Field Fisher Waterhouse

Annual increase in tribunal limits

The annual increase in the tribunal limits has now been announced and will come into force on 1 February 2007. Amongst the limits affected are:

	the maximum compensatory award for unfair dismissal: this will increase from £58,400 to £60,600;
	the maximum limit on a week's pay, for the purposes of calculating a redundancy payment or the basic or additional award of compensation for unfair dismissal: this will increase from £290 to £310; and
	the minimum basic award for certain unfair dismissals (e.g. by reason of trade union membership or activities): this will increase from £4,000 to £4,200.

Government response to consultation on additional paternity leave and pay

Following the consultation paper on the parameters of the new additional paternity leave (APL) and additional paternity pay (APP) scheme in March this year, the Government has now published its response, providing further detail of the new provisions.

The new scheme is due to be introduced at the same time as statutory maternity and adoption pay periods are extended to 52 weeks. It will permit an employed father or partner of a mother or adopter to be absent from work for a maximum of 26 weeks to care for a child, before the child's first birthday, once the mother or adopter has returned to work. The detail of the scheme includes the following:

	To qualify for APL, a father will have to have been eligible for ordinary paternity leave with the same employer and still be in employment with that employer.
	The earliest a father will be able to start APL and APP is 20 weeks from the date of the birth of the child.
	The calculation period for, and rate of, APP should mirror that for statutory maternity pay, and should be based on average weekly earnings in the 8 weeks up to and including the week immediately preceding the 14th week before the expected week of childbirth.
	A mother will be deemed to have returned to work if she has ended her leave and stopped receiving maternity or adoption pay.

Disability equality duty

Provisions of the Disability Discrimination Act 1995 are due to come into force next week, on 4 December. These provisions place a general duty on public authorities to have due regard to the need to eliminate unlawful discrimination and harassment and to promote equality of opportunity between disabled persons and other persons.

Click here to access the guidance on the duty from the Disability Rights Commission

Gender equality duty

The Gender Equality Duty Code of Practice has now been laid before Parliament. The Gender Equality Duty comes into force in April 2007, and places a duty on public bodies to provide services and adopt policies that promote equality for women and men.

The Code of Practice can be accessed here.

Pension provisions of age discrimination regulations

As noted in our update on 17 November, the Government has had a difficult time applying the Employment Equality (Age) Regulations 2006 (the Regulations) to pension schemes. Their first attempt left a great deal of doubt as to whether certain practices would fall foul of the Regulations. The Government bowed to pressure and, whilst the rest of the Regulations came into force on 1 October 2006, it delayed the implementation of the pensions provisions of the Regulations to have a second attempt.

Following a brief consultation in October (and the Government's rejection of a compliance window), the pension provisions of the Regulations finally come into force today. It is now unlawful to discriminate against members, including prospective members, of pension schemes and employees with regards to pension issues on the grounds of age. This law applies to the trustees of occupational pension schemes and employers with occupational pension schemes or personal pension schemes.

Look out for our Winter issue of People over the coming weeks, which takes a detailed look at the new pension provisions.

Discretionary bonus payments

The Court of Appeal has handed down an important judgment, in Commerzbank AG v Keen, examining an employee's ability to challenge discretionary bonus payments.

In this case, the Bank had a very wide contractual discretion relating to the award of a bonus. The Court held that the burden of establishing that no rational bank in the City would have paid the employee a bonus that was less than the recommendation given by his manager is a very high one. There would need to be an overwhelming case to persuade the Court that the level of a discretionary bonus payment was irrational or perverse, particularly in an area where much depends on the discretionary judgment of the Bank in fluctuating market and labour conditions. The fact that an employer fails to provide reasons or identify the decision maker in relation to the discretion are relevant, but will not necessarily establish irrationality or perversity.

The Court did, however, suggest that, in light of the ongoing duty to preserve trust and confidence in an employment relationship, employers should explain the exercise of discretion to employees, including the factors which influenced the decision, who made the decision and their reasons.

The Court also took a strict view of the Unfair Contract Terms Act 1977 (UCTA) in relation to its application to contracts of employment. Whilst it has often been argued that UCTA should apply to such contracts, the Court confirmed that the employee in this case did not fall within the natural and ordinary meaning of a "consumer" under UCTA in relation to the Bank's payment for his service as an employee.

This decision will be welcomed by the many employers who use discretionary bonus schemes and provides some clarification in a highly contentious area.

Acts extending over a period under the Race Relations Act 1976

In Lyfar v Brighton and Sussex University Hospitals Trust, the Court of Appeal has approved the guidance given in Hendricks v Metropolitan Police Commissioner when considering whether a complaint is part of an act extending over a period.

Under the Race Relations Act 1976, complaints of race discrimination should be issued within 3 months of the act complained of. Any act extending over a period is treated as if it is done at the end of that period.

The Court of Appeal has now confirmed that when looking at whether a complaint is part of an act extending over a period, the focus should be on the substance of the complaint, examining whether there was an ongoing situation or a continuing state of affairs in which employees were treated less favourably. The question remains whether that is "an act extending over a period" as distinct from a succession of unconnected or isolated specific acts.

Guidance on enforcing restrictive covenants

The Outer House of the Court of Session in Scotland has provided some useful guidance on the enforceability of restrictive covenants and how to calculate damages for any breach.

In Dunedin Independent plc v Welsh, an independent financial adviser (IFA) was subject to post-termination restrictions in his contract of employment, including non-dealing and non-solicitation provisions. After his employment with Dunedin terminated, he set up in business elsewhere. Dunedin alleged that the non-dealing and non-solicitation provisions had been breached.

The Court held that the non-dealing provision, which prohibited the IFA from having business dealings with, or accepting business from, clients of Dunedin, was too wide to be enforceable. The Court looked at whether it could read in a limitation to make the provision enforceable but decided that it could not. In view of the nature of the commercial and business arrangements in which the parties were involved and the way in which personal contact could lead to and foster new business arrangements, a broader interpretation was not inconsistent with the commercial situation as envisaged by the parties.

The Court also held that there had been no breach of the non-solicitation of clients provision. Contacting clients was not prohibited by the provision and the clients had not been solicited but had instead decided to transfer business to the IFA on the basis of their past experience with him. Even if there had been a breach of this provision, no damages should be awarded as Dunedin had failed to show that, but for the breach, those clients would have remained with them.

Christmas party advice from ACAS

ACAS has provided some practical advice for employers in the lead up to the Christmas party season, covering issues ranging from Christmas decorations in the workplace to drunkenness and boisterous celebrations. Click here to read the guidance.

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