HR agenda: Key issues to consider

Russell Brimelow looks at the key issues which will be hitting HR directors’
desks in the near future, and plans out an agenda for an HR director to

Ever since I have been an employment lawyer (a period going back longer than
I care to admit!) it has been said in each successive year that it has been a
"big year for employment". Seemingly every year radical additions and
changes have occurred to employment law, and HR teams have needed to be on top
of these issues as they happen.

This article has been born out of preparations for presentations to HR
directors this Autumn on what is coming, and what might be the key practical
changes required to ensure that the employer is not only in compliance with the
new law, but also in control. These issues are dealt with below, in no
particular order of importance, as this will vary from company to company.

The introduction of age discrimination

Currently only Ireland of the EU countries has age discrimination laws and,
judging from the recent cases arising under that legislation, they are proving
tricky and difficult for employers. Certainly, in the US, where age
discrimination has existed in federal law for some time, where individuals over
the age of 40 are dismissed, claims of age discrimination are routinely lodged
and just as routinely settled (the potential awards are much higher there).

Age discrimination laws will have a number of practical effects for employers
and, given the implementation date of December 2006, is not a long way off on
the horizon. As most employers will know, age discrimination will be brought
into English law as a result of the implementation of the Equal Treatment
General Framework Directive, adopted on 27 November 2000.

The most important practical effect of bringing in age discrimination laws
will be its impact on retirement. Indeed, in the US, it is normally unlawful
simply to have a blanket retirement age for employees, regardless of
circumstances. In many cases, an employer will be having to undertake a process
to ascertain whether or not an individual is still able to carry out his or her
job satisfactorily, a process which may be both bureaucratic and distasteful.

Other practical issues will arise – how will it be possible to replace
"tired management" with "new blood"? How will the constant
regeneration of people required in certain high-tech and creative workplaces be
held-up by incumbents raising the spectre of unlimited compensation forage
discrimination, should they be displaced? How will the ability to objectively
justify age discrimination, enshrined in the new Directive (2000/78/EC) at
Article 6, work in practice?

Article 6 explicitly allows age discrimination if differences in treatment
on grounds of age are "objectively and reasonably justified by a
legitimate aim…if the means of achieving that aim are appropriate and

Examples of where age discrimination might objectively be justified include
where certain minimum age, professional experience or seniority conditions are
set for access to employment or to certain advantages linked to employment or
where the fixing of a maximum age and recruitment is necessary because of the
training requirements of the post in question or the need for a reasonable
period of employment before retirement. That leaves, however, huge potential
loopholes to be exploited by employees disgruntled because they feel that their
age has been a material factor in employment decisions (and that includes
people who feel that they are seen as being too young, as well as those who are
seen as being too old).

Consultation will begin on the issue in the next few years, but employers
could begin to look carefully at how they deal with the issue of age and to
consider how age discrimination laws will affect the way they deal with
recruitment, promotions, retirement benefits and retirement itself.

Phasing out age ranges for job advertising will become necessary, and
perhaps a study on which positions in the organisation might come within the
justifiable examples above might be prudent.

The impact of age discrimination laws should not be underestimated. It is significant
that while the Labour party entered office in 1997 with a commitment to outlaw
age discrimination, it shied away from this when it looked thoroughly at the
practical issues, and instead introduced a Code of Practice which is widely
regarded as toothless and generally ignored.

The introduction of religious and sexual orientation discrimination

By virtue of the same Directive, religious discrimination and sexual
orientation discrimination will become unlawful in the UK by December 2003.

Although these issues will not be of paramount importance or difficulty for
many employers (many of whom already include them within their equal
opportunities policies already) it will bring them into sharp focus.

Workers might now press for time off to observe religious holidays and more
flexibility on weekly holy days and the requirement for frequent prayers.
Employers should begin to consider what their response might be to these
issues, bearing in mind the duty to remain even-handed, and the legal fact that
the major Christian religious holidays coincide with bank and public holidays
while other religious holidays do not. This, of course, will not necessarily
give followers of other religions the right to time off for their religious
holidays, but there will be many arguments over what further flexibility should
be shown by employers.

