Category Archives: Politics

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Kraft takeover of Cadbury – Catalyst for consultation on proposed amendments to the Takeover Code


Kraft takeover of Cadbury – Catalyst for consultation on proposed amendments to the Takeover Code

You may remember the public (and Trade Union) furore over Kraft’s takeover of Cadbury. The Takeover Panel has recently published a consultation on proposed amendments to its Takeover Code, which have the aim, among other things, to give greater recognition of the interests of offeree company employees.

On 21 October 2010, the Code Committee of the Takeover Panel (the “Code Committee”) published a Statement (“Statement 2010/22”) setting out its response to a public consultation paper (“PCP 2010/2”), published on 1 June 2010, which had sought views on various suggestions for possible amendments to the Takeover Code (the “Code”).

The Code Committee concluded that amendments to the Code should be proposed in order to:

(a) increase the protection for offeree companies against protracted “virtual bid” periods by requiring potential offerors to clarify their position within a short period of time;

(b) strengthen the position of the offeree company by:

(i) prohibiting deal protection measures and inducement fees other than in certain limited cases; and,

(ii) clarifying that offeree company boards are not limited in the factors that they may take into account in giving their opinion and recommendation on an offer;

(c) increase transparency and improve the quality of disclosure by:

(i) requiring the disclosure of offer-related fees; and

(ii) requiring the disclosure of the same financial information in relation to an offeror and the financing of an offer irrespective of the nature of the offer; and

(d) provide greater recognition of the interests of offeree company employees by:

(i) improving the quality of disclosure by offerors and offeree companies in relation to the offeror’s intentions regarding the offeree company and its employees; and

(ii) improving the ability of employee representatives to make their views known.

The Full consultation can be viewed here:

Philip Henson, Partner in Bargate Murray.

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New “European Pact” for gender equality for the period 2011-2020


 

        

On 7th March 2011 the The Council of the European Union (at a meeting of the Employment, Social Policy, Health and Consumer Affairs Council) adopted a new “European Pact” for gender equality for the period 2011 -2020.  It has attracted very little attention in the media, but could have a real effect on social policy, and employment relations in the coming months.

 It urges action by the member states and the Union, by taking measures to :

eliminate gender sterotypes, ensure equal pay for equal work and promote the equal participation of women in decision-making; improve the supply of affordable and high-quality childcare services and promote flexible working arrangements; strengthen the prevention of violence against women and the protection of victims, and focus on the role of men and boys to eradicate violence.

It also reaffirms the importance of integrating the gender perspective into all policies including external actions of the EU.

 Gender equality is enshrined in the EU treaty, which states “that the Union shall promote equality between women and men, and that this aim is to be pursued in all Union’s activities”.

Many will question whether this  will be the hammer to finally break the glass ceiling.

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The Right to Strike


The Court of Appeal decision – National Union of Rail, Maritime and Transport Workers v Serco Ltd and another

On Friday afternoon last week the Court of Appeal handed down the eagerly anticipated decision of National Union of Rail, Maritime and Transport Workers v Serco Ltd (and another); which considered, among other things, the unions’ duty to maintain accurate membership data, and suggests (albeit obiter) that the ‘de minimis’ rule can apply to excuse failures not covered by S.232B of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULR(C)A).

 In this far-reaching judgment Lord Justice Elias rejected the argument that the legislation should be construed strictly against unions because they are seeking to take advantage of immunity.

I am often asked to give media comments on the right to strike, and from where this right originated. Lord Justice Elias gave an excellent précis of the legal position regarding strike action in the UK in his judgment, extracts of which I set out below:

“The common law confers no right to strike in this country.  Workers who take strike action will usually be acting in breach of their contracts of employment.  Those who organise the strike will typically be liable for inducing a breach of contract, and sometimes other economic torts are committed during the course of a strike.  Without some protection from these potential liabilities, virtually all industrial action would be unlawful Accordingly, ever since the Trade Disputes Act 1906 legislation has been in place to confer immunities on the organisers of strikes from certain tort liabilities provided, to put it broadly, that the purpose of the action is to advance an industrial rather than a political objective.  This is achieved by a requirement that the industrial action must be “in contemplation or furtherance of a trade dispute”. The current protection is afforded by section 219 of the 1992 Act (ie TULCRA).  The legislation therefore secures a freedom rather than conferring a right as such”

