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Hello Hope you are having a good summer. Just a reminder that we are meeting at Tullow Oil on September 23 at 12 for our next Lunch time Forum on Training and Development and look forward to seeing you there. I will assume you are coming unless I hear to the contrary! Do let any new contacts in Chiswick Park know and I will email them if you send me their details. I suggest we bring our own packed lunch again..and maybe we can do something a bit special at the Forum around Christmas time. Do try to log on to the Forum occasionally and add your photo and any interesting ideas etc.

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Law at work
May 2008
Features print (pages 2-4) for this section
UK immigration: If points mean prizes, will your business be a winner?. more
The introduction of the Points Based System
An analysis of the "biggest shake up of the immigration system in its history"
Case law update print (pages 5-7) for this section
Unfair dismissal: Person wrongly categorised as self-employed can still.. more
make an employment claim
Enfield Technical Services Limited v Payne and BF Components Limited v Grace [2008] EWCA Civ 393
Changing terms: Dismissal for some other substantial reason so no.. more
entitlement to redundancy payments
Martland and Others v Co-operative Insurance Society Limited; Sculley and Others v
Co-operative Insurance Society Limited UKEAT/0220/07
Hot topics print (pages 8-9) for this section
Unfair dismissal reform: ACAS Draft Code of Practice on discipline.. more
and grievance
Sex Discrimination Act 1975 (Amendment) Regulations 2008.. more
Whether provision of a flexible benefits fund in which part of the fund.. more
has age related benefits is age discrimination
Contacts
Contents
Law at work
Features
UK immigration: If points mean prizes, will your business be a winner? The
introduction of the Points Based System
The UK is currently undergoing "the biggest shake-up of the immigration system in its history" according to the
Immigration Minister, Liam Byrne. Starting in March 2008, the Home Office began rolling out a point-based system
similar to that operating in Australia. This will eventually replace all existing immigration laws, including the work permit
and HSMP schemes. The Home Office is attempting to consolidate more than 80 existing work and study routes into
only five tiers and in doing so is introducing radical changes to migrant workers and employers alike.
While it is still unclear whether these changes will benefit employers, there is no doubt that the Home Office is seeking
to pass more responsibility to employers for their migrant workforces.
Changing times?
These changes arise in a political climate in which the Government is keen to maintain economic growth, while
managing a perceived drain on the country's resources. Whatever one's views on that, the current immigration system is
cumbersome and uncertain for all parties.
The Points Based System ("PBS") is intended to be simpler, objective and transparent. The Home Office is enabling
workers and employers to review their eligibility for permits online prior to making applications by applying objective
points criteria. They have also introduced a 'sponsor' requirement for all but one of the tiers to shift responsibility to
employers.
The Home Office is introducing the following five tiers:
Tier 1 – Highly Skilled Individuals to contribute to growth and productivity
Tier 2 – Skilled workers with a job offer to fill gaps in the UK labour force
Tier 3 – Low Skilled Workers to fill specific temporary labour shortages (this tier has been frozen until Bulgarian
and Romanian worker restrictions are lifted)
Tier 4 – Students
Tier 5 – Youth Mobility and Temporary Workers
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Further detail is awaited but statements of intent for three of the tiers have now been issued. The tiers which will have
the biggest impact on employers are Tier 1 (currently HSMP) and Tier 2 (currently work permits).
Tier 1 – Highly Skilled Individuals to contribute to growth and productivity
This tier is aimed at attracting the most highly skilled workers to the UK. It is a variation of the current HSMP scheme.
Tier 1 will also include post-study work applications (replacing the IGS), entrepreneurs and investors. Tier 1 is the first
active part of the PBS and is gradually being rolled out across the world, with UK based applications and applicants in
India being impacted first. Tier 1 will become fully effective throughout the world from June or July 2008 meaning that
all applications (except extensions or "switches" into the category from within the UK) will be made at the applicant's
home British Consulate (rather than through Sheffield).
Points under Tier 1 will continue to be awarded based on qualifications, earnings, time spent in the UK (whether
working or studying) and age. 75 points will be required for a successful application. There are mandatory English
language requirements - at Council of Europe level 'C1' – unless the person comes from a majority English speaking
country or has an undergraduate degree taught in English. Applicants will also be required to meet strict guidelines
demonstrating they have held sufficient funds to support themselves and any dependents for every day of the previous
three months. Original documents must be presented to demonstrate each category.
