The Government has recently announced its decision to abolish the default retirement age (DRA) of 65 by October 2011.

Current position

Although employees can, at present, request to work beyond the age of 65, employers are able to retire employees aged 65 and over as long as they have given between 6 and 12 months notice of the intended date of retirement. Provided they follow the required statutory procedure, employers are protected from unfair dismissal and age discrimination claims.

Position after 6 April 2011

From 6 April 2011, employers will no longer be able to issue notice of their intention to retire an employee aged 65 or over. If they want to dismiss an older employee, they must follow a fair procedure and rely on one of the reasons set out in S. 98 of the Employment Rights Act 1996 – capability, conduct, redundancy, illegality or some other substantial reason.

Despite these changes, employers will still be able to retain a default retirement age provided they can objectively justify it as a proportionate means of achieving a legitimate aim. This is the same as the current position where an employer operates a compulsory retirement age below 65.

Proportionate means that:

➢ what the employer is doing is actually achieving its aim;

➢ the discriminatory effect should be significantly outweighed by the importance and benefits of the legitimate aim;

➢ the employer should have no reasonable alternative to the action they are taking. If the legitimate aim can be achieved by another or less discriminatory means, they must then opt for that route.

Legitimate means:

➢ economic factors such as the needs of and the efficiency of running a business;

➢ the health, welfare and safety of the individual (including the protection of young people and older workers;

➢ the particular training requirements of the job.

Note: A legitimate aim must correspond with a legitimate need of the employer. For example, economic efficiency may be a real aim but achieving this through discrimination rather than non-discrimination is not a legitimate need.

Warning: It is not easy to prove objective justification and employers will have to provide valid evidence, if challenged. Any decision to compulsory retire an employee must be carefully considered and, in any event, employers should seek specialist HR advice before doing so.

Transitional period

Although employers will no longer be able to issue notices of retirement on or after 6 April 2011, the Government has agreed a 6 months transitional period where default retirement processes that have already commenced in accordance with the current statutory procedures can continue through to completion. However, the retirement notice must have been issued before 6 April 2011 and the retirement date must occur before 1 October 2011.

The Bribery Act 2010 will come into force in 2011. The Act, which reforms existing bribery laws, will bring about significant changes in UK anti-corruption law and will put the liability for preventing bribery and corruption by individuals acting on behalf of an organisation firmly with employers. All UK and overseas businesses need to be aware of the provisions of the Act and the offences for which individuals and businesses can be prosecuted.

What are the offences?

The updated legislation includes four new offences. Put simply, it will be an offence to:

➢ offer, promise or give a bribe to another person with the intention of getting that person to behave in an improper way or to reward them for an improper act;

➢ request or receive or agree to receive a bribe from another person;

➢ bribe a foreign public official in order to obtain or retain business;

➢ fail to prevent an act of bribery. A commercial organisation may be guilty of this offence if a person associated with it bribes another person for the organisation’s benefit.

Who can be prosecuted?

A UK or overseas corporate body can be prosecuted in the UK for the offence of failing to prevent bribery, regardless of where the offence is committed and even if its senior officers were unaware that the bribery had occurred. A senior officer can be widely defined as a director, manager, company secretary and other similar officers, as well as those purporting to act in such capacity.

An individual or corporate body can be prosecuted in the UK for giving or receiving a bribe or for bribing a foreign official if:

➢ any part of the offence takes place in the UK; or

➢ the offence takes place abroad and:

 the individual is a British Citizen or an individual ordinarily resident in the UK (whether or not a British Citizen); or

 the corporate body is incorporated under any UK law.

An overseas corporate body cannot be prosecuted in the UK for giving or receiving a bribe or for bribing a foreign official if the offence is committed outside of the UK.

What are the penalties for non-compliance?

If convicted of any of the bribery offences, individuals may be jailed for up to 10 years and/or receive an unlimited fine; companies may receive an unlimited fine. Directors convicted of bribery offences are likely to be disqualified from acting as a director for a significant period of time.