“There is no legal obligation to hold the ballot as such and a strike is not automatically illegal for that failure alone. However, virtually all strikes involve the workers taking strike action acting in breach of their contracts of employment.  Accordingly, if a ballot is not held, or if it is held but in breach of the legislation, then the immunities are inapplicable and in practice the union will be liable in tort for inducing their members to strike in breach of their contracts of employment.  Although the common law recognises no right to strike, there are various international instruments that do: see for example Article 6 of the Council of Europe’s Social Charter and ILO Conventions 98 and 151”

The Court of Appeal held that:

  • The S.232B accidental failures defence does not require the errors to be unavoidable. However, if a union knows, or must have known, that it was in error it will not be able to rely on the exception;
  • When assessing whether a union has complied with the S.226A(2D) duty to provide the employer with information that is ‘as accurate as is reasonably practicable’ about the numbers and categories of concerned employees, the focus is on the information the union has at the time it notifies the employer, not information it ought to have or which it could obtain;
  • Obiter – the ‘de minimis’ defence continues to apply to ‘trifling errors’ where there is no express statutory defence (ref to British Railways Board v National Union of Railwaymen);
  • A sufficient explanation of the figures provided to the employer under S.226A is one that complies with paragraph 16 of the Code of Practice ‘Industrial Action Ballots and Notice to Employers’, issued in 2005;

This requires unions to describe the sources of their data and states that it is desirable to describe any known deficiencies. In order for an explanation under S.226A to be inaccurate, the description of the process by which the figures were arrived at would need to be ‘positively and materially misleading’;

  • It does not matter if the S.226A explanation is formulaic. If the union obtains the necessary information for each strike in the same way, the description of what it has done will be essentially the same.

Philip Henson, Partner and head of employment law @ Bargate Murray says: “With threats of further industrial action on the horizon, and fears of a Spring of discontent, there may well be efforts for a further appeal to the Supreme Court”.  www.bargatemurray.com

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Far reaching changes to Employment Tribunals are imminent


Far reaching changes to Employment Tribunals are imminent

The launch of the “resolving workplace disputes” consultation by the Department for Business,  Innovation and Skills (BIS) is described as being the next step in the Governments comprehensive review of employment laws. In reality the consultation sketches out a roadmap to fundamentally change the current tribunal system into a more business friendly model.

Proposals include: charging fees; increasing the cap on costs awards; increasing the level of deposit awards; and removing payments for the expenses of witness. These proposals will not go down well with Claimants and Unions alike; who will no doubt view them as putting barriers in the way of access to justice.

Some of the wide-ranging consultation proposals will be welcomed with open arms, including:

  • Encouraging parties to resolve disputes earlier (through ACAS, and implicitly through mediation);
  • Making strike out powers more flexible, with “procedural safeguards to be built-in;
  • Allowing Employment Judges to be able to issue a deposit order at any stage in the proceedings;
  • Introducing a mandatory requirement for claimants to provide a statement of loss in the ET1; and,
  • Shortening tribunal hearings by taking witness statements as read.

 The more controversial aspects of the consultation include:

  •  Introducing “fee charging mechanisms”. This is not set out in any detail however, the consultation includes the example of “where claimants lodge claims (and respondents choose to counter-claim), and/or for parties in claims that proceed to full hearing”. It does not seem to be envisaged that any fee will be charged when a Respondent submits its ET3.
  • Extending the qualifying period for unfair dismissal claims from the current one year to two years. The Government estimates that this will reduce the level of claims by 3,700 – 4,700 a year.
  • Introducing Legal Officers to deal with case management. The consultation seeks views on the “qualifications, skills, competences and experience we should seek in a legal officer”. 

 Lawyers and HR practitioners should note that the consultation also seeks views on the type of interlocutory work (which the consultation considers “could be undertaken by any competent person”) that might be delegated, so clearly this proposal will be expanded.  Under the proposal Legal Officers could be: experienced administrative officers; qualified lawyers employed as registrars or legal assistants; or a ‘junior’ rank of judge or judicial officer.

