In our last edition we stated that the maximum weekly statutory redundancy payment will increase from £350 to £380. The Government has now confirmed that this increase will become effective on 1 October 2009. Employers would therefore be advised to complete (in a fair and usual manner) any redundancy programmes before this date, while it will be in employees’ interests to attempt to stall proceedings.

The limit will remain at £380 until February 2011, rather than being increased in February 2010 as it would normally be.

As the weekly limit also applies when calculating certain other types of payment, such as the basic award for unfair dismissal, this should be considered when making commercial decisions.

Need a break? Have a sabbatical

Sabbaticals are becoming an increasingly popular alternative to making redundancies. These can provide many positives to both employers and employees while helping to reduce short-term costs, including the retention of valuable employees in the long-run.

Sabbaticals usually last between 2 to 12 months and can be either paid or unpaid. It is common for an employer to offer a reduced percentage of salary to encourage employees to take up the offer.

Both employers and employees should be clear on the terms of the sabbatical before it begins, with particular attention given to employee entitlements, continuity of employment, contractual terms, bonus payments, accrued leave, job guarantees and more. This approach has proven to be a good commercial solution for some of our clients who wish to retain well regarded employees, but are required to reduce their over-heads in the short to medium term.

TUPE—Service Provision Change

A 'service provision change' (“SPC”) occurs when a client who engages a contractor to do work on its behalf is either:

• reassigning such a contract; or
• bringing the work ‘in-house’.

TUPE 2006 regulations aim to protect employees’ rights by allowing them to continue to work with the new provider on the same terms and conditions as held with the previous employer.

In Metropolitan Resources Ltd v Churchill Dulwich Ltd (in liquidation) and another UK EAT/286/08; [2009] WLR (D) 217, the EAT considered when a change of service provision falls within TUPE 2006.  The EAT held “where one contractor ceases and another commences service provision with differences in time, manner and/or place, there can still be an SPC under TUPE” (para. 37).

In light of this decision, it is advisable for contractors to consider carefully the potential consequences when taking over the provision of services, as it is likely to mean more changes will fall within TUPE 2006.

Remuneration packages and compensation awards

In Aegon UK Corporate Services Limited v S Roberts: CA (Civ Div) (Lords Justice Keene, Dyson, Elias): 21 July 2009, the Court dealt with the question of whether different elements of an employee’s remuneration package could be separated when calculating the compensation award following termination of employment.

The Court held that benefits (salary compensation scheme in this case) did not have specific status and were not unique. They were an important part of the remuneration package and, as such, the Employment Appeal had erred in applying different tests to the different aspects. The overall value of an employee’s salary and benefits taken together is likely to be the main factor when deciding compensation awards.

Minimum wage increases

From the 1 October 2009 the National Minimum Wage Regulations 1999 (Amendment) Regulations 2009 will come into force bringing a number of changes to the minimum wage rate:

• The main rate will increase from £5.73 per hour to £5.80 per hour, with the development rate increasing from £4.77 to £4.83 per hour. For those aged 16 to 17 years the rate increases from £3.53 to £3.57 per hour.
• The regulations increase the day value of accommodation that can be taken into consideration when an employer provides an employee with housing from £4.46 to £4.51.
• The regulations also specify new classes who do not qualify for minimum wage (e.g. A worker who is participating in the European Community Erasmus Programme or Comenius Programme in respect of work done for his employer as part of that scheme).

Here’s a tip...

Changes to the minimum wage legislation will prevent employers from using tips to increase staff pay so that it meets the minimum wage (known as trouncing).

The Safeguarding Vulnerable Groups Act 2006

From the 12 October 2009, employers will be able to check online for people banned from working with children or vulnerable adults using a centralised vetting system introduced by the Safeguarding Vulnerable Groups Act.

Employers who knowingly employ individuals on the list, or who fail to make the correct checks, may be fined up to £5000.

John Clarke

If you do not already know, John Clarke has joined Maitland Walker as a partner in our employment team. John has a national reputation for his employment law expertise and has extensive experience advising major education clients. We feel that John adds a greater ability to provide our clients with an even more balanced and efficient service.

To remove your name from our mailing list, or to contact us with questions or comments please email one of our team members:

John Clarke - john.clarke@maitlandwalker.com

Nick Rowe - nick.rowe@maitlandwalker.com

Laura Nelson - laura.nelson@maitlandwalker.com

or call us on 01242 285855.