January 5, 2007
2006 saw significant developments in UK labour and employment law with more expected to come in 2007. Copies of our Client Briefing concerning UK Labour and Employment Law Highlights of 2006 are available upon request. This Client Alert will identify key developments to watch out for in 2007.
Increased Compensation Limits
Effective 1st February 2007, the compensation limits applying to UK employment tribunal awards will be increased so that:
the ordinary cap on unfair dismissal compensation will, in most cases, increase to £69,900;
the maximum statutory redundancy payment will increase to £9,300;
compensation awards in cases of unlawful discrimination and "whistle-blowing" claims will remain uncapped.
Companies Act 2006
Implementation of the Companies Act 2006, which was passed in November 2006, will start this year (a timetable for implementation is expected to be published in February 2007). The Companies Act will have a significant impact upon the rights, duties and responsibilities of directors of UK companies. Please view a copy of our Client Alert at New Companies Act 2006 Impacts Upon Directors of UK Companies.
Dispute Resolution in Employment
The Government is carrying out a review of the recently introduced statutory dispute resolution processes, which were intended to reduce the number of employment claims and aid the resolution of employment disputes without litigation, in light of concerns about their complexity. Recommendations for changes are expected in Spring 2007.
Work and Families Act 2006
The protection afforded to women whose expected week of childbirth (or date of adoption) falls on or after 1st April 2007 has been increased as follows:
the period of statutory maternity pay, maternity allowance and statutory adoption pay has been extended from 26 weeks to 39 weeks (with the long term aim of increasing it to 52 weeks); and
employees will qualify for 12 months maternity leave, regardless of their length of service. It will be permissible for employers and employees to agree on a number of "keeping in touch" days on which employees on maternity or adoption leave can return to work for up to ten days during their leave without affecting their employment rights.
It is also expected that, during the course of this year, the UK Government will announce:
rules allowing for an additional period of paternity leave for fathers and provision for parents to share the right to statutory paid maternity/paternity/adoption leave;
a right to increase the statutory minimum entitlement to paid annual leave (currently set at 4 weeks) to take into account bank and public holidays.
Business Sales and Other Transfers of Undertakings
This year, we expect to see the first case reports concerning the interpretation of the Transfer of Undertakings (Protection of Employment) Regulations 2006 ("TUPE 2006"). TUPE 2006 continues to protect and transfer the employment, and associated rights, of employees who work in a business, part of business or other undertaking which transfers from a "transferor" (typically the seller of a business) to a "transferee" (typically the buyer of a business).
Most significantly, TUPE 2006 relaxes the protection afforded to employees in insolvency situations to encourage the "rescue" of failing businesses but extends the coverage of protection afforded to employees who are subject to outsourcing or other service provision changes as well as introducing rules which compel a "transferor" to provide employee liability information concerning transferring employees to the "transferee".
It is anticipated that the Corporate Manslaughter and Corporate Homicide Bill will become law this year. The Bill seeks to create a new statutory offence of corporate manslaughter which will replace the current offence of manslaughter by gross negligence, which has been used to prosecute UK companies and their officers with varying degrees of success in the past.
Extension and Development of UK Discrimination Laws
Arguably the most significant development in UK discrimination law for over 30 years came in October 2006, when the UK introduced protection against age discrimination for the first time, in the form of the Employment Equality (Age) Regulations 2006 (the "Age Regulations"). We expect the first cases on the scope of the Age Regulations to filter through the employment tribunals this year.
The Age Regulations supplement existing UK anti-discrimination laws which protect employees and candidates for employment against unlawful discrimination at all stages of the employment relationship. Particular areas of risk arise in relation to any severance/redundancy plans, employee benefits plans, pay scales, pension schemes, retirement arrangements and recruitment procedures which should be reviewed to ensure compliance. UK law now provides protection against discrimination on a number of grounds including age, gender, marital or civil partnership status, sexual orientation, gender reassignment, colour, race, nationality, ethnic or national origin, religion, belief, pregnancy, maternity leave and disability. Please view a copy of our Client Alert on the Age Regulations.
We will be watching with interest the progress of the case of Attridge Law & another -v- Coleman, which has been referred to the European Court of Justice. The court will be considering whether European laws which protect employees against disability discrimination extend to protect those who are not themselves disabled but who are discriminated against because of an association with a disabled person. Such a ruling would considerably extend the protection afforded by the UK disability discrimination legislation.
2007 looks set to be another significant year in the development of UK labour and employment laws as the Courts and employment tribunals grapple with TUPE 2006 and the Age Regulations, and the Legislature introduces key provisions of the Companies Act 2006 and policies which promote the rights of working parents. We will continue to keep clients appraised of all key developments which may affect their UK businesses as and when they arise.
Gibson Dunn’s UK Labour and Employment Practice has been recently strengthened by the arrival of English solicitor Daniel Pollard. Daniel has experience advising on all aspects of UK employment law, having previously worked at another major US law firm in London, and is also able to offer business immigration advice. Daniel joins English qualified partner James Cox in the UK Labour and Employment Practice.
© 2007 Gibson, Dunn & Crutcher LLP
The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.