  • Introducing a rule whereby either party can make a formal settlement offer to the other party, or parties, as part of formal employment tribunal proceedings, “backed by a scheme of penalties and rewards”. The consultation proposes a system similar to the “Scottish Courts’ judicial tender model” (see how many English practitioners put that search term into Google!), and not a Part 36 model.
  • Removing payment of witness expenses. The Governments argument is that this will lead to a reduction in the duration of some hearings, as “only witnesses that are strictly necessary will be called”. Surely it is simply intended to save Government money. It is unlikely to be the main consideration for witnesses I would suggest that a greater deterrent to witnesses attending a tribunal hearing would be the necessity to take time off work to give their evidence.
  • Increasing the current cap on the level of costs that may be awarded from £10,000 to £20,000. The consultation emphasises that “it is not our intention to move towards a general costs-recovery policy”.
  • Reviewing the formula for calculating employment tribunal awards and statutory redundancy payment limits.
  • Increasing the current level of the deposit which may be ordered from the current maximum of £500 to £1000.
  • Extending the jurisdictions where judges can sit alone, allowing “more efficient use of lay member resource” – (it is noteworthy that this is not defined).  Subject to discretion, unfair dismissal cases to normally be heard by an employment judge sitting alone.

This may lead to a two tier level of tribunal judges, and does little to address the reality that many unfair dismissal claims often feature as just one strand of several claims. The annual statistics published by Tribunal Service show that for 2009-10 the average number of jurisdictional complaints per claim was 1.7. Could this be the beginning of the end for lay members?

  • Proposing that claimants submit key details of their dispute (using what will amount to a shortened version of the ET1 claim form) to ACAS within the relevant time limit.

It is proposed that ACAS will have no role in determining whether the claim is in time or not; they will, however, date-stamp the form on receipt, and that will then allow the Tribunal to decide whether to accept or reject the claim.  This dual process is likely to confuse many businesses.

The consultation envisages that the clock (for the relevant time limit) will stop once the claim is received by ACAS and that there will then be a statutory period of time (they propose 1 calendar month) for ACAS to attempt to conciliate the dispute.

Resolving disputes

The amount of claims lodged at the Employment Tribunal for the period 1 April 2009 – 31 March 2010 show that there has been a 56% increase in claims from 151,000 for the period 2008/2009 to 236,100 claims in 2009/2010; although it should be noted that those figures include multiple claims.

The role of ACAS

The aspiration in the consultation to urge employers and employees to work together to resolve workplace disagreements should be welcomed. Work place mediation will most likely be an area of real growth. The role of ACAS should rightly be heralded as a successful way of resolving disputes, as 70,600 claims were ACAS conciliated last year. 

The Government intends to give all potential claimants with access to pre-claim conciliation by ACAS – free of charge to all those who want it; and for ACAS to give claimants with information about what they can expect from a Tribunal, including the time involved and what a tribunal might award.

The key issue will be whether ACAS has adequate resources to deal with a likely surge in demand. Perhaps the proposed tribunal fees will pay for the service to be expanded? In my own busy employment practice it is increasingly clear to me that ACAS case workers have an almost insurmountable level of cases to deal with.

Philip Henson. Partner, Bargate Murray, and accredited mediator specialising in work place mediation.

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A New Years resolution or a new problem?


A recent story from BBC news that UK banks are to pay billions in bonuses (although down from last year) has attracted a lot of media attention and I have been asked for my views:

The reality may be that the reduced bonus payments are more reflective of market conditions than a new years resolution from the financial services sector to tow the line of the governments scratched record pledge to tackle “unacceptable bonuses”; and lets not forget the recent rush to increase the basic remuneration of some bankers in an attempt to pre-empt the recent EU bonus cap announcement. 2011 should slowly usher in a new prudent regime which eschews risk, and rewards staff by awarding deferred compensation, rather than cash bonuses.

However, I predict that the reaction to the donkey bray from the Government for the sector to show restraint in awarding unacceptable cash bonuses will actually have the effect of promoting a shift towards promoting increasingly high levels of deferred compensation. The level of deferred compensation awarded in 2011 could set a dangerous precedent; and if not supervised could spawn an entirely unexpected new problem in the future.

The recent announcement about bonus levels will usher in a new season of banker bashing; but before gathering pitchforks in the market we should look to the recent developments in the financial services sector, which have not been very well publicised: On New Years day HM Treasury announced a newpermanent levy on banks’ balance sheets(0.05 per cent, rising to 0.075 per cent from 2012 onwards); the FSA has published a new remuneration Code; the European banking Authority (EBA) came into being (in London) on new years day. With the new bank levy predicted to bring in an additional £2.5bn to the HM treasury coffers; and a recent report from an accountancy firm recording that more than 11 per cent of the UK’s total tax last year came from the UK’s financial services industry many banker bashers will realise that we need to be careful not to kill the goose that lays the golden eggs; and the regulators will also need to ensure that the industry does not allow high levels of deferred compensation to fatten up that same golden goose, leaving the UK tax payers with a new type of fois gras.