Will corporate hospitality fall within the definition of a bribe?

The Government has stated that “to the extent that reasonable hospitality is a normal part of business, we are not seeking to discourage such practices”. However, certain forms of hospitality may fall foul of the legislation and it is therefore important that organisations have very clear policies and guidelines around offering hospitality. Offering lavish hospitality to a client at a time when a new contract is about to be awarded or secretive or unauthorised hospitality, is likely to be considered a bribe!

How can I avoid prosecution?

In order to avoid prosecution for failing to prevent bribery, a commercial organisation must be able to demonstrate that it had adequate procedures in place to prevent the bribery occurring. The steps needed to prevent bribery will vary for each organisation but you may wish to consider the following measures:

➢ Risk assessment: Undertake a review of the organisation’s activities in order to identify where a risk of bribery may occur. Undertake appropriate enquiries on all third parties associated with the organisation, particularly those in high risk positions. Ensure that all business relationships are transparent and ethical;

➢ Policies: Carry out a review of existing anti bribery and hospitality policies and implement new policies if necessary (the policies should highlight actions that are prohibited and tell individuals what to do if they come across bribery within the business). Ensure the policies are communicated and readily available to all employees. Carry out regular reviews and communicate updates promptly;

➢ Senior officers: Bring the new legislation to the attention of senior officers. A senior officer will be guilty of an offence if he consents to or connives to give or receive a bribe or bribe a foreign public official. Failing to act may be regarded as consenting or conniving and may lead to prosecution, imprisonment and/or fines;

➢ Induction and training: Train new and existing staff on the impact of the legislation and the organisation’s policies. Monitor compliance.

Default retirement age

The Government has recently announced its decision to abolish the Default Retirement Age (DRA) of 65 by October 2011. At present, employers can legally retire employees aged 65 or over as long as they follow the correct statutory procedure. From 6 April 2011, employers who wish to retire an employee will no longer be able to rely on the default retirement age as a means of doing so.

Read our “DRA: Key Update for Employers” for more information.

Bribery act 2010

The Bribery Act 2010 is due to come into force during 2011. The Act, which reforms existing bribery laws, will bring about significant changes in UK anti-corruption laws and will put the liability for preventing bribery and corruption by individuals acting on behalf of an organisation firmly with employers. All UK and overseas businesses need to be aware of the provision of the Act and the offences for which individuals and businesses can be prosecuted.

The Act was due to come into force in April 2011 but has been put on hold due to the delay in publishing the final version of the guidance – an earlier draft issued for consultation in September 2010 was widely criticised. The Government has said that it now intends to implement the Act three months after the final version of the guidance has been published. Watch this space!

Read our “Bribery Act: Key Update for Employers” for more information.

Extension of statutory flexible working

From April 2011, the right to request flexible working will be extended to parents of children under the age of 18. Currently, the right applies to parents or carers of children under the age of 17 (or under the age of 18 if the child is disabled) and carers of certain persons aged 18 and over.

The Government has also announced its intention to publish proposals on extending the right to request flexible working to all employees. Consultation will be launched later this year to consider the feasibility of allowing everyone to make the request.

Additional paternity leave and pay

The Additional Paternity Leave Regulations were introduced in April 2010 and apply to children born or matched for adoption on or after 3 April 2011. Under the regulations, eligible fathers and partners will have the right to take up to 26 weeks’ additional paternity leave provided:

➢ The mother or partner is entitled to Statutory Maternity or Adoption Leave, Statutory Maternity or Adoption Pay or Maternity Allowance;

➢ the child is over 20 weeks old (or has been with its adoptive parents for 20 weeks in the first year of being placed for adoption);

➢ the mother or partner has returned to work without exercising the full entitlement to maternity or adoption leave.

Additional Statutory Paternity Pay may be payable provided certain eligibility criteria are met.