The introduction of domestic Works Councils

Long resisted by the UK, and others (notably Ireland and Denmark) whose
opposition to domestic Works Councils finally collapsed in June 2001, political
agreement has now been reached on a new Directive imposing domestic Works
Councils across the European Union. No Directive has yet been adopted, since
the draft will have to be passed by the European Parliament, but it is expected
that this will be a formality and a Directive will be adopted in early 2002.

The current draft provides that Member States will have three years to bring
the legislation into national law, with the facility for the UK, should it so
wish, to stagger the triggering of the legislation over a number of years.
Nevertheless, despite the long timescale, an important principle has been
conceded – countries like the UK are being forced to inform and consult workers
even on key business decisions where trade unions are not recognised.

Currently, the exact timetable is not known, particularly since it has
recently been reported that the latest (unpublished) draft wishes to truncate
the seven year implementation period apparently agreed back in June 2001. This
could bring forward the obligation for employers with more than 150 employees
much nearer to 2005, the date upon which is likely that Member States will have
to implement the legislation. Although that may be only just over three years
away, planning for the new obligations should commence immediately, due to the
flexibilities which might well exist for employers in the early days.

By analogy with the European Works Council Directive, brought into force in
the UK in January 2000, if an employer can show on the implementation date that
it has a working system for informing and consulting employees on the grounds
set out in the Directive, it might be that it can escape more prescriptive
rules set out as a "back stop" in the legislation.

The emphasis of the draft Directive is on informing and consulting employees
about major recruitment or redundancy initiatives, restructurings and changes
to contractual terms. The Directive therefore will stop short from imposing a
general obligation to inform and consult employees on important business
decisions, but could still significantly bureaucratise decision-making.
Provisions exist for avoiding consultation in special circumstances and for
enforcing confidentiality upon the employee representatives, but the effect
will be huge, leading to a change of culture for many employers hostile to
trade unions.

Currently, the draft says a failure to consult will not invalidate any
business decisions (as it often can in Germany) but significant legal penalties
may ensue. Employers should seriously consider how they might set up employee
representative bodies (ideally by election) to begin the culture change in a
manner and style that they can control and live with.

Tribunal reform – the rise and rise of the grievance procedure

Although the issue which has hit the headlines from the Leggatt Report on
the Tribunal system has been the possibility of an application fee of £100
being levied for claims, that will be scarcely relevant for most employers.

The key issue will be a potential new obligation for individuals to use the
grievance procedure (or possibly the appeals procedure) before launching unfair
dismissal claims. Among the possibilities being canvassed at the DTI, there is
a proposal significantly to decrease the potential compensation available where
this is not done by the claimant, and, conversely, significantly increase the
compensation available where an employer refuses to facilitate a grievance or
appeal in these circumstances.

If this proposal comes to fruition, employers will need substantially to
revamp grievance and appeals procedures to ensure that they are not
unnecessarily putting themselves at risk of significantly increased
compensation claims for unfair dismissal.

The new regulations expected this year (but more likely next!)

Given the DTI’s record for the late implementation of European legislation
in recent years, it is perhaps a miracle that we are even contemplating
implementation of regulations in the same year that they are due!

Certainly, all three of the latest sets of regulations have been delayed.
Employers will need to be looking carefully at the Fixed-Term Work Directive
which will provide for no less favourable treatment of people on fixed-terms of
employment compared to permanent staff, and an automatic switch to permanent
status for individuals working for fours years or more under a series of
fixed-term contracts. It is not known exactly when these regulations will come
into force, although they were due last July.

The use of fixed-term contracts may well further decline due to this
legislation. Previously they used to be popular where a waiver for unfair
dismissal could be effected (which ceased to be the case when the Employment
Relations Act 1999 came into force).

