Legal advice: Changes to employment law in spring 2008

IT IS springtime in employment law land and the initial crop of new laws is coming through nicely.

Cultivated in the darkness, and fertilized heavily by politicians, they are often forgotten during the winter months. But already some of the more hardy perennials are beginning to show and we're beginning to wonder how we could have forgotten them.

Sex discrimination

Take the 'catchily' named Sex Discrimination Act 1975 (Amendment) Regulations 2008 for example.

This member of the discrimination family passed through the winter with little or no comment and quietly broke the soil on April 6, perhaps all the more quietly because it will only apply to women who have an expected week of childbirth that begins on or after October 5, 2008 - a bit of a blow for those who weren't checking the employment law cycle when considering starting a family.

Given the assurance that such new laws can now be expected only in April and October of each year, employees may be advised to breed with greater caution as there may now be real financial considerations to avoiding conception between February or June in a given year.

But before anyone is tempted to snow-paint out the date on their maternity documents we must question whether the wait would have been worth it for all.

The principle change comes with the new section 6A of the regulations. This not only helpfully clarifies what is meant by "remuneration" (of which a woman can be lawfully deprived while on maternity leave) but also provides that "other" terms and conditions must now be continued during additional as well as ordinary maternity leave. Superficially this may seem a great advance but in practice have many employers really discontinued the life insurance/medical cover and asked for the Austin Metro back during this period?

While this is a bit of a damp squib the regulations have missed a chance to clarify when bonuses should be paid to women on maternity leave.

Although it seems relatively clear that such bonuses are ordinarily to be regarded as "remuneration" (which is not payable during maternity leave) it is often difficult to determine whether part of the bonus at least really relates to something else (for example a thank-you for the period before maternity leave began or a reward for future service - both of which should be paid).

Corporate manslaughter

In a different part of the garden it looks however like being an even more interesting year for the fruits of health and safety law.

Here we see the much greater anticipated Corporate Manslaughter and Corporate Homicide Act 2007, which also came in on April 6. As a subject that will launch a thousand seminars and comment in its own right it is perhaps sufficient to summarise that the Act creates a new "corporate" offence based on the common law offence of gross negligence.

The offence can be committed by corporations, partnerships and limited liability partnerships - so law firms must also take heed; sadly this may finally end the time honoured tradition of angry partners flinging telephones at trainee solicitors.

The offence is based on the obvious formula that there must be a relevant duty of care that has been breached. Those to whom a duty is owed are listed. This includes a duty to provide a safe place of work for employees and for those whose work the body is able to control or direct - and so a duty is owed to employees and probably most contractors.

An organisation will itself commit this offence if the duty was breached due to the way in which the activities of the body were managed or organised as a whole.

On a jury finding a gross breach of that duty a court is allowed to fine the organisation without limit. It can also make a remedial order compelling the company or firm to take steps to remedy the management failure that led to death or indeed the consequence of that failure (this could include greater health and safety monitoring procedures).

Interestingly, an individual cannot be found guilty of aiding or abetting the offence which may be some comfort to directors, senior managers and partners - although this is presumably not to the exclusion of other health and safety offences that may have individual impact. Directors and partners must still remain mindful of other professional obligations when timing their intervention.

As always timing can be all. This was noted by a client of mine who recently made an appointment to see HR to ask nervously if he could be released early from his employment contract to join a competitor.

Before he could speak the flustered HR officer told him the grave news he would be made redundant, released that day and paid over £100,000 compensation. On this occasion at least we were able to process a compromise agreement swiftly and within the £250+VAT budget! A happy spring is in store for him too.

Meanwhile at the Court of Appeal...

The Court of Appeal has also been working on the further development of the line of authority relating to shareholder employees.

In many cases liquidators have argued that someone who is also a principal shareholder should not really be treated as an employee when looking at preferential creditors for obvious reasons. In the case of Neufeld v A&N Communications In Print Ltd (in liquidation) and Ors BAILII the Court confirmed that the correct approach though is to look at all the information and consider whether there really is a genuine employment contract (as opposed to a sham one). There should be no reason in practice why the person could not enjoy status as shareholder, director and employee.

A point of particular interest in the case is that the relevant date to consider the status of the shareholder is the dismissal date and not the date they are alleged to have entered into a contract of employment. As with the new sex discrimination regulations, it would therefore appear that the date of conception may not of itself be determinative in benefiting from employment law.