This new right will operate in addition to the existing right for fathers or partners to take two week’s paternity leave around the time of the birth or adoption placement.

Equality act 2010

The majority of the provisions of the Equality Act 2010 came into force in October 2010. A further provision on positive action in recruitment and promotion will come into force on 6 April 2011. Positive action will allow an employer, in specific circumstances, to recruit or promote a person with a protected characteristic in preference to another without a protected characteristic provided that both candidates are of equal merit for a particular job. For example:

➢ A counselling service for teenagers, located in an area of high Muslim population, has no employees who are Muslim. Two job candidates of equal merit are in a tie¬breaker situation with the employer having to find some way to choose between them. One candidate is Muslim and the other candidate is not. The manager could choose to offer the job to the Muslim candidate.

Read our “Equality Act 2010: Key Update for Employers” for more information on the provisions that came into force on 1 October 2010.

Right to request time off for training

On 6 April 2010, employees who had at least 26 weeks continuous service and who worked for organisations with 250 or more staff were given the right to request unpaid time off work for training purposes. From 6 April 2011, this right extends to all employees, regardless of the size of the organisation.

New statutory payment rates

The following statutory payment rates have been announced by the Government and are expected to apply form April 2011:

➢ Statutory Sick Pay will increase from £79.15 to £81.60. The weekly lower earnings threshold for these payments will rise from £97.00 to £102.00;

➢ Statutory Maternity, Statutory Paternity and Statutory Adoption Pay will increase from £124.88 to £128.73. The weekly lower earnings threshold for these payments will rise from £97.00 to £102.00;

➢ Maternity allowance will increase from £124.88 to £128.73. The weekly earnings threshold remains at £30.00.

Small Employers Relief: Employers whose Class 1 National Insurance bill is under a certain threshold (£45,000 in 2010/11) can recover 100% of the SMP/SPP/SAP paid to their employee plus 4.5% as compensation.

The Government has proposed that, from April 2011, this compensation amount will be reduced to 3%. Employers who do not qualify for the Small Employers Relief can recover 92% of SMP, SPP and SAP paid to their employees.

Finally……..

It’s a holiday – or is it?

The Government has announced additional bank holidays in 201 and 2012. The first is for the Royal Wedding on 29 April 2011 and the second for the Queen’s Diamond Jubilee on 5 June 2012. Whether or not the employee is entitled to take the extra bank holidays depends upon the terms of the contract of employment. In short:

➢ If the contract states that the employee is entitled to a certain amount of annual leave plus bank holidays (i.e. 20 days plus bank holidays), then employers are obliged to allow the extra day;

➢ If the contract states that the employee is entitled to a certain amount of annual leave inclusive of bank holidays (i.e. 28 days including bank holidays) or specifies a certain number of bank holidays can be taken (i.e. 8 bank holidays), then contractually there is no entitlement to the additional time off.

In the current economic climate, many businesses may consider it simply not feasible to allow an additional days’ leave for all. However, even if you are not contractually obliged to award the addition bank holiday, you should still think carefully about whether to allow employees the time off. Insisting that employees work, will not be a popular decision and could affect morale. Consider whether to allow employees to book annual leave as an alternative to taking the bank holiday or to offer an alternative day to be taken at a later time, to suit business requirements.

On 1 October 2010, certain provisions of the Equality Act 2010 will become law. The Act is the single biggest piece of discrimination legislation that has been created in this country. It harmonises and replaces previous legislation and ensures consistency in what you need to do to make your workplace a fair environment and to comply with the law.

Protected characteristics

The Equality Act covers the same groups (now known as “protected characteristics”) that are protected by existing equality legislation:

• age
• disability
• gender reassignment
• race
• religion or belief
• sex
• sexual orientation
• marriage and civil partnership
• pregnancy and maternity

Types of discrimination

The Equality Act has introduced changes to existing definitions of discrimination and has also introduced new forms:

Direct discrimination
Occurs when a person is treated less favourably than another person because of a protected characteristic they have. Applies to all protected characteristics.

