ACAS Guide to Holiday

ACAS has today issued a revised guide to holiday and holiday pay.

The web version (which rather embarrassingly claims at the top to be dated as of November 2003, but at the bottom as of April 2003).

It provides the answers to (or guidance on) a number of questions, such as:

• do employees have the right to paid leave on public holidays?
• can a part-time worker who works Wednesdays to Fridays claim the right to paid bank holidays which fall on a Monday?
• does leave accrue during periods of absence?
• how must a worker apply for leave?

etc.

LINK: ACAS Guide to Holidays

ACAS Guide to Holiday

The Department of Work and Pensions has published details of a survey on age discrimination in the workplace.

According to the survey, despite legislation still being three years away, employers are beginning to take action to introduce appropriate policies into the workplace. The results of the survey include:

• 67% of employers are aware that age discrimination legislation will be introduced into the workplace by the end of 2006;
• 57% of employers confirmed they already avoid using age limits and age-related words in job advertisements;
• 55% do not use age as a basis for redundancy (the summary of the survey is unclear if they includes LIFO, which is indirectly discriminatory on grounds of age); and,
• 62% of employers base training purely on skills needs.
  

Age Discrimination

The Department of Work and Pensions has published details of a survey on age discrimination in the workplace.

According to the survey, despite legislation still being three years away, employers are beginning to take action to introduce appropriate policies into the workplace. The results of the survey include:

• 67% of employers are aware that age discrimination legislation will be introduced into the workplace by the end of 2006;
• 57% of employers confirmed they already avoid using age limits and age-related words in job advertisements;
• 55% do not use age as a basis for redundancy (the summary of the survey is unclear if they includes LIFO, which is indirectly discriminatory on grounds of age); and,
• 62% of employers base training purely on skills needs.
  

Repayment Clauses in Compromise Agreements

(Thanks to Neil Russell of BD Laddie, and to Michael Simpson of Thompsons, for telling me the official guidance was out)

On 26th August 2003, I gave advance notice of the Inland Revenue's intention to issue a formal statement on its attitude to repayment clauses in compromise agreements.

The statement has now been issued in issue 67 of the Tax Bulletin. It is reproduced below; but, in summary, the Revenue accepts that sums paid which are repayable in certain circumstances are not taxable.

TAX BULLETIN 67

Termination payments and benefits - repayment clauses in compromise agreements - application of s225-6 ITEPA 2003

In recent months, a question has arisen concerning whether the existence of a "repayment clause" in a compromise agreement made at termination of employment gives rise to a charge to tax and National Insurance Contributions under the legislation dealing with restrictive covenants (s225-6 ITEPA 2003 - formerly s313 ICTA 1988 - and s4(4)(b) Social Security Contributions and Benefits Act 1992).

Typically, such a clause requires the employee to repay some or all of the sum settled by the agreement if he or she subsequently initiates litigation in respect of the employment or its termination.

The Revenue's view has been, and remains, that a compromise agreement by its very nature includes a restrictive covenant. This is because the employee agrees not to do something, namely not to commence or continue litigation.

Statement of Practice 3/1996 advises that the Revenue will not attribute any of the settlement sum to such an undertaking, so there is nothing to charge under s225-6 ITEPA 2003.

However, an employer could still make a payment specifically for an undertaking not to litigate, in which case SP 3/1996 would not apply and a charge arises.

The question is whether a repayment clause entails attribution of some or all of the settlement sum to that undertaking since the sum is lost if litigation commences.

Following legal advice, the Revenue accepts that such a charge will not arise other than in very exceptional cases.

Vaughan-Neil v CIR (54 TC 223) confirmed that it is necessary to establish, realistically and as a matter of fact, what the settlement sum is actually paid for. Normally, a compromise agreement made at termination deals with genuine claims and the settlement sum is paid in consideration for settling those claims. Where that is the case, the settlement sum is exhausted by reference to those claims and no sum remains to be attributable to the undertaking not to litigate. That remains the case whether or not a repayment clause exists.

Consequently, enquiries will not normally be raised on this point alone. The Revenue will raise the question only if the claims appear spurious, for example the amounts are clearly in excess of a reasonable sum for settlement of the claims.

