Retirement procedures (1)
February 10, 2009
Yesterday I explained the background and implications of the Heyday case on the default retirement age in the UK. At the moment the Age Discrimination Regulations (2006) still apply, which means that a mandatory retirement age of 65 can still be used and it is lawful to dismiss for reason of retirement after 65, as long as the statutory procedure is followed. Here is an explanation of the current procedure:
Notice of a planned retirement:
The employee needs to be given at least 6 months notice of the intended retirement date – which will be after they have reached the age of 65. It is important to note that if an employee has a longer notice period in their contract of employment (unlikely but possible) then they will be entitled to the longer notice period as you are giving them notice of the termination of their employment.
Requests to work beyond retirement age:
The employee has a right to request to work beyond the intended retirement age, and the employer has a duty to consider this request. When an employer gives notice of the intended date of retirement, they must also inform the employee of their right to request to work longer. The employee should put this request in writing and should indicate whether they would like to continue working indefinitely or until a specified date.
Tomorrow’s article will continue to look at the statutory retirement procedures.
Heyday and the mandatory retirement age
February 9, 2009
If you work in HR or are an employer, you will probably have heard about the famous case relating to the default UK retirement age that has been made by Heyday, which is part of the charitable organisation Age Concern. Here is an explanation of the background to the case, and where it leaves UK employers at the moment:
What is the basis for the case?
The case was brought by Heyday to the High Court, to challenge the mandatory retirement age of 65 that the UK currently has. The mandatory retirement age forms part of the age discrimination regulations that came into force in October 2006, and means that at the moment employers can legally dismiss employees over the age of 65 by reason of retirement (without any other justification), as long as they follow the correct procedure. The mandatory retirement age is due to be reviewed in 2011 but the case brought by Heyday is bringing the question of whether this aspect of the UK law complies with the Equal Treatment Framework Directive (EU Law) forward. The question is to do with the interpretation of the European Directive – and Heyday is arguing that the Directive has been incorrectly interpreted by the UK government when the age discrimination regulations were implemented. Heyday argues that it is against the principle of age discrimination to allow employers to dismiss employees simply because of their age.
What has happened so far?
In July 2008 the High Court referred the question of whether the mandatory retirement age is lawful to the European Court of Justice (ECJ). In September 2008 the Advocate-General, who is responsible for making recommendations to the ECJ on these sorts of rulings, gave his opinion, and it was not good news for Heyday. The Advocate-General said that whilst he agreed that the retirement provisions as stated in the UK age discrimination regulations do fall under the Equal Treatment Framework, he did not think that the Directive prevents EU states from introducing a mandatory retirement age. Whilst this is not a binding decision, around 80% of past ECJ decisions have gone the same way as the Advocate-General, so it is quite a telling opinion. The ECJ is due to make its decision this year, and there are around 260 cases in the UK that are waiting for the outcome before they can be decided.
What should employers do for the time being?
At the moment, employers can still dismiss employees after the age of 65 by reason of retirement, as long as they follow the statutory procedure and as long as they are a private sector company. The rules relating to public sector employers are different and they cannot necessarily automatically dismiss by reason of redundancy after the age of 65. This is because of the principle of ‘direct effect’ which means that EU rulings apply directly to the public sector, whereas the private sector continues to rely on UK regulations until they are changed or removed. So if the ECJ finds the UK regulations are incompatible with the Directive, public sector employers will have to immediately change their procedures. Employers need to keep their eye out for the ruling as this may affect their policies and procedures if it means a change to the UK regulations.
Reviewing employee benefits
February 6, 2009
In the current economic climate, employee benefits are possibly one of the last things on many employers’ minds; unless they are thinking of ways to cut back on costs by reducing spending on benefits or removing schemes altogether. For example, the company that my colleague formerly worked for removed the employer’s contribution from the pension scheme following a consultation exercise. Basically the choice was that the pension contribution had to be removed, otherwise redundancies would be necessary.
These often necessary changes to employee benefits are nonetheless extremely damaging to employee morale, and to keep hearing negative news with nothing to counteract it will increase the negative effects of the recession, i.e. employee insecurity, depression and de-motivation. However the budgets for employee benefits will continue to be squeezed, making it hard for HR or Reward/Benefits departments to maintain morale and faith in the company when they’re taking away the very things they have used to increase it in the past.
This is a perfect time to review the benefits package on offer to employees. In the same way that different benefits will appeal to different employees due to their varying personal circumstances, benefit choices will change depending on the external environment and the ways in which employees need to be supported.