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The probable winners and losers under the coalition


The general election may seem like a distant memory to many ( except perhaps the student population), as 2010 draws to a rather frozen close lets take another look at the coalition document and who are predicted to be the winners and losers.  

The document reiterates the mantras of Freedom, Fairness and Responsibility. But what could the coalition mean for your business; and what future trends can be predicted from the coalition document?

 The 36 page document is a thumb nail sketch of what the leaders hope to achieve over the next 5 years. It is divided up into 31 parts, covering sectors from Banking to Universities. The declaration in the foreword that “difficult decisions will have to be made in the months and years ahead” is a subtle indication of looming job cuts. As you read through the document you may get the impression that it has borrowed some ideas from across the Atlantic such as directly elected police chiefs, and measures to “enhance customer service in the private and public sectors” for example.

 Private vs. Public sector

 The document drives the aspiration that the private sector be freed from the burdens of administrative red tape and also indicates that the public sector will feel the brunt of the austerity cuts. The most evident victims of the cuts will be government quangos; the Ministry of Defence; the Civil Service Compensation Scheme; and possibly public sector pensions. At the same time the coalition intends to give public sector workers a new right to form employee-owned cooperatives. 

 As can be expected in the current economic maelstrom there is an obvious focus on trying to also raise extra funds for the depleted coffers by cracking down on white collar crime, tackling tax avoidance, and reviewing taxation of non-domiciled individuals.

 The probable winners under the coalition

  • Bank of England – More powers to be given to the Bank of England to control macro-prudential regulation.
  • Charities – A range of measures will be taken to encourage charitable giving and philanthropy. It is implicit that this will include tax relief.
  • Children’s hospices – £10 million per annum beyond 2011 promised from Department of Health budget to support children’s hospices.
  • China and India – The coalition is to establish a new ‘special relationship’ with India and seek ‘closer engagement’ with China.
  • Family Mediators – A comprehensive review to be carried out to increase the use of mediation when couples break up.
  • Farming – “Home on the Farm” schemes to encourage farmers to covert existing buildings into affordable housing; reduction of regulatory burden on farmers by moving to a ‘risk based’ system of regulation;  extra support for hill farmers; development of a national tree planting scheme, and a free vote will be allowed on proposals to repeal the Hunting Act.  Perhaps the most ground breaking proposal is the desire to “ensure that food procured by government departments, and eventually the whole public sector, meets British standards of production wherever this can be achieved without increasing the overall cost”.
  • Green Banking – A green investment bank to be created; individuals to be able to invest in infrastructure needed to support the new green economy; floor prices to be introduced for carbon, and efforts to be made towards persuading the EU to move towards full auctioning of ETS permits.
  • Green Energy – Extension of protection of support to ‘off-grid’ energy consumers’; creation of an off shore energy grid to support a new generation of offshore wind power; mandate a national recharging network for electric and plug in hybrid vehicles; encourage marine energy; work towards ‘zero waste’ economy encouraging Councils “to pay people to recycle”, and support for sustainable travel initiatives.
  • Health Care – guarantee that health care spending increases “in real terms” each year of the Parliament;  aim to ensure that Military personnel’s rest and recuperation leave can be maximised; extra support for the mental health needs of veterans, and injured personnel are to be treated in dedicated military wards.
  • Minorities – Promotion of equal pay and “range of measures” to be taken to end discrimination in the work place; improved community relations and opportunities to be promoted for Black, Asian and Minority Ethnic (BAME) communities by providing internships for under represented minorities in every Whitehall department, creation of a national mentoring scheme for BAME people who want to start a business; “Look to promoting gender equality on board of listed companies[1]; Push for unequivocal support for gay rights and for UK civil partnerships to be recognised internationally.
  • Post Office – Post offices to be allowed to offer a wide range of services; possible creation of a Post Office Bank, and Post office Card account holders to benefit from “direct debit discounts”.
  • Private Security – Alternative forms of secure, treatment based accommodation for mentally ill and drug offenders to be explored.
  • Pubs/Live Music venues – Red tape to be cut to encourage the performance of more live music.
  • Railways – longer rail franchises to be granted to give operators incentives to invest in better services, better stations, longer trains and better rolling stock.
  • Regulatory– The Freedom of Information Act is to be extended to provide greater transparency; CCTV to be further regulated; ban on the use of the powers in the Regulation of Investigatory Powers Act (RIPA) by Councils unless signed off by a magistrate for stopping serious crime; and a new ‘right to data’ to be created.
  • Policing – The coalition intends to reduce “time wasting bureaucracy” and introduce better technology to make policing more effective; and a free vote is to be brought forward on the proposal to repeal the Hunting Act. If revoked this would remove the soaring financial burden of storage costs of seized animals and hunting equipment.
  • Public sector whistleblowers – New protections for public sector whistleblowers to be introduced, although the proposal contains not even a morsel of detail.
  • SME’s – Proposals to be developed to ensure the flow of credit to “viable SME’s”;  red tape to be cut; introducing a “one in one out” rule where “no new regulation is brought in without other regulation [sic] being cut by a greater amount[2]; Promote small business procurement by introducing an “aspiration” (this is notably not a ‘target’) that a quarter of government contracts should be awarded to SME’s; government tenders to be published in full, on line, and free of charge; IR 35 to be reviewed and replaced with simpler measures to prevent avoidance; simplification of the rules and regulations relating to pensions, and work towards auto enrolling; the time it takes to set up new enterprises is to be cut by reducing the number of forms needed to register, moving towards a “one-click” registration model.
  • Teaching – Teachers to be given anonymity when accused by pupils; reform of league tables; more powers to teachers and heads to ensure discipline in the classroom.
  • Turkey – The Coalition supports further enlargement of the EU.
  • UK Tourism – UK Tourism is to be given a boost by recognising the important part it plays in the economy.

