Employment Law - Getting in on the employment law act

The Disability Discrimination Act is set to take centre stage again on 1 October 2004, with the 'small employer' exemption in the DDA due to be abolished and the introduction of more thorough rules. These concern ensuring proper access to businesses and other venues such as churches and libraries to those with impairments.

Those small businesses that thought they would not need to make any adjustments may find they are inadvertently being discriminatory and that a disabled person may bring a claim for compensation against them.

Another Disability Discrimination Bill is due to come into force in 2006.

The Works and Pensions Secretary, Andrew Smith, has recently announced that this will incorporate a number of recommended changes. These will include bringing a larger number of people with mental illnesses within the definition of the term 'disability'. It aims to achieve this by: removing the requirement that their condition be clinically well-recognised; including people diagnosed with progressive conditions such as HIV, multiple sclerosis and cancer; and introducing a questionnaire procedure similar to that currently operating in sex and racial discrimination cases. This will arrive at a time when employers continue to grapple with how to handle an employee absent from work with long-term stress.

Currently, if a psychiatrist says this is more a question of anxiety than a true clinical condition, such a person might not be considered 'disabled' under current rules - and the employer would not be obliged to consider making reasonable adjustments to incorporate this employee's needs. How-ever, it looks likely that, in the future, stress-related illnesses of a more minor nature and those not found in a medical dictionary will be included.

The House of Lords has been busy this summer considering employment cases.

The first of interest relates to employers' duties towards a disabled employee when that employee is no longer able to perform their own job, but when there is another job to which they could be reassigned.

In Archibald versus Fife Council, Mrs Archibald became disabled after complications from surgery and was no longer able to carry out her road-sweeping job. There was a sedentary job available, however, and she was interviewed for this and would have been suitable. However, another applicant was more qualified and got the job. There was nothing else available for Mrs Archibald and she was subsequently dismissed. The House of Lords said this was wrong. Unlike sex and race discrimination, an employer is obliged to positively discriminate in favour of disabled people. This could potentially include allowing disabled people to 'trump' applicants for other jobs when they are suitably qualified for the job, even if they are not the most qualified candidate. This case was referred back to the original tribunal to re-examine, with the House of Lords guidance in mind.

The dilemma exists that this guidance may cause considerable difficulty for businesses that may be obliged to fill a post with their second-best choice of candidate. Businesses are in a cleft stick. They may face being accused of discrimination and taken to an employment tribunal if they press ahead with their preferred, more qualified applicant. However, if they positively discriminate in favour of the disabled applicant, they may be failing to maximise the potential of their business.

Employment Act

Moving away from disability discrimination cases, the House of Lords' attention has also been drawn to several cases where claimants were seeking to extend their compensation claims further than previously allowed.

In Eastwood and Williams versus Magnox and McCabe versus Cornwall County Council, the House of Lords looked at the question of employers breaching their contractual duty to act fairly in 'trust and confidence' in relation to their employees. It made a distinction between an employer actually unfairly dismissing someone in breach of this trust and confidence, for which the employee could only claim the maximum award in the employment tribunal for unfair dismissal, in effect, £55,000.

In the situation where the employer had been acting unfairly and in breach of this duty of trust and confidence before the dismissal, the employee could bring a claim for compensation for financial losses incurred by this pre-dismissal breach of contract. This may seem very technical but the case has repercussions for employers in that they might find themselves being brought before two court venues. First, the employment tribunal for a dismissal and then the civil court for unfair pre-dismissal actions that cause the employee financial loss. In the civil court, the loser pays the other side's legal costs, so this may be an increased burden and possible risk for employers to bear in mind.

Alarm bells were rung by an incidental comment made by Lord Steyn, one of the House of Lords judges, that the statutory cap on compensation for unfair dismissal should be abolished. But, many believe it is just a matter of time before this happens.