Highly skilled migrants will continue to be free to seek employment anywhere in the UK and will not be required to
have a sponsor (please see below), making it easier for employers to take on such migrants.
Law at work
Tier 2 – Skilled workers with a job offer to fill gaps in the UK labour force
Tier 2 will replace the current work permit scheme and will be applied to migrants who are filling a job only if no
suitable EEA worker is available. Each applicant will need a certificate of sponsorship from his or her prospective
employer. Unless the person already works for a group company (i.e. an intercompany transfer) the company must pass
the "Resident Labour Market Test" meaning that the job must be advertised according to strict guidelines for at least
two weeks prior to the application being made. Advertising will be reduced to one week if a salary of £40,000 or more
is offered.
Again, applicants must show that they can score at least 70 points from a combination of qualifications, prospective
earnings (including allowances), a certificate of sponsorship, and maintenance requirements. Industry salary levels will
be set in accordance with Home Office guidelines. Tier 2 migrants will also be required to demonstrate English skills at
level 'B2' (approximately 'C' grade at GCSE), with the same exemptions as Tier 1.
According to the current statements of intent, work permit holders already in the UK will be able to extend their
permits once without needing to meet the new points requirements. After that they will need to comply with the new
rules.
What is sponsorship?
The Home Office considers that those who benefit from migration should help maintain the system's integrity. Under
Tiers 2 – 5 of the PBS, migrants' leave to remain in the UK will be tied to a sponsor (sponsors are not required for Tier
1 applicants).
From October 2008 all employers who wish to make an application to employ a migrant worker will need to be
licensed as sponsors. Licensing applications will be renewed every four years. Only UK based companies can make
applications. The licensing process is clearly set out and within companies, specific lines of authority must be drawn up
to fill the mandatory licensing roles.
Employers will be required to show that: they are a bona fide establishment; they are registered with HMRC and
have audited accounts; and they are registered with the appropriate authorities. Sponsors will be subject to a number
of duties which, if not complied with, could affect their licence. For example, they will be required to report to the
authorities if the migrant fails to show up to work.
All sponsors will be graded, either 'A' or 'B'. The 'B' rating is transitional and gives sponsors who have not complied
with the regulations a chance to get their 'house in order'. If a sponsor does not improve, it is likely that their licence
would be withdrawn. A licence will also be withdrawn if a key person in an organisation is convicted of a serious
immigration offence.
If a licensed employer wishes to employ anyone under Tiers 2 – 5, they will need to issue a certificate of sponsorship
asserting that the applicant meets the requirements under that tier. They will be held accountable to the Home Office
on account of that pledge. All applicants, including those coming to the UK for under six months, will then use the
certificate of sponsorship to apply for a visa to enter the UK from their nearest British Consulate.
Time frames
Tier 1 is already active. Applications for licensing can already be made and must be completed by October 2008. At
the time of writing, Tiers 2 and 5 will be rolled out in the third quarter of 2008 and Tier 4 in the first quarter of 2009.
What if you get it wrong?
The process of issuing visas to migrants is also changing. UKVisas will make most decisions on paper as the PBS should
make everything more objective. Controversially, full appeal rights are being replaced by an internal administrative
review – decisions will only be overturned if there has been an error of fact. It is important to get it right first time
around!
A much tougher line is being taken against UK companies who employ people without correct permission. The Home
Office has the power to enforce an on the spot £10,000 fine per illegal worker against those who negligently employ
migrant workers without the correct permission. Furthermore, companies who "knowingly employ" illegal workers
could face a two year prison sentence or unlimited fine.
Law at work
Conclusion
We plan to contact interested clients in July to offer an assistance service to apply for sponsor licences. This will be
offered on a fixed fee basis. Please email s.nesbitt@taylorwessing.com to register your interest.
