Internships or free labour?

We used to call it work experience in my day; but over recent years the humble “work experience” has become the American “internship”.

Internship loosely translates as “work for free”. In theory, that is fine. The idea behind it being that if you perform well, there is the chance a paid job as the end of that particular rainbow.

An interesting article on the BBC website which discusses how intern positions have become the preserve of those elite who have the fortune of someone else’s fortune to support them. They can just work for fun.
http://www.ippr.org/members/download.asp?f=%2Fecomm%2Ffiles%2FWhy+interns+need+a+fair+wage%2Epdf

However, an even more interesting slant on this subject is the impact of the national Minimum Wage Act on UK interns.

The Institute of Public Policy Research published a report on 2nd August 2010. See it at http://www.ippr.org/members/download.asp?f=%2Fecomm%2Ffiles%2FWhy+interns+need+a+fair+wage%2Epdf

The report points out that within the private sector anyone deemed to be working is entitled to be paid, at least, the national minimum wage.

The concept of interns, as mentioned above, came from across the Atlantic. In UK law they are not defined. Instead, therefore we must ask whether they would meet the definition of “worker” within the National Minimum Wage Act.

A worker is defined as someone who “has entered into or works under a contract of employment or any other contract...........whereby the individual undertakes to do or perform personally any work or services for another party to the contract......”

It would be impossible to give a categorical answer to the question of whether an intern is entitled to be paid national minimum wage or not. Each case would have to be judged upon its own facts in an employment tribunal. The reality is that any person (in particular someone fresh at university) who is hoping to secure their dream job with, for example a magazine, is going to take that magazine to a tribunal to test the point. Chances of them getting a job afterwards....erm.......nil.

The only way to resolve it is by legislation. Until then private companies can continue to exploit this free, and pretty endless, supply of free labour.

World Cup Fever

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Toni Haynes comments on the impact of Company liquidation

I have recently successfully represented another employee in a claim for a protective award against an insolvent employer.

In this case the employer entered into liquidation with no warning to the 24 employees, who were all immediately made redundant. There was no indication to the employees that their jobs were at risk and it came as a surprise to most of them. As the employer was at this stage in liquidation they did not receive notice pay, redundancy pay or pay for the last two weeks of employment, those payments having to be made from the Redundancy Fund.

The employer also failed to consult about the redundancy situation. As there were more than 20 employees to be made redundant, the employer should have consulted for at least 30 days before the first dismissal took place. Again this legal requirement was ignored.

The Tribunal found that there was a complete disregard to comply with the law and awarded the maximum amount of compensation of 90 days pay for each employee who was made redundant.

Despite this finding, the employer will not have to pay the compensation as he is insolvent. The liquidators, also, will not find themselves liable. The payment will have to be made from the Redundancy Fund, in other words by the taxpayers.

This is a situation that we come across time and time again. The insolvency process does not occur overnight but despite the fact that a company knows that it will shortly go bust, the employees are kept in the dark. Often the job of dismissing the employees falls to the administrators/liquidators but they ignore the legal requirements as they will not be personally liable if there is a subsequent award of compensation made by the Tribunals.

So not only is the taxpayer responsible for paying the employees their redundancy pay, notice pay, holiday pay and other unpaid wages, but they then have to also fork out millions of pounds for the deliberate breach of the duty to consult by the directors of the company and the insolvency practitioners.

The new Con-Dem government is keen to convince us that they stand for fairness, a phrase we heard all too often in the run up to the election and that they are eager to cut costs. Maybe they should consider reviewing the laws regarding the liability of company directors and insolvency practitioners. I’m sure that if the directors/insolvency practitioners suddenly found that they were responsible for paying out 90 days pay to each employee who was made redundant, rather than the payment coming from the public purse, then they would be able to comply with the consultation requirements and not leave employees finding themselves without warning out of a job.

For further information, please contact our Employment Rights department on 0113 245 0733.

When is a contract NOT a contract?

One of the first things you learn at Law School is the key principles of the law of contract. I can remember our tutor pointing out time and time again (we were slow learners) that we had failed to answer the questions correctly because we had not first asked whether there was a valid contract. Contracts, very basically, exist when one party offers something – a car, a book, a job – to another party who then accepts it. It is then pretty much accepted that the parties agree terms upon which the car will be sold or the job performed. Until recent times it was also pretty much accepted that one party could then not unilaterally vary the agreed terms. Terms could be changed, provided the other party agreed to them.