The probable losers under the coalition

  • Aviation – Third runway at Heathrow to be cancelled; permission for additional runways at Gatwick and Stansted to be refused and air passenger duties to be replaced by a per-flight duty.
  • Banking – A banking levy to be introduced; “unacceptable bonuses” to be targeted; an independent commission to be established to investigate the separation of retail and investment banking, with an initial reporting time frame of one year.
  • Betting and Gaming – Cash from dormant betting accounts to be used to improve local sports facilities and support sports clubs[3].
  • Dentistry – A new dentistry contract to be introduced to focus on achieving good dental health and increasing access to NHS dentistry.
  • Food retail – Introduction of honesty in food labelling.
  • Health care – GP contract to be renegotiated; patients to be given right to chose to register with the GP they want without being restricted by where they live; foreign healthcare professionals to be stopped working in the NHS unless they have passed ‘robust language and competence tests’; cost of NHS administration to be cut by a third.
  • HIP’s Advisors – HIPs to be scrapped, but energy performance certificates to be retained.
  • Ofgem – To be instructed to establish a security guarantee of energy supplies.
  • Lobbyists – Lobbying activities for the National Lottery to be banned; and a statutory register of lobbyists to be introduced.
  • Immigration Lawyers – Introduction of annual limit on the number of non-EU economic migrants (to live and work); and new measures to be introduced to minimise abuse of the immigration system, via the student visa route.
  • Rail Industry – Network Rail to be made “more accountable to its customers”, and a commitment to fair pricing for rail travel.
  • Retail/Restaurants and pubs – Maximum fine for selling alcohol to those underage doubled to £20,000; Councils and Police to be allowed to shut down permanently any “shop or bar” found to be persistently selling alcohol to children; the Licensing Act is to be overhauled to give local authorities and the Police stronger powers to remove licences from, or refuse to grant licenses to, premises that are causing problems.
  • Policing – The coalition promises a “full review of the terms and conditions for police officer employment”. Reading between the lines this might indicate that sick leave and overtime provisions are to be reviewed.
  • Public sector workers – Full on line disclosure of all central government spending and contracts over £25,000; Councils to publish contracts and tender documents in full.  
  • The Church of England – There is no mention of Christianity within the coalition document. The Equalities section does refer to “religion” but only in the context of too many people being held back because of their “gender, race, religion or sexuality”
  • Water Industry – The Cave and Walker reviews to be examined to reform the Water industry to ensure efficient use of water and the protection of poorer households

[1] This vague statement does little to address the chronic lack of women in UK board rooms. My hope is that it acts as a catalyst to the debate of how the imbalance can be addressed. It does not specifically spell out a need for quotas, which some commentators had predicted.

 

[2] A commitment to reduce the multitude of red tape may be welcomed by SME’s. Although who decides which regulations will be cut is not clear.  It could be the public as there is also a declaration that the public will be given the opportunity to challenge the worst regulations. Although the structure is not in any way clear.

[3] The mechanism for this is not explained.

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