Partnership of Public Employers

Legal Update

Audrey Williams, Partner – Eversheds LLPOctober 2011

Agenda

• Working Time – Direction of travel

• Changing Contractual Terms

• Agency Regulations – What are employers doing

Working Time Directive review

• March 2010 - EU Commission asked social partners to provide views on whether WTD required change

• December 2010 - consultation into :– Narrow change: on-call time/compensatory rest, or– Wider change: above and more, e.g. extending

reference period for averaging WT to 12 months

• ETUC and Business Europe in discussions ( Jan 2011)

The contract of employment

The contract of employment is a bilateral arrangement between the employer and any employee, the terms of which can only be changed by:

• agreement, directly or indirectly; or• termination of the contract with notice, coupled

with the offer of ongoing employment on new terms.

Direct and indirect agreement

1. Direct agreementAgreement between the employer and one or more employees, with or without union involvement

2. Indirect agreement• clauses which allow contractual flexibility• agreements reached between one or more

unions and the employer which are binding on employees, whether on a national or local level

Termination and Re-engagement: Process

• Aggressive action, because ultimately it amounts to dismissal

• Consultation with a view to seeking agreement should be exhausted

• 90-day collective redundancy consultation should be commenced:– HR1– Information to trade unions in S.188 letter

Termination and Re-engagement: Process

• If sound, genuine business reason, and if agreement can’t be reached, staff should be dismissed with notice

• Notices of dismissal should not expire before 90 days following commencement of consultation

• A new contract of employment should accompany the notice of dismissal

N.B. –Check provisions on employees right of appeal

Termination and Re-engagement: Risks

• Protective awards• Unfair dismissal awards, even where the new

role has been accepted• “SOSR” – sound, genuine business reason• Reasonable process• Likely the union will support claims

New rights for agency workers

Agency workers

• Effective as of 1 October 2011• Govt guidance:

– developed in conjunction with key stakeholders representing agencies, hirers and agency workers;

– http://www.bis.gov.uk/policies/employment-matters/strategies/awd

“The basic working and employment conditions of temporary agency workers shall be…at least those that would apply

if they had been recruited directly…”

Which individuals are protected?

Supplied by temporary work agency

Supplied by intermediaries e.g. umbrella companies

‘Sham’ self-employed or Managed Service Contracts

x Genuinely self-employed e.g. contractors, consultants, freelancers

x Genuine Managed Service Contracts

Note: Genuine supervision and direction of a worker by the hirer is essential if Regs are to apply

What is pay?

Includes: Basic pay Fees Bonuses relating directly

to work done Commission Fixed cash vouchers or

stamps Holiday pay (WTR plus) Other entitlements directly

linked to work e.g. shift allowances, overtime pay, unsocial hours premiums

Excludes, for example:× Occupational sick pay× Occupational pensions× Redundancy pay× Expenses× Maternity, paternity,

adoption pay× Payments made pursuant

to a financial participation scheme e.g. share/profits distribution

× Bonuses not relating directly to work done

Information to representatives

• Obligation triggered if there is an existing requirement to provide information e.g. TUPE, redundancies plus for collective bargaining

• “Suitable information” on use of agency workers:– total numbers;– areas of business using them;– type of work being undertaken; – not terms and conditions of workers

Liability• Temporary work

agency:– Liable for breaches of

rights to basic working and employment conditions, to extent it is responsible for the infringement;

– Defence available – took “reasonable steps” to obtain relevant information from hirer and acted “reasonably” in determining those terms after qualifying period

• Hirer:– Liable for any breach to

extent it is responsible for infringement;

– Regard will be given to steps hirer has taken to enable agency to provide information to worker;

– Sole responsibility for breach of “day 1” rights

Assessing the impact of the AWR

Current (and future) agency worker needs: Number of workers involved? For what roles? Do we directly recruit employees to carry out

same work? Pattern(s) of engagement Why do we use? How much does it cost us? Decision to hire – who makes it, when and how? Contractual commitments with agencies?

Assessing the impact of the AWR

Collating relevant data: Pay, holiday, working time differentials? How much discretion do manager currently have

regarding e.g. starting pay? Collective facilities available to employees? How are vacancies communicated? How will we monitor agency contracts and

individual assignments? Record keeping issues – potential need for

centralisation?

Assessing the impact of the AWR

When reviewing options, consider:• How great is your potential need for flexible

labour?• How well placed are you to deal with the

administrative burden?• What will be fair? (for workers and employees)• Any employee relations issues?

N.B. Don’t forget the anti-avoidance provisions!

© EVERSHEDS LLP 2011. Eversheds LLP is a limited liability partnership.