right to paid time off for union learning representatives (ULRs), as provided for in the Employment Act 2002, came into effect on 27 April 2003.

Union learning representatives are a type of lay union representative with the function of advising union members about their training, educational and developmental needs.

Section 43 of the Employment Act 2002 inserts a new section 168A into the Trade Union and Labour Relations (Consolidation) Act 1992. This requires employers to provide

• ULRs with paid time off during working hours to carry out their functions and undergo training, similar to the rights enjoyed by trade union officials, and
• union members with unpaid time off to make use of the services of a ULR.

The ACAS Code of Practice 3: Time Off for Trade Union Duties is being updated to include information about ULRs. The new version is not yet available.
(Source: www.tso.co.uk/bookshop/...)
...back to 25 April 2003

Redundancy calculator

An interactive redundancy calculator is now available on the DTI's website for determining the number of weeks of statutory redundancy pay to which employees are entitled according to their age, length of service and weekly rate of pay (up to the current £260 weekly maximum). Care must be taken with its use as it does not handle such common issues as calculating the weekly rate for employees whose pay varies due to bonuses or shift working, and performing the calculation at the appropriate calculation date. Access to the calculator is at www.dti.gov.uk/er/redundancy/ready.htm .
Payroll Briefing 19 - 14 April 2003

Union Learning Representatives

The Employment Act 2002 makes provision for Union Learning Representatives (ULRs) to take paid time off work, in the same way as shop stewards, to train for and perform their duties. When these measures come into force early in 2003, union members will also entitled to take time-off, without pay, to make use of the services of ULRs.

The ACAS code of practice, Time Off for Trade Union Duties and Activities, has been reissued in draft form to provide guidance on the role of ULRs and their entitlement to paid time off. The text has been prepared by ACAS in conjunction with the Department for Education and Skills. Interested parties have been asked to give feedback on the draft code by 13 November 2002. A copy may be downloaded from www.acas.org.uk/index.html .
Payroll Briefing 6 - 12 September 2002

Employment Act 2002

The Employment Bill received Royal Assent on 8 July and became the Employment Act 2002. In addition to the new maternity, paternity and adoption rights, there are a number of other significant employment rights that will come into force over the coming year. A short description of these provisions, their current status and their likely implementation dates are given below.

Union Learning Representatives

Union learning representatives (ULRs) have a similar status to shop stewards but their role is to advise trade union members about their training, educational and developmental needs. The Employment Act gives them the right to time off with pay to perform their duties and to undergo training, similar to the provisions applicable to union officials. The Act also gives the right to time off without pay for union members that consult a ULR.

These provisions are the responsibility of the Department for Education and Skills, which is currently working with ACAS on a draft code of practice. Implementation is not expected before the end of 2002.

Payroll Briefing 5 - 28 August 2002

Statutory payments and awards

From 1 February 2002, the maximum amount of "a week's pay" for calculating statutory redundancy pay was increased from £240 to £250. The daily limit on the amount of a guarantee payment also increased on that date from £16.70 to £17.00. Increases were also made to the limits that apply to tribunal awards in the event of findings of unfair dismissal.
Payroll Briefing 218 - 14 February 2002

Statutory limits

The limits that are applied to a range of employment provisions were increased from 1 February 2002. Among them, the weekly maximum rate of statutory redundancy pay increased from £240 to £250, and the daily maximum rate of statutory guarantee payments increased from £16.70 to £17.00. - Payroll Briefing 217 - 4 February 2002

Employment Bill update

The Government has published a new Employment Bill, covering a broad range of provisions that are due for implementation over the next 18 months, including the new maternity and related entitlements, and fixed term working. The Bill clarifies many aspects but still allows for further Regulations to be made to fill in the fine detail. Descriptions in the following notes about the contents of future Regulations are based on the explanatory notes that accompany the Bill. As this is a Bill, any part may be amended before it comes into law. Equally, the provisions of any future Regulations may differ from those described below.

Union Learning Representatives

A Union Learning Representative (ULR) is a new type of lay union representative, with duties that involve advising trade union members about their training, educational and developmental needs. As existing trade union legislation does not refer to this role, there is no statutory entitlement for ULRs to receive paid time off for the performance of their duties, nor any entitlement for trade union members to take unpaid time off to consult with ULRs.

The Employment Bill introduces new sections to the Trade Union and Labour Relations (Consolidation) Act 1992 in order to provide these entitlements. ULRs will be entitled to paid time off if

• they are members of an independent trade union that is recognised for collective bargaining purposes
• their activities are undertaken on behalf of fellow employees who are members of the ULR's union
• the union has notified the employer in writing that the employee is a ULR
• they have been properly trained to perform their duties at the time they start performing as a ULR or within six months of that date.

Union members who consult a ULR that meets these requirements and who performs the role on their behalf will be entitled to take unpaid time off to access their services.

No date has yet been fixed for the introduction of this entitlement. - Payroll Briefing 213 - 29 November 2001