Employment law update: July

July 23rd, 2010

This is our first e-mail update after the Chancellor’s emergency budget on 22nd June 2010. Within this update we shall therefore provide a quick run down of some of the budget announcements that may have an effect on the world of employment law as well as providing information on some recent Employment Appeal Tribunal cases that may be of interest.

The Emergency Budget – key points to note:

So what are the government’s key spending reforms we should keep an eye on over the next year? The list below is by no means exhaustive but it pulls out a couple of key, select reforms that have been announced by the government.

Personal allowance
Everybody who earns an income in England is entitled to receive a fixed amount of that income tax free. This is what is called a Personal Allowance. Under the new budget, the government intends to raise the Personal Allowance in April 2011, for people under the age of 65 from £6475 to £7475.

Public sector pensions
A Commission has been set up to consider the cost of public sector pensions. According to government websites, an initial report will be available around September 2010 and a full report is intended to be available before the next budget is announced.

State pension age
The previous government had intended for the state pension age to be increased from 65 to age 66 and for this to be introduced between April 2024 and April 2026. The new Coalition government now intends to begin consultation into whether it is possible to introduce this rise sooner.

Default retirement age
Although we currently have laws in place to allow employees to request that they work beyond the age of 65, the UK law does still allow employers to make employees retire at the age of 65. The new Coalition government has announced that it plans to consult on whether the default retirement age should be phased out.

Public sector pay
It has been announced that there will be a 2 year public sector pay freeze. This will apply to all public sector workers who earn more than £21,000 per annum.

National insurance threshold
Employers are currently obliged to pay national insurance contributions for all employees who received over £110.00 per week. This is called the national insurance threshold. Under the new budget, the government intends to raise the national insurance threshold to £21.00 above indexation from April 2011.

Further information can be found at the direct.gov website which can be found via the following link

http://www.direct.gov.uk/en/Nl1/Newsroom/Budget/Budget2010/DG_186500

Time limits for submitting a claim to the employment tribunal

On 25th May 2010, the Employment Appeals Tribunal (EAT) handed down its decision in the case of Northamptonshire County Council v Entwhistle [UKEAT/0540/09/ZT]. In their judgment, the EAT held that even if an employer mistakenly informs a dismissed employee that the time limit for lodging an unfair dismissal claim at tribunal runs from the date of the outcome of an appeal, an employee must still lodge their claim at tribunal within the 3 months from the effective date of termination which will be the first date that an employee is dismissed.

http://www.employmentappeals.gov.uk/Public/Upload/09_0540wwfhSBZT.doc

A further case on the time limit point is the recent case of Wedgewood v Minstergate Hull Ltd [UKEAT/0137/10/DA UKEAT/0174/10] , for which judgment was handed down by the EAT on 13th July 2010. In this case, the claimant received a letter on 26th November 2008 stating that he was being released from his contract of employment from that date and that he would be paid up until the end of his notice period which expired on 1st December 2008. The claimant submitted a claim to the employment tribunal on 28th February 2009 which the tribunal in the first instance held was submitted out of the 3 month time limit for submitting the claim. However, the EAT on appeal has held that the effective date of termination in this case was 1st December 2008 and that by releasing an employee from working their notice period did not alter the effective date of termination.

http://www.employmentappeals.gov.uk/Public/Upload/10_0137and0174rjfhSBDA.doc

These recent cases simply send a warning beacon to all regarding the time limits for lodging employment tribunal claims.

A perceived disability does not entitle an employee to be brought under the Disability Discrimination Act

The case of Aitken v The Commissioner of Police of the Metropolis [UKEAT/0226/09] was handed down by the EAT on 21st June 2010. In this case, the appellant had been mistakenly perceived to have been suffering from a disability and pleaded that he had suffered detrimental treatment as a result of this mistaken perception. The EAT held that treatment on the basis of a mistaken perception did not fall within the definition of direct discrimination or disability related discrimination under the DDA 1995.

This case should not be confused with cases involving other types of discrimination (e.g. sexual orientation discrimination) in which the tribunal have held that treatment on the grounds of a perception amounts to discrimination.

http://www.employmentappeals.gov.uk/Public/Upload/09_0226rjfhSBZT.doc