The Burden of Proof Directive relating to sex discrimination claims was due
in July and is expected to come into force later this year. Employers need not
worry too much about this piece of legislation since it only marginally changes
the current UK position for sex discrimination cases (in which employers are
already at a major tactical disadvantage). The major issue is a slight
expansion of the definition of indirect discrimination, which is unlikely to
have much practical effect.

The new Tupe regulations, again due in July 2001, will certainly not be out
until next year. A consultation document on this has only recently been
published, with responses due by 15 December 2001. For employers regularly
engaged in Tupe issues, the new regulations are likely to be enormously
important. Among other things the consultation floats the costly possibility of
pensions being included within Tupe, particularly for contracting-out from the
public sector. The consultation also seeks to address a number of the
uncertainties of Tupe currently. There may be a new requirement for the
transferor actually to provide information about its employees to the
transferee (which otherwise has to take them on blind).

Crucially, there will be an ability to make transfer-related changes to
terms and conditions after Tupe transfer, if the employer has an
"ETO" reason for them.

Exactly how this is to be dealt with within the legislation will be
critical, since the normal "ETO" definition is rigid – it requires
"economic technical or organisational reasons entailing changes in the
workforce" (emphasis supplied) – the latter provision being likely to
cause most practical difficulties for employers as changes in the workforce may
not be required when all that is needed is a simple harmonisation of terms and
conditions to those of an existing workforce.

The consultation paper also suggests that the regulations could simply state
that all outsourcing is to be covered by Tupe – removing uncertainty but
potentially increasing costs. The removal of uncertainty however will certainly
seem attractive to many employers, who will then be relieved from the onerous
task of liaising with their employment lawyers over every potential transfer!

Any other business?

The following practical issues are those which every HR department should be
making policy decisions on.

– How to respond to the proposed changes to maternity and paternity law.
Already widely reported, "ordinary maternity leave" will rise from 18
to 26 weeks from April 2003 and "additional maternity leave" will be
26 weeks too. SMP will be for 26 weeks, calculated over 26 weeks not eight.
From the same date, there will be a right to two weeks’ paid paternity leave at
the SMP flat rate, which will increase substantially to £100 a week by April
2003. Paid adoption leave will become available, at the same rate as SMP. All
notice requirements are to be standardised at four weeks. Employers will need
to ensure that these changes are phased in correctly for their workforces, and
for many employers, there will be some headache now as to how to deal with
existing enhanced rights. Is there an obligation morally to uplift the enhanced
rights again, or will employees not object to getting at or near the legal

– The Data Protection Code is set to come into force towards the end of this
year. The Code will govern how employers should, in practice, deal with data
protection issues in relation to their staff. Already hotly debated since a
draft was widely criticised for being unpractical and over zealous in its
protection of individuals, the Code could well see major changes in the way
that information is dealt with and processed by many employers.

– The issue of equal pay is likely to become prominent in the next year. One
of the few pledges in relation to employment law made by the Labour party in
the 2001 election was to strengthen and develop equal pay law, due to
continuing statistical information pointing to a wide disparity between pay for
men and women. Denise Kingsmill, a high profile public figure, has the job of
coming up with proposals to make equal pay a reality. One widely floated
proposal has been to force employers to reveal information concerning equality
of pay in their organisations, in order to focus attention on the issue and
make it possible for a "name and shame" campaign. Recruitment
managers and potential litigants will be following the process very carefully –
now is the time to carry out equal pay audits. Coming at this issue from another
angle, it is now increasingly common for employees formally to ask their
employers (by way of sex discrimination questionnaires or otherwise) how they
have implemented the Equal Pay Code and whether or not they gather statistical
information on this issue. A continuing "head in the sand" approach
will no longer be a viable option for employers.

Russell Brimelow is the head of the employment group at Boodle Hatfield,
with offices in London and Oxford

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