New compensation limits
From February 2005, a number of new compensation limits will come into force:
Limits on guarantee payments
Previously: £17.80/day
From 01.02.05: £18.40/day
Limits on a week's pay
Previously: £270
From 01.02.05: £280
Maximum amount of a week's pay for calculating basic or additional award of compensation for unfair dismissal or redundancy payment
Previously: £270
From 01.02.05: £280
Maximum basic award for unfair dismissal (30 weeks' pay)
Previously: £8,100
From 01.02.05: £8,400
Minimum basic award for dismissal on trade union, health and safety, occupational pension scheme trustee, employee representative and working time grounds only
Previously: £3,600
From 01.02.05: £3,800
Maximum compensatory award for unfair dismissal
Previously: £55,000*
From 01.02.05: £56,800
Minimum award for employees excluded or expelled from a trade union
Previously: £5,900
From 01.02.05: £6,100
* There is no limit where the employee is dismissed unfairly or selected for redundancy for reasons connected with health and safety matters or public interest disclosure ('whistleblowing'), or the dismissal is contrary to discrimination law.
ACAS e-learning guides
Acas now has a series of e-learning guides available to anyone who registers online for their courses. Registration is free.
The range of guides includes: Informing and consulting; Discipline and grievance; Absence; Contracts and written statement; Redundancy. Each course is divided into a series of sessions. For instance, under the Informing and Consulting course, students learn:
- what information and consultation (I&C) is
- some of its benefits and limitations
- the forthcoming changes to I&C regulations in the UK
- how to introduce I&C into your organisation effectively
- how to maintain its momentum, once introduced.Â
If the student wants more help after completing the course, Acas provides a range of services from half day training sessions to individual consultation.
Just go to www.acas.org.uk/elearning to find out more.
Compulsory retirement?
The government has been locked in debate for months about whether to abolish compulsory retirement ages as part of the implementation of age discrimination laws, required by the EC Equal Treatment Framework Directive.
The government has just announced that it will set a default retirement age of 65, so that people will not have to retire before that unless their employer can justify it. It has also said it will create a right for employees to ask if they can work beyond a compulsory retirement age.
Maternity pay increase
Alan Johnson, Minister for Work and Pensions, has announced new rates of pay for maternity, paternity and adoption pay. These will be effective from April 2005 and current rates will go up from £102.80 to £106 per week.
He also announced that the lower earnings limit (the minimum amount that employees need to earn to qualify for the statutory payments) will increase from £79 to £82 per week, effective from April 2005.Â
Redundancy Guide
Acas has also just updated its guide to handling redundancy, aimed at employers, trade unions and employee representatives and provides guidance on how best to handle redundancies.
The booklet emphasises the importance of planning labour requirements to avoid or to minimise the need for redundancies; the benefits of establishing an agreed procedure for handling redundancies; and the need for fairness and objectivity when selecting members of the workforce for redundancy.
It has a number of appendices providing a checklist for redundancy agreements, an outline of redundancy payments and an outline of the law governing redundancy.
A taxing matter
In September 2004's LELR, we reported the High Court case of Wilson (HM Inspector of Taxes) v Clayton (2004, IRLR 611), in which Thompsons was instructed on behalf of the employees.
The case has just been heard by the Court of Appeal which has once again decided in favour of Mr Clayton and his colleagues.
Mr Clayton was dismissed and subsequently re-employed on new terms and conditions by his employer, Birmingham City Council. He made a claim of unfair dismissal but before the case could be heard he reached an agreement with his employer that his old terms and conditions should be reinstated and he received the sum of £5,060 as compensation.
However, the Inland Revenue argued that he had to pay tax on it. Mr Clayton appealed against that decision to the General Commissioners who agreed with him that the payment was not chargeable to tax under section 19 of the Income and Corporation Taxes Act 1988 as an emolument (a profit on earnings) or under section 154 as a benefit in kind.
Instead, the commissioners decided that it fell within section 148 as a payment received 'in connection with the termination' of his employment. Since the payment was less than the £30,000 threshold set by the legislation, it was not taxable.
The Inland Revenue appealed against that decision to the High Court. It argued that the order for reinstatement meant that Mr Clayton had to be treated as though he had not been dismissed. The payment he received referred to his past and continuing employment, and was therefore either an emolument or a benefit in kind.
It then appealed to the Court of Appeal which said that the payment was made as a basic award, which required an effective date of termination. It said that the payment was not an emolument because it was made to compensate him for his unfair dismissal.
Nor was it a benefit in kind under section 154 because the payment was made as a genuine compromise to resolve the earlier proceedings, without any intention of giving a 'gratuity' to the employees. Accordingly it was not a benefit within section 154, and was therefore not taxable.Â
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Part-time justification
The European Court of Justice has just decided in Schönheit v Stadt Frankfurt am Main (2004, IRLR 983) that it was indirect sex discrimination against women to pay fewer pension benefits to part-time workers compared to full-timers. So far, so unsurprising.
The court then went on to say, however, that 'a difference in treatment between men and women may be justified, depending on the circumstances, by reasons other than those put forward when the measure introducing the differential treatment was adopted.'
In other words, just because an employer does not have a good reason for an indirectly discriminatory policy when it was introduced does not mean to say that they cannot conjure one up at a later date. This is because, the court said, justification is objective, not subjective.
The last straw
It is always a high risk strategy for an employee to resign and claim constructive dismissal. Even more so when the last act relied on was not in itself unreasonable, but was the 'final straw' in a series of acts.
The Court of Appeal has now said in London Borough of Waltham Forest v Omilaju that 'the only question is whether the final straw is the last in a series of acts or incidents which cumulatively amount to a repudiation of the contract by the employer. The last straw must contribute, however slightly, to the breach of the implied term of trust and confidence.'
Mr Omilaju had brought a claim of race discrimination against the council. When he realised that he had not been paid during his absence at the tribunal hearing, he resigned saying that the decision not to pay him had destroyed his 'trust and confidence' in his employer.
The court concluded, however, that because 'the straw that broke this camel's back was perfectly reasonable and justifiable conduct of his employer acting fully in accordance with the terms of the applicant's contract', that his case could not succeed. The council's appeal was therefore allowed.