ABG Employment Newsletter – January 2013

New limit on compensatory awards and maximum amount of a week’s pay

The maximum compensatory award for unfair dismissal is due to increase from £72,300 to £74,200 for dismissals taking effect on or after 1st February 2013. At the same time the maximum amount of a week’s pay which is used to calculate the basic award and statutory redundancy pay will rise from £430 to £450.

The Government has also announced that it is planning to introduce a new cap on the compensatory award of one year’s pay. This change is likely to come into effect in summer 2013 when the award will be capped at whichever is the lower of one year’s pay or the new limit of £74,200.

Changes to collective redundancy consultation rules

The Government has announced a change in the minimum consultation period which must be allowed when an employer is planning to make 100 or more redundancies. The current 90 days minimum consultation period will reduce by half to 45 days with effect from 6th April 2013. At the same time ACAS will be publishing a new Code of Practice focussing on the principles and behaviours underlying a good quality consultation.

There will be no change in the consultation period where there are less than 100 redundancies. The current 30 day minimum period which applies where there are at least 20 redundancies will continue to apply.

In addition the Government is planning to introduce new legislation which will exclude employees on fixed term contracts from collective redundancy consultation. Fixed term contracts are widely used in a number of sectors, particularly further and higher education and other areas of the public sector.

Flexible working requests and flexible parental leave

Looking further into the future the Government has announced an extension to the right to request flexible working as from 2014 and a new system of flexible parental leave from 2015.

Currently any employee with a child under 17 (or under 18 if the child is disabled) can ask for a flexible working pattern. The Government intends to extend this right to all employees in 2014, subject to a qualifying period of 26 weeks continuous employment. As at present, employers will not be compelled to grant any request for flexible working, but will be required to deal with such requests in a reasonable manner and respond within a reasonable period of time.

As from 2015 there will be a new system of flexible parental leave under which a mother who does not use her full period of 52 weeks maternity leave will be able to share up to 50 weeks of the untaken maternity leave with her partner.

Fathers will retain a separate entitlement to 2 weeks paid paternity leave, but will also have a new right to take unpaid leave to attend two ante-natal appointments.

In a separate development, the existing right to take unpaid parental leave in respect of a child up to the age of 5 years will increase from 13 weeks to 18 weeks in March 2013.

Retirement conversations and age discrimination

In a recent case an Employment Tribunal ruled that an employer was not guilty of unlawful age discrimination despite having had conversations with the employee (a teacher) about her potential retirement.

The employee’s complaint of age discrimination was based on a number of allegations, including that a colleague had asked her if she had any plans for retirement and that the Chair of Governors had had a discussion with her about retirement. She also claimed that a number of other age related comments had been made to her and about her, both verbally and in writing.

However, the Tribunal found that the discussions were reasonable in the context of succession planning and the management of that process. They did not support her case of age discrimination.

This ruling provides reassurance for employers that they can have sensible and reasonable conversations with their staff about potential retirement and that such discussions will not in themselves give rise to a case of unlawful discrimination.

Redundancy dismissals and individual consultation

In the vast majority of cases a redundancy will be unfair and give grounds for an unfair dismissal claim if there has not been any consultation with the individual about the process and how redundancy might be avoided, for example, through redeployment. However, in exceptional circumstances a redundancy can be fair even if no consultation has taken place provided it is clear that consultation would have been utterly futile.

This was the situation in a recent case in which the company’s Head of HR was declared redundant without any consultation process being followed. The company had suffered a sharp decline in its revenue and was under considerable financial pressure. As part of a reorganisation the employee’s job was abolished and his responsibilities were split between other managers. The employee was made redundant without any warning or consultation.

Despite this, the Employment Tribunal and the EAT ruled that he had not been unfairly dismissed because any consultation would have been futile. Although there was an alternative vacancy which he might have been invited to apply for in more prosperous times, it was reasonable not to have given him that opportunity because of the financial pressure which the company was under and the need to make effective changes to management.

The comments in this note are of a general nature only. Full advice should be sought on any specific problems.

Christopher Gigg 
[email protected] 
+44 (0)115 934 3310

Kathryn Meir
[email protected]
+44 (0)115 934 3308