As I said a few weeks ago, when I recently visited my GP he told me that his workload had increase due to the recession as he was treating a lot of stress and depression related illnesses. When I have consulted in the past on employee benefits, an employee assistance programme has been one of the least popular choices, but at the moment I bet a lot of workers across the company could really benefit from this kind of service. Another option that could help out a lot of people at the moment might be providing some time with a financial advisor; so that people can discuss their options if they have concerns about mortgage, bad credit loans or credit card repayments. This would be a fairly low-cost option but shows that the employer is aware of the personal issues facing many people at this time.
Companies should also consider flexible working options as an alternative to financially-based benefits, for example offering flexitime would be a great boost to many people; and although this might be quite difficult to set up initially, does not have a long term cost. Giving employees the opportunity to purchase additional holidays means that people can choose to take more time off if they wish (and therefore does not impose another benefit that some people may not necessarily want) and if employees purchase the days, can actually save the company money in salary and National Insurance payments.
This is a time for HR and benefits professionals to be creative with their budgets and time, rather than simply taking everything away and sending out the message that there is nothing that can be done because of the recession.
British jobs for British workers: is ‘protectionism’ valid?
February 5, 2009
You’d have to have been living in a cave somewhere in the middle of nowhere to have not heard this week’s big news story. This is about the widespread industrial action that has taken place in a row over Italian workers being imported to work on a contracted job at a Total oil refinery in Lincolnshire.
The dispute occurred because a contract at the Lindsey Oil Refinery was awarded to IREM; an Italian Company, who gained an agreement that they could bring in their own workers from Italy and Portugal to carry out the work. British workers and their unions were dissatisfied with this because they feel that British workers are being denied work; as many jobs like this are being given to foreign workers instead. Of course, the recession has exacerbated this debate because so many jobs are being lost or are at risk, so it is angering some people even more to see foreign workers taking jobs that could potentially be carried out by British workers. Once workers had staged a protest at Lindsey, thousands of workers at other sites across the country carried out their own unofficial industrial action in sympathy.
The dispute has been settled to an extent, with strikers having voted today to return to work on Monday after a deal was struck in which an additional 102 jobs will be created for British workers on the contract, without sacrificing any of the jobs that will be given to the Italian and Portuguese workers. However it is likely that the general dispute about these sorts of actions will continue for a long time, especially as job security and financial stability continue to cause concerns for UK workers during the recession. Even union officials have been saying “the fight does not stop here” and there is now more strike action taking place at Staythorpe power station in Nottinghamshire over lack of work.
This is a very strange and interesting debate. On the one hand it is easy to see why people in one country who are worried about their jobs would feel aggrieved to see people from another country effectively ‘stealing’ their opportunity to work; and therefore ‘protectionism’ appears to be a legitimate course of action. On the other hand, we are part of the European Union, and this means that anyone from the EU has a right to work anywhere within it. The unions are trying to argue that giving British companies the opportunity to make agreements with contractors in which they can bring in their own employees is direct discrimination against British workers. If this argument succeeds, then could we see new legislation dictating the way contracts are agreed with foreign contractors in future?
This sounds like an argument that could stretch into other realms of ‘who should be allowed to work (stroke, be) where?’ and it’s a little unsettling for me. What happens when ‘British jobs’ are kept for ‘British people’ and then it turns out that the people that get them are immigrant workers from foreign countries? Will the workers and unions feel that the right person has got the job in the end? John Philpott, Chief Economist for the CIPD, describes:
‘the worrying undercurrent of xenophobia evident in the current rash of unofficial strikes’
and this effectively describes the way that I feel about this situation. What is your opinion on the events that have taken place and the implications for the future of foreign contracts?
Should women ‘dress for success’?
February 4, 2009
Despite more and more gloomy economical news each day with thousands of redundancies, failing companies, strike action and house repossessions, a really surprising news story yesterday was that the Bank of England has held a seminar for female staff on what makeup, clothes, accessories and perfume to wear in the workplace. Apart from the obvious question of ‘haven’t they got more important things to worry about at the moment?’ the bank has come under fire from both the press and equal opportunities professionals for what has been described as ‘institutional sexism’, and could possibly face discrimination claims as a result.
I actually can’t believe that the bank went ahead with such a ridiculous event at a time like this! What’s more surprising is some of the outrageous statements made in the seminar, that have been leaked in a memo from the meeting, such as:
“be careful with perfume; always wear a heel of some sort – maximum two inches; always wear some sort of makeup, even if it’s just lipstick,”
“No-nos include ankle chains – “professional, but not the one you want to be associated with”
Now, I have in the past sent memos and emails about appropriate dress to staff, mainly in relation to dress down day as it is more difficult for employees to assess what is professional when they are given the freedom to wear their own clothes instead of say, a suit. However, the idea of implying that an employee might look like a prostitute is going a bit over the top in my opinion!