On a more positive note for employers, although the House of Lords overturned the Court of Appeals' decision in Dunnachie versus Kingston upon Hull City Council, which had previously decided that compensation could be given for injury to feelings resulting from an unfair dismissal. Lord Steyn and the other four House of Lords judges all agreed that, under Section 123 of the Employment Rights Act 1996, the employment tribunal can only award compensation for financial losses. This was largely predicted to be the outcome and will be welcomed by many employers who had seen a claim for additional compensation for hurt feelings being added to ex-employees' claims.

Dispute resolution

On 1 October, the introduction of statutory minimum procedures for employers and employees to follow when raising disciplinary issues and grievances in the workplace will take effect. The Employment Act 2002 (Dispute Resolution) Regulations 2004 have been introduced in a bid to cut down the number of claims being brought in the employment tribunal.

A study had shown that a large proportion of ex-employees bringing claims against their former employer for constructive dismissal had never actually discussed their grievance with the employer before leaving. The new regulations require employers and employees to talk to each other and communicate their positions clearly and in writing at a much earlier stage in disciplinary issues or grievance matters and set procedures are laid down.

The good news for employers is that employees will have to raise their grievances with them or face not being able to bring a claim in the tribunal at all or, if permitted to, they may face a reduction in the compensation they receive. The bad news for employers is that, if they do not follow statutory minimum steps and a dismissal follows, the dismissal may be considered automatically unfair and they are liable to pay compensation.

When it is considered that a dismissal is defined in these regulations as also including the end of a fixed-term contract and retirement, it can be seen why much confusion ahead is likely.

The old adage that only the lawyers win is true in this case. The regulations themselves are so convoluted in parts and vague in others that few lawyers can confidently advise their clients on how they will be interpreted by the employment tribunal. This is further illustrated by the astonishing fact that the first set of guidance notes produced by the Department of Trade and Industry were deemed to be misleading and have since been revised.

Many test cases are likely to be brought to clarify their interpretation and, instead of a reduction in employment tribunal cases, the opposite may in fact be true.

To read more about these regulations, see http://www.dti.gov.uk/er/resolvingdisputes.htm Those who are just plain worried - and with good reason - should take legal advice and consider whether they should minimise the risk to their business with a before-the-event commercial policy. More models are coming on the market that provide legal support not simply for disputes but also advice on contracts and disciplinary procedures.

Information and consultation

The legal landscape is constantly changing. Call it the 'hothouse effect', but there appears to be a harsher climate now for employers than ever before. More regulations improving rights are ahead, but increasing responsibilities are also certain. Most people are aware that 2006 will see age discrimination legislation come into force. In 2005, the Information and Consulta-tion of Employees Regulations 2004 should come into force. The details are not yet clear on what precisely these regulations will entail, but the name provides some clues. The government has released a consultation paper asking for feedback on the draft guidance notes by 22 October 2004.

Lawyers generally agree that employment law is the most rapidly changing and evolving area of law. And even employment lawyers often struggle to keep on top of these changes, so the difficulties for businesses in doing so are obvious. What is also obvious, given the climate, is the powerful argument for commercial legal expenses policies, which can provide pre-emptive and after-the-event advice. The mutual benefit to business and the legal expenses insurance market is clear.

- Sheena Lindegaard, Head, legal advice line, Allianz Cornhill Legal Protection

THE EMPLOYMENT RELATIONS BILL

- This was introduced in the House of Commons on 2 December 2003 and into the House of Lords on 30 March 2004. The Bill is expected to achieve Royal Assent by autumn 2004.

- The Bill is mainly concerned with collective labour law and trade union rights. It will implement the findings of the review of the Employment Relations Act 1999, announced by the Secretary of State in July 2002.

- The centrepiece of the Employment Relations Act 1999 was the establishment of a statutory procedure for the recognition of trade unions by employers for collective bargaining purposes.

- The review concluded that, while the Employment Relations Act 1999 is working well, it identified a number of areas in which recognition procedures could be improved and trade union law modernised.

- The review was conducted with close involvement of interested parties and included a full public consultation on its draft conclusions and recommendations.

- Enquiries can be made direct to the Department of Trade and Industry on 020 7215 5000 or visit www.dti.gov.uk/er/erbill_2003.htm for further details.