Directors' Pay and Bonuses

A couple of interesting developments to report today...

First, the High Court has refused to order payment of a £175,000 severance payment agreed with the chief executive of an NHS Trust, on the basis that her performance was so bad that the Trust's decision to pay her a severance payment was perverse and ultra vires. See the article in today's FT - http://www.ft.com/cms/s/0/4c727026-3419-11de-9eea-00144feabdc0.html

[Thanks to Simon Jeffreys of CMS Cameron McKenna for telling me about this]

Second, the European Commission has set out principles for remunerating risk-based staff in financial institutions. The recommendations include the bulk of bonuses being deferred (to enable better judging of performance) and claw-back clauses in data proves to have been misstated. The Recommendations will be followed up by legislative proposals. See the Press Release - http://europa.eu/rapid/pressReleasesAction.do?reference=IP/09/674&format=HTML&aged=0&language=EN&guiLanguage=en

[Thanks to Richard Linskell of Campbell Hooper for telling me about this]

Extension of registration scheme for Eastern European Workers

[Thanks to Tom Royston of Leeds CAB for telling me about this and providing the summary]

The government has announced that the Worker Registration Scheme , which had been expected to end on 30 April 2009, will continue for another two years .

This means employees from the A8 states [Czech Republic, Estonia, Latvia, Lithuania, Slovenia, Slovakia, Poland, and Hungary] must continue to be registered with the Home Office until they have completed 12 months registered work. Employers failing to ensure that their employees comply can be fined up to £5,000. [SI 2004/1219 s.9(5) ]

The scheme utilises a UK derogation from the EC Treaty which was supposed to end this month. However, Member States which can show a "serious disturbance to the labour market" are allowed to extend the derogation for up to two years. The scheme will now end on 30 April 2011.

It is possible that the European Commission may object to the extension as the meaning of "serious disturbances to the labour market" is not defined in EC law.

Equality Bill Published

The long-awaited Equality Bill was published this morning. The Bill is intended to combine all of the existing legislation on discrimination into one single statute. Whilst it will inevitably be subjected to considerable debate in committee, the first draft can be seen here.

The Bill contains a mere 205 clauses (plus 28 Schedules for those with a penchant for self-flagellation). Since the chances of me reading it before it becomes law are nil, I'm instead going to rely on various press releases from some very impressive firms of solicitors to point out that the Bill:-

• allows positive discrimination during recruitment in favour of disadvantaged groups when faced with candidates who are otherwise equally qualified
• reverses Malcolm v London Borough of Lewisham, and abolishes the list of areas in which a disability must impact (eg mobility, manual dexterity, memory or ability to learn, concentrate or understand etc.)
• contains a clause allowing the Secretary of State to order employers with more than 250 employees to publish information about disparities in pay between male and female employees - although apparently the government has anounced that this power will not be exercised in the next four years
• outlaws any clauses in employment contracts which impose a secrecy obligation stopping employees discussing their pay packages
• introduces a new duty for some key public bodies to pay due regard to socio-economic disadvantage in making strategic decisions, and extends public sector duties to ensure equality to age discrimination
• gives effect to recent European caselaw by outlawing discrimination by association

Budget Special: increase in redundancy payments

Alastair Darling, the Chancellor of the Exchequer, has announced that the maximum of a week's pay for statutory redundancy payment purposes will increase from £350 to £380. Accordingly, the maximum statutory redundancy payment will rise from £10,500 to £11,400. However:-

• the budget speech is silent about whether the maximum for an unfair dismissal basic award will also increase - it looks like that will stay at £350 (unless added in afterwards when the SI is drafted)
• the Chancellor was silent on when this change will come into effect.

Disability Discrimination: Normal day to day activities

What does the word 'normal' mean, when considering whether something is a "normal day-to-day activity" for the purposes of the Disability Discrimination Act 1995?

According to a decision of the EAT in Chief Constable of Dumfries & Galloway Constabulary v Adams, it refers to activities which are to be found amongst a range of employment situations. It would not cover a specialist skill, even though such a skill might be normal within the particular industry (eg a skilled watchmaker using specialised tools to craft fine objects of precision) - see paras. 20 and 16 of the judgment.

So, in this case, skills required specifically of a policeman would not be a 'normal day-to-day activity'. However, where the activity was a common one across a range of industries (specifically, walking around during night-shifts), then it did qualify as a 'normal day-to-day activity'.

Time Limits for Instituting Equal Pay Proceedings

Barrister Emma Price of 1 Temple Gardens has written an excellent summary of last week's important Court of Appeal case concerning equal pay time limits. Read it here.

Statutory Grievances and Equal Pay Claims

[Thanks to Bronwyn McKenna of Unison for providing this case summary]

The Court of Appeal has, this morning, resolved the vexed question on whether a grievance for an equal pay claim (under the statutory grievance procedures) needs to actually identify the comparator, or whether it is sufficient to simply claim 'equal pay' (see the history of the conflicting cases through the courts so far).

In Mid Suffolk Mental Health Partnership and NHS Trust v Hurst and Arnold v Sandwell MBC, the Court of Appeal held that it is sufficient for purposes of s.32 of the Employment Act 2002 ,for a grievance to state that claim was brought under the 1970 Equal Pay Act. There is no requirement to identify comparators or to specify the limb of the Equal Pay Act on which the Claimants seek to rely.

The reasoning of Elias J (as he was) at the EAT sitting in London on these cases was to preferred to that of Lady Smith sitting in the EAT in Scotland in the Highland Council case.

It is estimated that there around 7,000 equal pay cases awaiting this judgment.

When is a grievance not a grievance?

[Thanks to Paul Lewis from St John's Chambers, Bristol, for preparing this case summary]

Well, of course, as of today, the statutory grievance procedures have officially been given the heave-ho. From the dying embers, here's a useful little memento.

After being sued for breach of contract, the employee counterclaimed against her employer in the County Court, making clear in her pleadings that she wished to pursue an equal pay claim in the Employment Tribunal. The ET claim was duly presented, and rejected - the ET holding that the claimant could not rely on her county court pleadings as constituting the required statement of grievance.

On appeal, the EAT confirmed the position that a grievance raised in the context of litigation cannot reasonably regarded as a complaint for the purpose of the statutory grievance procedure (see para's 16 - 20).

It seems reasonable to assume (until we are told anything different!) that this principle will be of continuing application in relation to a failure to comply with the new Acas Code on Grievance Procedures.

Burns v Killgerm

Court of Appeal: when is a controlling shareholder an employee?

The Court of Appeal has handed down its judgment in Berr v Neufeld & Howe, dealing with the question of whether a controlling shareholder can ever be an 'employee' of a company - with the result that the National Insurance fund has to pay redundancy, notice and other payments if the company becomes insolvent.

DBERR were keen for the Court of Appeal to consider this point, given conflicting judgments and some 12,000 such claims on the National Insurance fund last year.

The chaps at http://danielbarnett.c.topica.com/maamYlXabPiKFbLBMZbe/ have produce a first rate summary of this case. Rather than reinvent the wheel, here it is (reproduced with permission).

[Thanks to barrister Clive Jones and solicitor Sue Ball, both of whom acted pro bono for Mr Neufeld, for telling me about this case]

6th April 2009 - forthcoming changes

Here's a short summary of forthcoming employment law changes (coming into force 6th April 2009).

Read summary