Equal opportunities specialists have said that the seminar and memo indicates that the Bank of England is an ‘institutionally sexist environment’ because they are obviously being judged by what they wear and are therefore being treated differently to men. Perhaps then, a better option would have been to have an open seminar that advised all staff – women and men, on professional dress and how to portray the required image in the workplace…
I saw a mini debate on this subject on the BBC Breakfast show yesterday, and there was a woman in the debate that felt very strongly that people should be judged on the quality of their performance rather than their image. On the other hand, an image consultant argued that appearances are judged, and even went as far as saying that you might have a better chance of saving your job in a redundancy selection situation with the right sort of dress. I agree that image is important to a certain extent, but I do not believe that there’s anyone who could dress their way out of losing their job if they were not good enough. In these difficult times, when companies are making redundancies they will be thinking about the core skills and needs that will help that business to survive and thrive, not who looks the most striking or professional – unless your company actually sells or deals in image (like an escort agency or something…)
One comment that made me chuckle in the whole debate was from Ruth Lea, who is an economic advisor to the Arbuthnot Banking Group, who said:
“Surely it is up to men and women, and their peers at work to decide for themselves what is suitable to wear. If you can get a well-paid job, surely you have the nous to choose the right clothes”
Which I think says it all!
What do you think about this subject? Is dress important and should the Bank of England have gone ahead with the seminar?
ECJ ruling ends dispute over holidays on long term sick
February 3, 2009
The European Court of Justice (ECJ) made a ruling at the end of last month that will end years of debate over whether staff who are on long term sickness absence should continue to accrue holidays and then be entitled to them at the end of their sick leave.
The right to a minimum amount of paid leave (which will increase to 20 days plus bank holidays in April) is part of the Working Time Directive (1998), and the ECJ ruling found that this right remains even when the employee has been absent through sickness for a long time:
“A worker does not lose his right to paid annual leave which he has been unable to exercise because of sickness. He must be compensated for his annual leave not taken”
This news has been taken badly by many employers and business groups, because of the added expense this ruling is likely to mean, especially in the current economic circumstances. It means that an employee will be entitled to take the accrued annual leave after the end of their sick leave, no matter how long this period is – which will mean issues with providing cover for extended leave requests and effectively integrating the employee back into work. In many cases employees on long term sickness absence do not return to work at all, and in this case the employee would be entitled to a lump sum payment of their outstanding accrued holidays when their employment is eventually terminated.
What this means for HR departments is that they will need to review their policies and handbooks to ensure the new rules are incorporated into the wording. Many current policies will give a maximum length of sick leave during which an employee may accrue annual leave (e.g. 6 or 12 months) and this will therefore need to be taken out. Many companies have a policy that states that employees on long term sick will continue to accrue the statutory minimum amount of holidays, but will not be entitled to accrue their additional company holidays (if they have an enhanced number of days) after a certain period. It is my understanding that this type of policy will still be legal after the ECJ ruling – as long as the employee accrues the legal minimum amount of holidays whilst they are on long term sick. It might therefore be prudent to add this into the policy when changing it, so that the company is not liable to pay even more annual leave that has been accrued by the employee if they are entitled to an enhanced amount of days when they are in work.
Heavy snowfall affects UK businesses
February 2, 2009
Today has seen the heaviest snowfall in 18 years across the South East of England, and many other areas have also been affected by the severe weather. This has caused major delays to many road and rail networks, meaning a lot of workers could not get to work this morning. The first I heard about this is when a friend of mine who lives in London called me first thing this morning to gleefully announce that she was heading back to bed after not being able to get to work on the tube, bus or train! London is said to be the worst affected for travelling as this is where the transport network is most concentrated. Tonight the weather is due to turn very icy, with some areas reaching lows of minus 7 degrees, so it looks like there will be further travel chaos for commuters tomorrow. Commuters are warned to take extreme care when driving as not all roads have been gritted properly and so car tyres may not grip the roads. I’ve actually seen a few minor road accidents in the last few weeks caused by icy driving conditions.
Whilst I wasn’t affected too badly by the snow, I did have to stay at home today due to unforeseen carer leave. However this wasn’t a problem for me because I have a laptop and have recently gained home access to the work computer network and my emails, via a virtual private network (vpn). I’ve actually managed to have a very productive day at home! However this isn’t the norm where I work, and the issues with the weather today have made me realise that we don’t have suitable contingencies for when staff cannot get to work or have to go home early (as we had today)to avoid impending bad weather.
Flexible working options such as home working are seen as a great benefit to employees and are often part of employers’ recruitment and retention strategies, but what’s happened today shows that good facilities for home working can also be a great help to companies when alternatives to employees being in work are needed. Many businesses today will have suffered from a massive amount of down time with employees not being able to get to work, such as the company where my friend in London works. Flexible working plans can help to ensure no loss of productivity when circumstances impede normal working situations.
Let me know if your company has been affected by the weather, and what measures (or lack of them) were in place to cope with the loss of working time.