E-NEWS: 4 April 2003

Welcome to the latest edition of Enews from Steeles Law. In this edition we report on:

* EMPLOYMENT ACT 2002 - 6 APRIL 2003
* WORK PERMIT CHARGES - 1 APRIL 2003
* NATIONAL MINIMUM WAGE - OCTOBER 2003
* CALCULATING HOLIDAY PAY
* DISABILITY - ALCOHOLISM AND DEPRESSION

EMPLOYMENT ACT 2002

On Sunday, 6 April 2003 a number of key parts of the Employment Act 2002 will come into force with many repercussions for employers and employees alike. Here is a reminder of the parts of the Act which will be operational from Sunday:-

1. Parents of children under 6 years of age (18 if the child is disabled) will have legally enforceable rights to ensure that requests for flexible working arrangements are not rejected by employers without good business reasons.

2. Maternity leave for women with 26 weeks' service will increase to one year (26 weeks' paid Ordinary Maternity Leave and 26 weeks' unpaid Additional Maternity Leave) and 26 weeks for women without 26 weeks' service.

3. The standard rate of statutory maternity pay will increase to £100 per week. (The right of small employers who pay less than £40,000 in National Insurance Contribution's to reclaim 104.5% of SMP will automatically be extended to more employers as the NIC threshold is increased.)

4. New paid paternity leave rights of two weeks' pay at the same rate as SMP will come into effect.

5. New adoption leave rights will come into effect.

6. A questionnaire procedure will be introduced under the Equal Pay Act. The new questionnaire system will provide for questionnaires similar to those available in sex, race and disability discrimination cases.

WORK PERMIT CHARGES

Work permit arrangements allow UK employers to employ non EEA nationals who are not entitled to work in this country. Prospective employers of overseas nationals who have signed and ratified the Council of Europe Charter or the European Social Charter are exempted. Therefore, employers making work permit applications to employ any of the following nationals are exempted from the charge: Czech Republic, Hungary, Slovakia, Bulgaria, Estonia, Lithuania, Romania, Slovenia, Poland, Turkey, Cyprus, Malta, Latvia and Moldova.

On the 1st April 2003 the work permit application procedure was revised and for the first time fees were introduced by the government in a bid to reduce the "ever-increasing burdens on the general taxpayer".

Prospective UK employers making applications to recruit overseas nationals who are not exempted will have to pay £95.00 for each work permit application.

For further information about making work permit applications go to www.workpermits.gov.uk.

NATIONAL MINIMUM WAGE

On recommendations from the Low Pay Commission, the national minimum wage is to be increased in October 2003. The forthcoming changes are as follows:-

Main (adult) rate for workers aged 22 years and over. £4.20 per hour, increasing to £4.50 per hour in October 2003.

Development rate for workers aged 18-21 inclusive. £3.60 per hour, increasing to £3.80 per hour in October 2003.

NB: The development rate can also apply to workers aged 22 and above during their first six months in a new job with a new employer where they are receiving accredited training.

CALCULATING HOLIDAY PAY

An important decision has been delivered by the Court of Appeal in Evans v Malley Organisation Ltd t/a First Business Support. It was decided that when calculating an employee's holiday pay under the Working Time Regulations, commission paid in addition to basic salary should be excluded.

The Applicant alleged that his former employer had withheld monies due to him in lieu of holiday pay in that he was entitled to commission as well as his basic salary. The employment tribunal dismissed the Applicant's claim, ruling that the Applicant's week's pay should be determined by section 221(2) of the Employment Rights Act 1996 in that his remuneration did not vary with the amount of work done.

The Applicant then appealed to the EAT, who allowed the appeal.

Where the EAT agreed with the employment tribunal in that payment was not based on the amount of work done, it concluded that section 221(4) had the effect of overriding the meaning of 221(3).

Section (4) states that "...references to remuneration varying with the amount of work done includes... commission...", whereas section (3) states that if an employee's remuneration does vary with the amount of work done, then the amount of a week's pay "...is the amount of remuneration for the number of normal working hours in a week calculated at the average hourly rate of remuneration...".

Finding that section (4) overrides section (3), the EAT accordingly decided that the Applicant's holiday pay should have been calculated on the basis of his remuneration, including commission.

The employer appealed to the Court of Appeal, who found that section 221(4) does not override section 221(3) and that cases in which commission forms part of a remuneration package do not automatically fall within section 221(3).

The court concluded that where remuneration varies with the amount of work done, commission and bonuses should be included in the calculation of an employee's week's pay. However, in this instance they ruled that the Applicant's case fell squarely within section 221(2) in that his remuneration for employment in normal working hours did not vary with the amount of work that he did. The Applicant's commission should therefore be excluded when calculating his entitlement to holiday pay.

DISABILITY- ALCOHOLISM AND DEPRESSION

Despite section 3(1) of the Disability Discrimination (Meaning of Disability) Regulations 1996 specifically excluding alcoholism from the definition of disability under the DDA 1995, in Power v Panasonic UK Ltd the EAT held that an employee was disabled within the meaning of DDA where her depression was caused by alcoholism.

Whilst working for her employer, the Applicant was depressed and drinking heavily and consequentially signed off sick for over a year. Having been dismissed, the Applicant brought an action against her former employer alleging disability discrimination. The employment tribunal dismissed her claim, holding that she had failed to prove that she was disabled under the Disability Discrimination Act 1995.

In the tribunal's finding it stated that the 'core issue' was whether the Applicant became clinically depressed and turned to drink, or whether her alcohol addiction led to her depression.

The Applicant appealed to the EAT, who stated that the cause of the impairment was not material when deciding whether a person is disabled within the meaning of the Disability Discrimination Act 1995. The EAT concluded by stating that the tribunal had erred in law in failing to consider whether the depression had a substantial and long-term adverse effect on the Applicant's ability to carry out normal day-to-day activities.

Rosemary Graham, Associate Partner in the Employment Team says that this case serves as a cautionary reminder to employers when assessing whether their employees are disabled under the act when their disability flows from an addiction. Employers should put the cause of the disability to one side and address their minds to what reasonable adjustments can be made.

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