In Wandsworth London Borough Council v D’Silva [1998] IRLR 198 the principle was established that an employer could reserve the right unilaterally vary a contractual term. However, the implication was that a variation clause capable of having unreasonable results is likely to be subject to restrictive interpretation by the courts.

That, it seems to me, has been turned on its head following the decision of the Employment Appeal Tribunal in Bateman & Others v Asda Stores [2010] EWCA Civ 80.

In August 2007 some of Asda’s employees were working on a pay structure called “standard rate”. Asda wished to amend the contracts to bring them onto the more up-to-date structure known as the “top rate”. This would have brought them into line with their colleagues.

Extensive consultation followed. About 9,300 employees transferred voluntarily and about 8,700 transferred involuntarily. Asda maintained that they could change the contracts without agreement because the staff handbook stated that the Company:-

“reserve the right to review, revise, amend or replace the contents of this handbook, and introduce new policies from time to time reflecting the changing needs of the business”.

Following this, six test claimants brought claims for unlawful deductions form wages.

The Tribunal stated that the first issue for them was whether Asda needed the consent of the employees to make amendments having regard to the wording of the handbook.

The Tribunal held that the Handbook permitted Asda to make the changes and therefore it was not necessary for them to consider the remaining issues (implied/explicit consent & whether an unlawful deduction had been suffered).

The central question according to the Tribunal was whether the new regime could be introduced without obtaining consent of the employees.

The Claimants argued the following points: -

a) The power to vary was limited to non-contractual policies.

b) Any proposed variation to pay would require consent

c) Therefore, on the facts Asda did not do what was allowed by the variation clause.

d) The fact that Asda never acted expressly stated that they were exercising their right in accordance with that clause supported the Claimants’ interpretation of it.

The Tribunal accepted that Wandsworth established the principle that an employer can reserve the right to unilaterally vary a contractual term.

They also found that in certain cases a unilateral variation may break mutual trust and confidence, by being applied capriciously or unfairly; or by being introduced without consultation. However, it was found that those issues not relevant to the present case.

The tribunal held that consent was not required.

The Claimants appealed and put forward the following arguments: -

That the Tribunal had failed to apply the proper principles of construction set out in Investec Compensation Scheme Limited v West Bromwich Building Society [1990] 1 WLR 896 – the relevant meaning is the meaning that the document would convey to a reasonable person.  They also referred the Employment Appeal Tribunal (EAT) to Autoclenz Ltd v Belcher [2009] EWCA Civ 1046 – proposition that sometimes it is necessary to consider whether the written contract represents the true intentions of the Parties.  The argument was that the employees could not conceivably have intended to leave to the unilateral discretion of Asda the right to reduce pay, increase or decrease hours, cut holidays – without the need for consent or indeed notice.  The submission was rejected on the basis that no evidence was put before the Tribunal to justify such a finding.

1. 
   
   Had Asda intended the wording of the handbook to have the meaning found by the Tribunal then , in order to maintain its duty of trust and confidence, it should have brought home to the employees what that clause really meant. That submission was rejected because before the original Tribunal the Claimants had expressly conceded that there was no issue in respect of trust and confidence.
2. 
   
   The final argument, and the one I find most compelling, was that the Tribunal was wrong to find the words in the handbook were “clear and unambiguous”. The power to review, revise, amend or replace did not apply to terms and conditions but merely permitted alterations to the contents of the handbook.

The EAT held that the relevant paragraph conferred two rights on Asda. They were to: -

(i) Review the contents of the handbook

(ii) Introduce new policies

“Contents” of the handbook included sections entitled “my pay”, “sick pay” and “my hours of work” all of which changed under the new regime.

The EAT concluded that the relevant wording of the handbook was clear as showing that Asda was entitled to review and to change the contracts of its employees without obtaining prior consent.

The decision appears to make it plain that a carefully worded clause in a staff handbook can enable an employer to make fundamental changes to the contract.

That to me ignores some of the special features of an employment contract. In particular a prospective employee is often handed a contract – terms are not usually negotiated. Indeed, often the staff handbook is provided once the job has been accepted. There is, in short, no equality of arms. When the job market is weighed heavily in favour of the employer this is even more so. Is it really fair to then allow an employer to effectively make any changes to the contract that he sees fit? I think not. We have supposedly moved away from the old concept of master and servant. With this decision I am not so convinced that we have.

Some people have suggested that the case is very specific to its facts. In particular, the issues that the claimants did not offer any evidence to support. However, it seems to me that when advising employees in a similar situation the advice has to be that there is a very real risk that a Tribunal will find that their employer can, without their consent, reduce their pay, increase or decrease their hours or otherwise make key changes to the terms and conditions of their employment.