Practitioners should bear in mind that there are no tax or NIC provisions allowing adjustment to charges if such a repayment in fact happens.

All the NICs legislative references mentioned in this article are those which apply in Great Britain. Northern Ireland has its own NICs legislation which, in the main, is the same as that for Great Britain

Rutherford - Upper Qualifying Age

(Thanks to Paul Troop, junior Counsel for Messrs Rutherford & Bentley, for sending me the summary below)

The EAT has handed down its decision in Secretary of State v Rutherford & Bentley (previously Rutherford v Harvest Town Circle).

It has overturned the ET's decision, and found that the upper qualifying age for unfair dismissal and redundancy does not offend Article 119. Thus the rule remains that employees over normal retirement age cannot claim unfair dismissal or statutory redundancy payments.

The EAT declined to remit the case back to a tribunal and said it was the end of the road for the litigation (subject to any appeal to the Court of Appeal).

I have not read (or seen) the transcript. Paul Troop's summary is reproduced below.

Secretary of State for Trade and Industry v (1) Rutherford (2) Bentley

Mr Justice Wall, 2 October 2003

The EAT has today allowed the Secretary of State's appeal against the finding of the Stratford Employment Tribunal that the provisions of the Employment Rights Act 1996 that prevent employees over the age of 65 claiming either unfair dismissal or redundancy (sections 109(1)(b), 156(1)(b), 119(4) and 162(4)) should be disapplied as being indirectly discriminatory on the grounds of sex contrary to Art 141 of the European Treaty.

The SoS was successful in arguing that the Tribunal's decision in relation to both disparate impact and objective justification was wrong. The judgement runs to over 100 pages.

On the issue of disparate impact, the EAT held that the Tribunal selected the wrong pool for comparison, and even if the pool selected was the correct one, its rejection of the pool proposed by the SoS without any proper form or reasoned analysis was an error of law sufficient to vitiate its decision.

The EAT took the view that the correct pool to be examined is the entire workforce. To deal with any particular segment of it on the basis that it represents those "for whom retirement has some real meaning" is to introduce a subjective element which was capable of being expanded or reduced without the application of any measurable criteria. The EAT stated that this does not mean that it would be wrong, in appropriate cases, to consider the disadvantaged group. The EAT held that the wider pool shows clearly and unequivocally no disparate impact.

On the issue of justification for the provisions, the EAT found that the Tribunal was wrong to decide that the default provisions were inextricably linked to the State retirement age. The EAT accepted that the policy arguments advanced by the SoS constituted reasonable policy objectives that reflected legitimate aims of the State's social policy. The EAT held that the policy aims were not related to any discrimination based on sex and were not "tainted with sex discrimination" as had been found by the Tribunal. The EAT added that the Tribunal failed to give any weight to the consultation process currently under way in relation to age discrimination and to allow the government a reasonable margin of appreciation when striking the balance between the need to legislate and the need to ensure that proper processes have been gone through before legislation is placed before Parliament.

The EAT saw no point in remitting the case to another Tribunal for further consideration. The order of the Tribunal was set aside and the claims of Mr Rutherford and Mr Bentley were dismissed.

The EAT also stated "We do not, of course, criticise either Mr Rutherford or Mr Bentley for bringing these applications. By pointing up the difficulties, they and their lawyers have performed a public service, of which we hope the government will take note. But that said, we see no purpose in there being a Rutherford II. Subject, of course, to the Court of Appeal taking a different view, it is our judgement that this litigation should stop now."

ACAS Pilot Mediation Scheme

ACAS has launched a pilot mediation scheme. Help is available over the telephone, or an ACAS representative will visit the workplace and help employers and employees resolve their problems. They aim to visit the workplace within 5 working days of a request, and for formal mediations within 10 days of receiving an agreed request from both employer and employee.

The visiting / mediation service is free.

Whilst being piloted, it is only open to:

• employers in the Yorkshire & Humber region or the East London area (covering City of London, Newham, Tower Hamlets, Redbridge, Havering, Hackney, Barking & Dagenham, Lewisham, Greenwich and Bexley); and,
• employers that employ fewer than 50 employees.