In this round up of recent news, we report on claims that the removal of travel perks by BA amounts to race discrimination; the delay in the implementation of the Bribery Act; planned caps on civil service redundancy payments; planned restrictions on bankers' bonuses; a forthcoming review of the Agency Workers Regulations; and the 2009/10 Employment Tribunal statistics.

BA flight attendants claim race discrimination on removal of travel perks

We recently considered the lawfulness of BA's threat to withdraw discounted travel perks from its striking employees. The saga continues, with recent reports that a group of 75 flight attendants based in Scotland, Ireland and mainland Europe are suing the airline for race discrimination.  They claim that the removal of the perks discriminates indirectly against them, as they use the scheme to commute to and from Heathrow airport.  The loss of the perk (which equates to a 90% discount on full fare) has had a severe financial impact.

BA has said that it totally rejects the claims of discrimination and will defend any claim vigorously.

Government announces implementation of Bribery Act in April 2011

The Government has delayed the implementation of the Act until April 2011 in order to allow a short consultation exercise, commencing in September, on the guidance about what "adequate procedures" organisations are required to put in place to prevent bribery.  The final guidance is due to be published early next year.

Anti-corruption campaigners have criticised the delay, warning that the consultation may start attempts to water down the Act.

Businesses now have some additional time to prepare for the Act, but will need to be ready when it comes into effect.  Shepherd and Wedderburn is running seminars on the Bribery Act in conjunction with senior members of the Criminal Bar.  These will examine the substance of the Act, practical compliance and risk-management measures.  If you would like to attend, please click here.

Civil service redundancy payments to be capped

The Government has "reluctantly" announced that it will legislate as soon as possible to cap redundancy pay for civil servants, bringing packages into line with best practice in the private sector.  Compulsory redundancy payments will be capped at 12 months' pay and voluntary redundancy payments will be capped at 15 months' pay.  There will be an additional cap on the amount any individual can receive.  Accrued pension rights will be be unaffected.

The plans will save hundreds of millions of pounds as redundancies hit the public sector.  However, it will severely affect long-serving employees, some of whom would currently be entitled to a severence package of over six years' pay.  Although the plans to cap compulsory redundancy payments are not negotiable, the Government is seeking to agree arrangements for voluntary redundancies and protection for lower paid staff with its union partners.  Unsurprisingly, the unions are resistant to the proposals and PCS has already warned of possible industrial action.

EU restrictions on bankers' bonuses lead to FSA consultation on changes to its Remuneration Code

The European Parliament has announced its approval of "some of the strictest rules in the world" capping bankers' bonuses.  The aim of the rules is to "transform the bonus culture and end incentives for excessive risk taking".  The rules come into effect on 1 January 2011 and include:-

• upfront cash bonuses to be capped at 30% of the total bonus (20% for particularly large bonuses);

• 40 to 60% of any bonus to be deferred for at least three years (and to be recovered from the employee if investments do not perform as expected);

• at least 50% of the total bonus to be paid as "contingent capital" (i.e. funds that are called upon first if the bank is in difficulty) and shares;

• bonuses to be capped as a proportion of salary – each bank will have to establish limits on the basis of EU-wide guidelines in order to help to bring down the overall disproportionate role played by bonuses in the financial sector;

• bonus-like pensions will be covered, with exceptional pension payments being held back in instruments such as contingent capital that link their final value to the overall strength of the bank;

• special rules will apply to banks bailed out by member states.

There is a concern that these rules will place EU banks at a competitive disadvantage on the international arena, as it does not appear that the US banks will be subject to equivalent legislation.  The Council of the European Union has yet to rubber stamp the rules.

FSA consults on changes to its Remuneration Code

The FSA has recently announced plans to update its Remuneration Code to reflect new EU restrictions.  This will include widening the application of the Code (which currently applies to the largest banks, building societies and broker dealers) to cover over 2,500 organisations, including all banks and building societies, asset managers, hedge fund managers, UCITS investment firms, as well as some firms that engage in corporate finance, venture capital, the provision of financial advice and stockbrokers.  The FSA has stated that it does not intend the final rules to be "super-equivalent" to the EU rules, unless required to do so by UK legislation.  The FSA is consulting on these changes, including the question of to which staff the Code will apply, until 8 Octobter 2010.  It intends to issue a policy statement in November 2010, with rules effective from 1 January 2011.

The timetable is tight and the FSA is urging all firms within its scope to start preparing for the changes as early as possible.  We will keep you updated of developments.

Agency Workers Regulations to be reviewed

The Government has confirmed that the Agency Workers Regulations 2010, due to come into force on 1 October 2011, are currently under review.  Minister, Edward Davey, stated: "the Government are aware of the different points of view expressed by the business community about certain aspects of the agency workers regulations and is currently considering the way forward".

Tribunal statistics show large increase in claims for 2009/10

The Tribunals Service recently published its Annual Statistics for the period to 31 March 2010.  There was a 56% increase on the previous year in the number of claims accepted, with the volume of claims now at a record high.  The rise is principally due to multiple claims, which rose by nearly 90% on 2008/09, and to the current economic climate.  Claims relating to redundancy pay rose by 76%.

The Tribunal Service is buckling under its hefty caseload, with 400,000 cases outstanding at the end of 2009/10.

19 August 2010

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