For further information please contact our Employment Rights department on 0113 2450733.

The Right to Strike (2)

I previously wrote a piece about the right to strike here: - http://morrishsolicitors.blogspot.com/2009/12/right-to-strike.html

It seemed appropriate to look at it again now that Lord Adonis and Gordon Brown have commented on the BA dispute.

I cannot help but wonder - What does an employee do if his or her employer announces that all benefits that the employee enjoyed, and agreed to when they signed the contract of employment, will vanish or be cut dramatically? Add into this a clear refusal by the employer to discuss their intentions and/or try to reach a compromise.

If negotiations fail an employee has two choices – accept the poorer terms, or leave. People often, mistakenly, take the view that the employee can claim constructive dismissal in such circumstances. That is not easy and an employer can argue that “business needs” make the changes and therefore the dismissal fair. The individual who takes that step is left with no job, no income and is taking their chances against a Company that can afford to pay huge sums of money to its lawyers to defend such a claim. Hardly a level playing field.

There is no “my employer can’t do that” or “that’s just not fair” law. (Maybe if there was strike action would not need to be used.) Instead, the only remedy is collective action.

But, what if the employees’ actions damage the “brand” and they ultimately end up out of work? Well, those employees will move to the competitors who are paying the lower rate that they are resisting. What do they have to lose?

I remain baffled as to why the employees and the Union have been turned into the “bad guys” in the dispute with BA. These are not employees seeking improved pay and conditions but instead are trying to prevent unilateral changes being forced through by the Company.

For further information, please contact our Employment Rights department on 0113 2450733.

How equal is age discrimination?

I was looking back over past notes recently (I do really need to get out more!) when I came across a talk that I had delivered around the time that the Age Discrimination Regulations were introduced. Within that talk I discussed the fact that unlike the other forms of discrimination direct age discrimination could be objectively justified. I noted that this had been very unpopular due to concerns that it could enable employers to avoid liability for age discriminatory acts. It was hoped at the time that “objective justification” would be interpreted strictly.

Over three years on, it would seem that both our domestic courts and the European Court of Justice will, in fact, readily find objective justification thus enabling an employer to defend age discriminatory behaviour.

In MacCulloch v ICI Plc and Loxley v BAE Systems Limited the EAT held that the two contractual redundancy schemes did discriminate on the grounds of age, but that the discrimination could be objectively justified. In MacCulloch the EAT endorsed the tribunal’s view that rewarding loyalty and encouraging turnover of staff were capable of being legitimate aims that might be furthered by increased payments to older workers.

In Loxley the EAT accepted that excluding an employee from a redundancy scheme because he was entitled to benefits under the pension scheme, could also, potentially, be objectively justified.

In Pulham & Others v London Borough of Barking and Dagenham the EAT held that unlike in the case of sex discrimination and equal pay, age discrimination pay protection arrangements are always potentially justifiable.

In Europe the ECJ have upheld the German Government’s policy of barring anyone over the age of 30 from applying for the fire service (Wolf v Stadt Frankfurt am Main) The ECJ accepted that older people would be less likely to be physically capable of fighting fires.

The ECJ has also upheld the German Government’s age limit of 68 applied to dentists practicing in the national health service on the grounds that it enabled younger dentists to move into that sector (Petersen v Berfungasusschuss für Zahnärzte für den Beezirk Westfalen-Lippe).

It would seem that it is in fact fairly easy for an employer to provide a reason why discrimination should not be deemed unlawful. Whilst this does sometimes benefit employees, my concern is that what it in fact suggests is that age discrimination is perhaps not perceived to be as serious as other types of discrimination. The explanation for that could be that it is the only type of discrimination likely to affect us all at one stage or another.

I think that most people would also agree that there is nothing objectionable in principle about older, long-serving employees receiving a better deal in a redundancy situation.

The danger however, especially in the light of the two above ECJ cases, is that objective justification enables preconceived ideas about older people to perpetuate. Why should it be assumed that all older people (and I am talking anyone over 30) is not fit enough to be a fire fighter? Surely a non-discriminatory fitness test could resolve the issue. Why should older individuals be forced out of a job to allow a younger person to step in? How does that tally with our ageing population? The issue, I guess, is as always a question of balance. But at the moment it seems to me that the balance is not being successfully struck.
For further information, please contact our Employment Rights department on 0113 2450733