Will you be made to retire at 65?

26 09 2008

It might seem strange to write about retirement when many people in London are haunted by the spectre of redundancy, but a legal development in Brussels this week potentially affects when we can all retire.  I wrote a while ago about the Heyday challenge to the Age discrimination legislation that came into force almost exactly two years ago. Those Regulations provide that it is lawful to require a person to retire at 65.  A younger age is unlawful unless it can be justified. Heyday, part of Age Concern, argued that having this default age was discriminatory in itself.  This week the Advocate-General at the European Court of Justice has published his opinion stating that the default age is not contrary to European law provided  it is a proportionate means of achieving a legitimate aim and that is an issue for national courts to decide.  The ECJ will decide the issue in December, but there is a good chance it will follow the Advocate-General’s opinion. 

Why is this important?  65 was chosen as a default retirement age to assuage those people that want to retire before they join the choir invisible and also employers (who should, of course, know better) want to know they can get shot of that awkward old bugger in accounts.  However, many people want or need to carry on working and it is easy to see why Heyday brought its challenge.  If the ECJ upholds the Advocate-General’s opinion it will then be left to the government to justify the default retirement age to the UK courts and that will be a very interesting case as I struggle to see how the government can justify making people retire at 65. It goes to the very heart of the age discrimination regulations.

The situation, for now, is as unclear as ever.  Employers will breathe a sigh of relief, for the time being, and those employees with Employment Tribunal claism stayed pending the outcome of the Heyday challenge will just have to carry on waiting.





Age Discrimination – are the floodgates about to open?

26 09 2008

A few weeks ago I wrote about the lack of impact that the Employment Equality (Age) Regulations have had since coming into force in October 2006. These are colloquially known as the Age Discrimination regulations.  However, that may be about to change.  Last year Heyday, a not-for-profit organisation and part of Age Concern, launched a judicial review in the High Court against the legality of the default retirement age of 65, imposed by the Regulations. This means that a person can be forced to retire at 65 and it will not usually constitute unfair dismissal, provided the correct procedures are followed.  Heyday claim that this is illegal and in breach of the EC Equal Treatment Framework Directive 2000/78.  The case has been referred to the European Court of Justice pending a final decision, which is not expected before 2009.

 

It was thought that the Heyday case had little chance of success, especially as a similar challenge in Spain was rejected by the ECJ last week.  The prospects for employees wanting to take action now was not helped by a decision in the Southampton Employment Tribunal in the summer which said that such claims could not be stayed (i.e. put on hold) until the Heyday case is decided.  That decision has now been reversed and, it seems, it will be permissible for employees facing retirement dismissal to submit claims to an Employment Tribunal to protect their position pending the decision in Heyday.  The advice for employees must be to seek legal advice now if you are coming up to retirement age and your employer is not agreeable to you carrying on past 65.  Do not wait for the Heyday judgment as you may lose the right to sue for unfair dismissal in the meantime.

 

This article first appeared in the “Docklands” newspaper





Age Discrimination – a damp squib?

26 09 2008

It is now just over a year since the Employment Equality (Age) Regulations 2006 came into force.  They were presaged by a fanfare of publicity and caused employers huge amounts of concern.  A year on many employment lawyers are wondering what all the fuss was about.  The cases haven’t been flooding through the doors and, according to the Employment Tribunal’s own figures only 972 cases have been lodged that allege age discrimination since the Regulations came into force.  This compares with almost 44,500 claims for unfair dismissal and 44,000 for equal pay in 2006/7.  In the same period there were 28,153 claims for sex discrimination. Not quite the massive number that was feared.

 

There have been few high profile cases involving age – although the case involving a former partner at City law firm Freshfields Bruckhaus Deringer has recently been decided (in favour of the firm).  The Claimant alleged that the firm had altered its pension rules in order to force out older partners and it was billed as the first major test of the age discrimination legislation.  He lost because the firm was able to justify taking the action to amend its pension scheme rules.  The age discrimination rules are different to the other forms of discrimination legislation (race, sex, disability etc) because the employer is allowed to discriminate on grounds of race if they can justify the action they are taking.

 

Often new legislation can take a long time to settle down before the claims start coming in – but what makes the low numbers of age discrimination claims surprising is the publicity that was given before the legislation came in.

 

This article first appeared in the “Docklands” newspaper





That was the week that was

19 09 2008

What a week.  Lehman Brothers gone, Merrill Lynch taken over by Bank of America, HBOS swallowed up by Lloyds-TSB and AIG bailed out by the US government.  Now even Morgan Stanley and Goldman Sachs are said to be at risk.  It’s a dreadful time to be an employee in financial services and whilst many people will be secretly enjoying seeing events unfold, it will affect all of us sooner or later when the recession bites.  The TV news programmes have been full of Lehman Bros. employees walking away with their possessions in cardboard boxes and it isn’t a pretty sight.