Contents Page
By Vikki Wiberg
To do:
1. For now
(a) Consider accelerating postings under current system – analyse likely needs over next 12 months
(b) Seek longer periods on current applications
(c) Watch company credit
2. Strategic
(a) Apply for sponsor licence
(b) Agree authority lines to issue certificates
(c) Train overseas colleagues for consistency
3. Operating new system
(a) Review provisional transferees against language etc tests
(b) Consider advert timelines and salary adjustments
(c) Consider language timings
Law at work
Case law update
Unfair dismissal: Person wrongly categorised as self-employed can still make
an employment claim
Enfield Technical Services Limited v Payne and BF Components Limited v Grace [2008]
EWCA Civ 393
Why care?
Individuals often request self-employed status from their employer. Employers are often happy to accept such an
arrangement without considering either the impact of the relationship being one of employment in reality or the
possibility that the individual may claim at a later date that they have employment rights. Employers will often rely
on the employee's characterisation of the relationship as one of self-employed status. The fact that an employee has
previously benefited from the tax advantages of self-employed status will not automatically prevent the employee from
being able to claim the advantages of being employed if the employee has wrongly characterised his relationship,
provided that he has not made false representations as to the underlying facts of the relationship. In both Enfield and
BF Components the employees had wanted to be engaged on a self-employed basis but later claimed that they had
been unfairly dismissed. Both respondents raised the issue of illegality of the contracts under which the individuals
were engaged on the basis that the contracts had been illegally performed. If a contract was illegal it would be
against public policy to allow a claim for unfair dismissal to proceed.
The case
In Enfield, the employee Mr Payne asked to be self-employed. After investigating his status, HMRC expressed the view
that it was prepared to accept that he was self-employed. Mr Payne later claimed unfair dismissal.
In BF Components, Mr Grace brought a claim for unfair dismissal. He had been an employee from September
2003 and self-employed and working for BF prior to that. In order to have the requisite period of service to qualify
for a claim of unfair dismissal, Mr Grace needed to rely on the period of self-employment as being, in reality, an
employment relationship. In Mr Grace's case about 10 weeks after starting employment, BF asked him to become an
employee. Mr Grace declined and again resisted employment status in August 2003 when BF told him that he would
be regarded as an employee by HMRC. In September 2003 he finally accepted a contract of employment.
The Court of Appeal upheld the EAT's decision that the contracts were not illegal in either case. It held that noncompliance
with fiscal obligations was not sufficient to render a contract illegal and that misrepresentations and/or bad
faith rather than an "error of categorisation" were required in order to establish illegality, for example if the employees
had made false disclosure to the Revenue about their circumstances.
What to take away
When entering into an arrangement with an individual, employers should understand that characterisation of the
relationship will be for the Tribunal to determine, and that the employee's acceptance of or even proposal of a selfemployed
arrangement will not be sufficient to prevent him from later claiming that an employment arrangement
existed. He may be embarrassed, but tribunals are willing to deal with such claims.
Take advice based on the totality of the relationship and current HMRC attitudes to enforcement of payroll withholding
obligations.
Contents Page
Law at work
Changing terms: Dismissal for some other substantial reason so no
entitlement to redundancy payments
Martland and Others v Co-operative Insurance Society Limited; Sculley and Others v Cooperative
Insurance Society Limited UKEAT/0220/07
Why care?
Employees who are dismissed and immediately offered employment on new terms and conditions may object to the
new terms, refuse such new employment and claim that they are redundant. This may result in disputed claims for a
contractual/enhanced redundancy payment and unfair dismissal.
S139(1)(b) of the Employment Rights Act provides that;
"For the purposes of this Act an employee who is dismissed shall be taken to be dismissed by reason for redundancy if
the dismissal is attributable wholly or mainly to – …
(b) the fact that the requirements of that business for employees to carry out work of a particular kind, … have ceased
or diminished or are expected to cease or diminish."
The work in question is the work that employees perform, rather than what they could be required to perform under
the contract of employment.
In this case the Tribunal considered the definition of redundancy and whether significant changes to terms and
conditions could constitute a change in the employer's requirements for work of a particular kind to be carried out,
such that there was a redundancy situation.
Employees may have a right, as in this case, to an enhanced redundancy payment under the terms of a collective
agreement. When assessing whether such rights in collective agreements have been incorporated into the contract of
employment, it is necessary to review the precise wording in both.
The case
The employees were financial advisers for the Co-Operative Insurance group. The employer was in severe financial
difficulties and as a result, decided to make changes to the terms and conditions of the financial advisers ("FAs"). This
involved adopting a new model for the employment arrangements of the FAs as well as some restructuring changes.