Example: An employer decides not to promote somebody because of their religious beliefs.

Indirect discrimination
Occurs when there is a condition, rule, policy or practice that applies to everybody but particularly disadvantages people who share a protected characteristic. Applies to all protected characteristics except pregnancy/maternity.

Example: An employer only permits full time working which could disadvantage some female employees who have childcare commitments.

Associative discrimination
Occurs when a person is directly discriminated against because of their association with someone who has a protected characteristic. Applies to all protected characteristics except marriage/civil partnership and pregnancy/maternity.

Example: An employee is refused promotion because they care for (and are therefore associated with) their disabled parent.

Perceptive discrimination
Occurs when a person is directly discriminated against because they are perceived to have a protected characteristic. Applies to all protected characteristics except marriage/civil partnership and pregnancy/ maternity.

Example: An employee is 50 but looks much younger. He is not allowed to represent his company at an external meeting because his manager thinks he is too young.

Harassment
Defined as “unwanted conduct which has the purpose or effect of violating an individuals’ dignity or creating an intimidating, hostile, degrading, humiliating or offensive environment for that individual”. Employees are able to complain of behaviour that they find offensive, even if it is not directed at them. Applies to all protected characteristics except marriage/civil partnership and pregnancy/maternity.

Example: A disabled employee is frequently teased and humiliated by his line manager about his sexuality and he claims harassment. The employee shares an office with another employee. He also claims harassment because the line manager’s behaviour has created an offensive environment for him.

Third party harassment
The Equality Act makes you potentially liable for harassment of your employees by a third party who is not an employee of the company, such as a client or a supplier. You will only be liable when harassment has occurred on at least two previous occasions, you are aware that it has taken place and have not taken reasonable steps to prevent it from happening again.

Example: An employee is gay. He complains to his manager that a client has made homophobic remarks to him on three separate occasions. His manager fails to take steps to prevent this happening again and the client makes further offensive remarks. The employee claims third party harassment.

Victimisation:
Occurs when a person is treated badly because they have made or supported a complaint or raised a grievance under the Equality Act or because they are suspected of doing so. The person need not be the victim of the discrimination. Applies to all protected characteristics.

Example: An employee makes a formal complaint against her manager because she believes she has not been promoted because of her age. Although the complaint is resolved through the company’s grievance procedure, the employee is ostracised by her manager. The employee claims victimisation.

Other important amendments

Positive action
The Equality Act will allow you to take positive action if you think that employees or job applicants who share a particular protected characteristic suffer a disadvantage connected to that characteristic.

Example: An employer places a job advertisement designed to reach members of under-represented groups and to encourage their applications.

Pre-employment health related checks
The Equality Act limits the circumstances when you can ask health related questions before making a job offer to an applicant:

➢ Where you need to make any reasonable adjustments to the selection process to accommodate the applicants’ needs.

➢ Where you need to determine whether an applicant can carry out a function that is essential (‘intrinsic’) to the job.

➢ Where you wish to monitor diversity amongst people applying for the job.

➢ Where you wish to take positive action to assist disabled people.

➢ Where you wish to assure yourself that a candidate has the disability required for the job, where the job genuinely requires the jobholder to have a disability.

It should be noted that an applicant cannot take you to an Employment Tribunal if they feel that you are asking questions that are unlawful but they can complain to the Equality and Human Rights Commission.

Once the applicant has passed the interview and you have offered them a job (whether it is an unconditional or conditional job offer), you are permitted to ask appropriate health related questions.

Pay secrecy
The Equality Act now makes it unlawful for you to prevent or restrict your employees from discussing whether differences in pay exist that are related to protected characteristics. It also makes pay secrecy clauses in employment contracts unenforceable.

You can, however, require your employees to keep pay rates confidential from some people outside the workplace, for example, a competitor.

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