What can be done when your employer goes bust?    You can apply to the Redundancy Payment Office (RPO), part of the Insolvency Service, for a Redundancy payment (you’ll need two years’ service minimum and must apply to your employer or to an Employment Tribunal within six months of your employment ending) and for up to eight weeks’ unpaid wages.  The RPO will also pay up to six weeks’ holiday pay and up to 12 weeks’ notice monies (depending on your length of service).  Whilst this may seem quite generous at first, bear in mind that in each case a week’s money is capped at £330.  HMRC will pay out Statutory Sick Pay, Maternity, Paternity and Adoption pay if entitlement continues after the date of the insolvency. 

The best hope, of course, is that another company will come in and take over the failed business.  Barclays is said to be circling the remnants of Lehmans looking for the best morsels. If it does take over parts of Lehmans it may be a TUPE transfer, meaning that certain safeguards will be put in place, although since the TUPE rules were overhauled in 2006 a lot more flexibility has been built into the situation where a new company takes over parts of an insolvent one.  It is far too complicated to go into here bu, in brief, the Transfer of Undertakings (Protection of Employment) Regulations (TUPE) provide that it is an automatically unfair dismissal to terminate a person’s employment for a reason connected with the transfer.  The new company cannot simply dismiss all the old company’s staff because they are connected with the old business.  It has to consult with all staff and it can only dismiss employees for an “economic, technical or organisational reason” – such as redundancy and has to be able to justify that decision if a complaint is made to an Employment Tribunal.  Compensation for unfair dismissal is capped at £63,000 plus a basic award of £330 per week of service.  TUPE transfers will be much more relevant in the Lloyds TSB – HBOS merger.

It looks like we’ll be seeing more of these situations over the next few weeks and months and I’ll try to cover as much as possible.  If there are any questions you want answering, please contact me using the email address below.

 

This article will appear in the “Docklands” and “Pensinsula” newspaper week commencing 22nd Sept





Employment and Insolvency

18 09 2008

If you are directly involved in the Lehmans collapse or working for any other business that looks to be on its last legs , do have a look at the Direct Gov website, run by the government, its got lots of interesting information on it.  Follow the link – www.direct.gov/uk/en/employment/index 

You’ll find links there to the Insolvency Service.





The Claimant’s Companion

16 09 2008

Whenever I see a client I am always conscious of the need to try and explain the law and procedure clearly and in plain terms.  That’s not always easy, especially in complex cases and many people are nervous or uptight and find it hard to retain everything that is said.  I’m always conscious that many of the things I take for granted – how the process works, who will be in the court, who will hear it etc – is a complete mystery for those people who have never been through the process before.  For a solicitor the tendency is to focus on the “issues” and what you need to prove to win the case without explaining the wider context.  An interesting new booklet, published by the London Law Centre, has just come out which does deal with all these points, and very helpful it is too.  Take a look at this link, which will download it as a PDF.

 http://www.londonlawcentre.org.uk/pdfs/Claimants%20Companion.pdf

 

The booklet makes it clear that it is not a substitute for legal advice or, indeed, a legal adviser, but it will help to demystify much of the employment litigation process.





When is a penalty not a penalty?

11 09 2008

Answer:  when it’s a liquidated damages clause.  Let me explain.  This isn’t another football article (although in passing let me just say how pleased I was to see Arsenal, sorry England, beat Croatia)   but a report on an interesting Court case decided this week.  Well, interesting to employment law nerds. 

The case involved Tullett Prebon, the City intermoney brokers, and one Mr El-Hajjali, who agreed to join them, signed his contract and then had second thoughts and didn’t go after all.  Tulletts successfully sued him for their losses – approximately £293,000 – incurred as a result of his “no show”.  Mr El-Hajjali had tried to argue that the clause in the contract requiring him to pay 50% of his net salary and 50% of the signing on payment he had negotiated was a penalty clause and thus illegal under English law.  The basic rule in most civil cases is that you can only recover compensation for money you have lost: it is very rare to be awarded punitive damages for another person’s default.  If a contract requires payment of a sum of money out of all proportion to the loss likely to be incurred by the “victim”, it is probably going to be deemed a penalty and the courts won’t enforce it.  On the other hand, if the specified sum is an accurate assessment of the losses that may be incurred the courts may view it as a liquidated damages clause and enforce it.  This is what happened in the High Court in this case. 

As ever, each case turns on its own facts.  In this instance, Tulletts won because the sum to be repaid had been carefully assessed, both parties had had legal advice through the contract negotiations, Mr El-Hajjali was a very well remunerated senior broker and the parties were deemed to have had equal bargaining power. These factors won’t often be present in most cases and I am not expecting to see a sudden rash of such claims.  However, it is likely that employers will start putting these clauses in contracts of employment more and more, as now happens with a clause often found in compromise agreements requiring repayment of all the termination payment if the departing employee breaches the terms of the agreement in any way.    From the employee’s perspective, the obvious way to avoid being on the wrong end of a claim is not to agree to the clause being in the contract in the first place if any doubt about taking the job offer up.  For employers concerned about having their time wasted by new recruits not turning up on the first day the sum to be recovered must be carefully assessed and be capable of justification. 

This article will appear in the “Docklands” and “Peninsula” newspaper week commencing 15th September 2008