The changes to terms and conditions would result in four principal changes between the duties of the FAs before and
after the restructure. These changes were to collections, servicing, administration and selling. The changes were fairly
significant in terms of how the nature of the FAs' work would change. Collections and servicing would cease, there
would be reduced administration and FAs were expected to increase the amount of time spent selling by 50%. As a
result of these changes it was expected that some categories of FA would suffer a reduction in earnings.
The changes were unwelcome to the FAs who contended that agreeing to the new terms would essentially be
agreement to being employed in a different kind of job. When the Co-op could not agree changes to employment
terms with employees, it dismissed them and offered to re-engage them on new terms.
The Employment Tribunal assessed whether the impact of the new terms was such that signing up to them would
essentially mean that the FAs were agreeing to be employed in a different kind of job. The Tribunal found that on
the facts of the case, they would not be because the changes all related to the way in which the work of FAs was
performed, and that the same work of a particular kind would still be performed by the FAs but in a different way.
In reaching this conclusion the Tribunal focused on the fact that the FAs were essentially salesmen and that they
would continue to be salesmen after the introduction of the new terms and conditions. The tribunal accepted that
the changes were significant but rejected the employees' argument that the extent of the changes amounted to
redundancy as a matter of law.
On appeal to the EAT, the claimants contended that changes to the nature of the selling process, the reduced contact
with clients, more intensive management scrutiny and a shift from servicing clients to selling meant that there was
a change in the kind of work being undertaken by the FAs. The EAT dismissed the appeal and agreed with the
approach of the Tribunal. It held that although it would be open to a Tribunal in similar circumstances to find that
there was a change in the kind of work employees were required to do, the Tribunal's decision in the instant case was
Law at work
not perverse. The essence of the job was selling, and the changes in the method of performance did not justify the
inference that there was a different kind of job being performed.
In respect of the claim for enhanced redundancy pay, neither the Tribunal nor the EAT had to consider this as it had
found that the claimants were not redundant. However, the EAT did make some observations.
The employees' contracts of employment provided that "any terms agreed in the course of collective negotiations
between CIS and the trade union recognised by CIS for such negotiations will have been incorporated into and form
part of this agreement". The collective agreement in question provided for the payment of an enhanced redundancy
payment but in clause 1 of the agreement it was stated that "this process is not intended to form part of individual
contracts of employment."
The question to be determined by the Tribunal and EAT was whether the enhanced payment formula had been
properly incorporated into the employees' contracts of employment. The EAT concluded that the provision in clause 1
related only to the redundancy process which was distinct from enhanced payments and that the obligations in respect
of enhanced payments were therefore incorporated into the contract.
What to take away
When advising employers about making substantial changes to terms and conditions it is necessary to consider
whether these changes could give rise to a redundancy situation. This case is authority for the principle that the
Tribunal will consider whether there has been a change to the kind of work performed by employees or the way in
which that work is performed. In the latter case there will not be a redundancy situation.
Contents Page
Law at work
Hot topics
Unfair dismissal reform: ACAS Draft Code of Practice on discipline and grievance
This month ACAS has published a draft code of practice on discipline and grievance in anticipation of the
Government's proposed removal of the statutory disciplinary and grievance procedures. It is open for consultation
until 25 July 2008. The revised Code would come into effect in April 2009, at the same time as legislative changes.
Its contents are important as employment tribunals will take the Code into account and will be able to increase
awards by up to 25% for unreasonable failure to comply with any part of the Code of practice.
The revised Code is more concise than the current code. It covers the procedure to follow in disciplinary warnings as
well as dismissal. This is a wider remit than the current disciplinary procedure. It also makes clear that even if an act
may call for summary dismissal, a fair disciplinary procedure process should be followed before a decision (unlike the
current modified statutory procedures). It does not cover redundancy dismissals, which currently are covered. The
Code also covers the handling of grievances.
Since April 1 2008, and in anticipation of another change proposed in the Employment Bill, ACAS has stated that
it will now exercise its discretion to extend conciliation throughout the whole period of a tribunal claim rather than
during fixed conciliation periods.
