United States: In Brief: Employment and HR Newsletter

This is the first issue of our new employment and HR newsletter. Our aim is to highlight what we consider to be the recent key developments, changes and issues of which your business needs to be aware. The final page is a quick reference guide to answer some common questions. We hope you find the newsletter both interesting and useful, and we welcome all suggestions regarding future content. So do let us know what you would like to see in our next edition!

Do you have employees on fixed-term contracts? Are you going to be renewing those contracts or re-engaging those employees on new fixed-term contracts? If so, beware of the "four-year" rule which will apply from 10 July 2006. This provides that, if fixed-term employees have their contracts renewed, or if they are re-engaged on a new fixed-term contract, when they already have a period of four or more years of continuous employment, the renewal or new contract takes effect as a permanent contract unless:

• employment on a fixed-term contract is objectively justified; or

• the period of four years has been lengthened under a collective or workplace agreement.

So how do you objectively justify employment on a fixed-term contract? By showing that the use of a further fixed-term contract:

• is to achieve a legitimate objective, for example, a genuine business objective;

• is necessary to achieve that objective; and

• is an appropriate way to achieve that objective.

Employers and representatives of employees may agree on objective reasons (for example, the nature of the profession or work in a sector where it is the norm for employees to work on fixed-term contracts) for the renewal of fixed-term contracts as part of a collective or workforce agreement. Remember, only service from 10 July 2002 counts towards the four-year period, so put a note in the diary now to review your fixed-term arrangements before 10 July 2006.

If an employee wants to bring a tribunal claim, he must first send a written statement of grievance to the employer. If he fails to do so, the claim will be inadmissible (the only exceptions are where the claim is about an actual or contemplated dismissal or, in some circumstances, disciplinary action). Equally, if an employer, having received a grievance, fails to comply with the requirements of the applicable statutory grievance procedure, any award of compensation to the employee will be increased by 10-50%. This uplift applies to unfair dismissal claims as well as discrimination claims, where compensation is unlimited.

Accordingly, it is vitally important for employers to recognise when an employee has raised a grievance and to handle it appropriately. Sounds simple enough? Unfortunately, recent caselaw might indicate otherwise. Tribunals have given a very broad interpretation to the question of what is a grievance. For example, a letter of resignation and a solicitor’s letter before action have both been held to be grievances, even though the latter was adversarial rather than conciliatory and was headed "without prejudice" (and therefore would not normally be admissible as evidence). In addition, a request to work flexibly has also been held to be a grievance. The key requirements of a grievance which can be gleaned from the caselaw seem simply to be that:

• it is in writing; and

• the employer, on a fair reading, can be expected to appreciate that a grievance is being raised.

Employers can only be certain that a grievance has not been raised if they receive a discrimination questionnaire, as Regulation 14 of the Employment Act 2002 (Dispute Resolution) Regulations 2004 provides that these cannot constitute a grievance.

So what should you be doing to ensure that your company doesn’t fail to recognise a grievance and thereby put itself at risk of a possible 10-50% uplift in compensation?

1. Be alert. Scrutinize all written communications from employees very carefully. Be aware that these do not have specifically to state that they are grievances or to comply with any company grievance procedure to qualify as a statutory grievance.

2. If you think something could be a grievance, check with the employee as to how they want you to deal with it. However, bear in mind that the employee’s intention is not determinative, so even if the employee says that he is not lodging a formal grievance under the company grievance procedure, you could still be at risk if you do not follow the statutory procedure.

3. Former employees are not required to set out the basis or details of the grievance. Accordingly, before responding to their grievances, you may have to obtain further details. You may also wish to do this where current employees provide scant information regarding the basis of their grievance.

The Department of Trade and Industry has issued a preliminary consultation paper on extending the right to 20 days’ paid holiday per year to 28 days’ paid holiday. The additional eight days are intended to represent the eight statutory holidays, so as to allow employees a minimum of 20 days’ plus statutory holidays. The changes would come into effect by October 2009, with four of the additional holidays to be introduced in October 2007 and the others following in 2008 or 2009. It is expected up to two million employees would benefit.

The exemption for partly-unmeasured working time has been removed. This applied to workers whose working time was only partially measured or predetermined and allowed working time which was neither measured nor predetermined, or could only be determined by the workers themselves, not to count for the purposes of the limits on weekly working time and night work. Employers were also not required to keep working time records in respect of such workers. The exemption in respect of those whose entire working time is not measured or predetermined, or can only be determined by the workers themselves, remains available.

10 July 2006: Fixed-term employees can accrue sufficient service to obtain a permanent contract (see When Is a Fixed-Term Contract Not a Fixed-Term Contract? above).

1 October 2006: Employment Equality (Age) Regulations 2006 come into force outlawing age discrimination in employment and removing the upper age limits on the right to claim unfair dismissal and redundancy payments (for more details, please see our legal update Age at a Glance, May 2006.

1 October 2006: National Minimum Wage increased to £5.35 for workers aged 22 and over, £4.25 for workers aged 18-21 and £3.00 for workers aged 16 and 17.

Sexual Harassment: According to new guidance from the Equal Opportunities Commission, lewd emails circulated to others in the workplace can constitute sexual harassment, even when not sent directly to a colleague. Anything creating a degrading and offensive environment can contribute to sexual harassment, and a complainant’s perception of whether an email is offensive must be given regard.

Breach of Contract: The Court of Appeal has confirmed that the excess over £25,000 in a tribunal breach of contract claim cannot be expressly reserved and recovered in the High Court.

Whistleblowing: The Court of Appeal has held that the whistleblowing legislation applies after terminaation.

Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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