Employment Bulletin
3 October 2008
Equal pay: Bonus scheme set up in the 70's had become unlawful
Hartlepool Borough Council and others v Dolphin and others [2008] UKEAT/0007/08/CEA and UKEAT/0007/08/CEA
Hartlepool Borough Council (H) operated a bonus scheme ("the Scheme") which was designed to encourage productivity in certain jobs (electricians/painters/roadsweepers). Those jobs were predominantly held by male workers. Mrs Dolphin and her colleagues (D) carried out work equivalent to their male comparators but did not receive a bonus.
Employers may have a defence to a claim under the Equal Pay Act 1970 ("the Act") if they can show that the variation in pay is due to a genuine material factor that is not influenced by a difference in sex. H argued that the purpose of the Scheme was to increase productivity. The Tribunal (and the EAT) found that in the absence of any review or measurement of the effectiveness of the Scheme, there was no objective evidence to substantiate this view. The Tribunal held that H's perception that the Scheme increased productivity was insufficient.
Upholding the Tribunal's decision, the EAT stated that the appropriate question when considering whether there is a genuine material factor defence to a claim such as this is: was the Scheme intended to, and does it in fact achieve productivity improvements?
Good Practice: Pay schemes that are not discriminatory at the outset can later become discriminatory. Regularly review and assess the impact and the effectiveness of any pay schemes that you operate to ensure that they achieve their intended aims.
For further information contact: Gareth Edwards Tel: 0117 314 5220 Email: gedwards@vwl.co.uk
Redundancy payments: Age enhanced redundancy payments must be objectively justifiable Galt and others v National Starch & Chemical Limited [2008] ET/2101804/07 Historically, at G's site, employees who were made redundant aged under 40 received three weeks' gross pay for each year of service, and those aged over 40 received four weeks' gross pay for each year of service. At the time of G's redundancy the employees' representatives did not raise any objections to this practice being followed. However, subsequently G brought claims against their employer, NSCL under the Employment (Equality) Age Regulations 2006 that they had been treated less favourably than older employees who had been made redundant. NSCL agreed that the scheme treated G and others less favourably than the older employees, but claimed that they were using proportionate means to achieve a legitimate aim. NSCL contended that they offered enhanced redundancy pay to avoid employees taking industrial action, and to enable them to close the site in an orderly and satisfactory manner. NSCL also suggested that the older employees would find it harder to find new employment and ought to be favoured financially. The Tribunal were of the opinion that NSCL had failed to produce any evidence of the fact that their older employees would find it more difficult than those under 40 to find work and had not consciously addressed the discriminatory impact of their practice. They had also failed to assess whether the proposed enhanced redundancy pay was the only means of achieving an orderly closure of the site. Accordingly, whilst they had a legitimate aim, NCSL had failed to use proportionate means to achieve that aim and were therefore unable to objectively justify the less favourable treatment received by G. Good practice: Review your schemes offering enhanced statutory redundancy payments. Do not assume that a tribunal will find your schemes to be lawful simply because they are unchallenged at the time of dismissal. For further information contact: Alison Graham Tel: 0117 314 5304 Email: agraham@vwl.co.uk The new national minimum wage came into effect on 1 October 2008. The hourly rates are follows: For further information contact: Kirsty Thomas Tel: 0117 314 5406 Email: kthomas@vwl.co.uk
National minimum wage increases
Agency workers to be entitled to Statutory Sick Pay (SSP)
From 27 October 2008 agency workers on contracts of less than three months will be entitled to SSP. They are currently the only group of employees who are not entitled to SSP.
For further information contact: Kirsty Thomas Tel: 0117 314 5406 Email: kthomas@vwl.co.uk
HMRC publishes welcome guidance
HMRC have confirmed in the guidance published last week that they will not seek to recover unpaid tax from an employer where a worker is subsequently found, at law, to be an employee if, the worker has already paid tax on their income under self assessment or on a self employed basis.
Good practice: If you are entering into arrangements with self-employed workers ensure that the worker is obliged to self-assess income tax. Please contact us if you need assistance redrafting the relevant clause in your Consultancy Agreements, or with a side letter to accompany the Agreement.
For further information contact: Felicity Larter Tel: 0117 314 5606 Email: flarter@vwl.co.uk