Sex Discrimination Act 1975 (Amendment) Regulations 2008
These Regulations came into force on 6 April 2008 and aim to bring the Sex Discrimination Act 1975 in line with the
EC Equal Treatment Directive. Their effects include:
Removing the need for a woman to have a comparator for the purposes of alleging sex discrimination while
pregnant or on maternity leave. Rather than having to show that she has been treated less favourably than she
would have been if she had not been pregnant or exercised her right to maternity leave, it is now sufficient to
show that she has been treated less favourably.
Broadening the scope of the definition of harassment to include unwanted conduct that is related to the sex of
the employee or that of another person. The Regulations remove the causal link between harassment and the sex
of the person being harassed so that claims may be brought where an employee is offended by a sexist remark
directed at, or about, another person.
Extending employers' liability for failing to protect employees from harassment during employment if the
employer knows that the woman has been subjected to harassment by a third party on at least two other
occasions.
Women with babies due on or after 5 October this year will have the same rights during Additional Maternity
Leave (AML) as they currently enjoy on Ordinary Maternity Leave, with the exception of maternity pay. For
example, benefits that were previously suspended during AML such as health insurance, the use of a company
car and contractual holiday accrual will have to be continued. A further minor change is that employers will need
to take the two week compulsory maternity leave into account when calculating contractual and discretionary
bonuses.
Whether provision of a flexible benefits fund in which part of the fund has
age related benefits is age discrimination
In the case of Swann v GHL Insurance Services UK Ltd [2008] ET/2306281/07, the Employment Tribunal considered
whether offering a flexible benefits package that included an option to join a private health insurance scheme whose
premiums were calculated according to age and gender was direct age discrimination. The minority member of the
Tribunal found that the company had complete control of the elements of the flexible benefits package so that it was
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Law at work
all tainted with discrimination as a result of the inclusion of the age-related element.
However, the Tribunal held by a majority that this was not the case. They agreed that GHL had provided the scheme
to enhance recruitment and retention of staff, having taken expert advice on this and surveyed the employees to see
what they would most like. They were entitled to rely on that advice. They found that the treatment Mrs Swann had
been subjected to was the provision of a fund to purchase flexible benefits. There was no obligation on Mrs Swann
to "buy" the PMI; – she could have chosen a different benefit. They found that the value of the fund was not
subject to the employee's age and therefore her age discrimination claim failed.
The majority also held that even if the offer of the benefits package had amounted to unlawful discrimination on
the grounds of age they considered GHL had made out the justification defence and considered that this could be a
legitimate and proportionate means of retaining staff based on expert evidence.
Companies would be well advised, if introducing a new benefits scheme which could have an age related element,
to take professional advice as to whether it is a legitimate way of, for example, retaining staff as the Tribunal placed
much reliance on this point.
Contents Page
Law at work
10
Contacts
Taylor Wessing employment specialists
For further details on any of the topics raised in this update, please contact your usual employment contact at
Taylor Wessing or one of the practice leaders below, who will be pleased to answer your queries.
Practice leaders:
Employment
Sean Nesbitt +44 (0)20 7300 4294 s.nesbitt@taylorwessing.com
Pensions
Carolyn Saunders +44 (0)20 7300 4752 c.saunders@taylorwessing.com
Employee incentives
Ann Casey +44 (0)20 7300 4750 a.casey@taylorwessing.com
Immigration
Charlie Pring +44 (0)20 7300 4256 c.pring@taylorwessing.com
Vikki Wiberg +44 (0)20 7300 4738 v.wiberg@taylorwessing.com
Taylor Wessing has offices in Berlin, Brussels, Cambridge, Dubai, Düsseldorf, Frankfurt, Hamburg, London,
Munich, Paris. Representative offices: Alicante and Shanghai.
http://www.taylorwessing.com
For events and seminars, please contact:
Lucy Hall +44 (0)20 7300 4082 L.hall@taylorwessing.com
If you would like to receive a copy of our other newsletters please contact us on london@taylorwessing.com
This bulletin is correct to the best of our knowledge and belief at the time of going to press. It is, however, written as
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required by law to protect personal data. Please write to Carmelite, 50 Victoria Embankment, Blackfriars, London EC4Y
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© May 2008 Taylor Wessing LLP
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