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1 December 2007 Law at work The Employment & Pensions team at Taylor Wessing would like to wish you season s greetings and a Happy New Year Contents Features print (pages 2-3) for this section New UK Immigration Laws What s the Points? more We explore the new point-based system to be introduced in the UK next year Case law update print (pages 4-6) for this section Dismissal over mistaken fear of immigration status was potentially fair more Klusova v London Borough of Hounslow [2007] EWCA Civ 1127 How contractual mobility clauses are exercised in a redundancy situation more The Home Office v (1) Mr Peter Evans and (2) Mr Ian Laidlaw [2007] EWCA Civ 1089 Right to object can be exercised after a transfer has taken place more New ISG Limited v (1) Benjamin Vernon (2) Joseph McMullin (3) Tracey Harvey (4) Bryan Harvey and (5) Stacey Austin [2007] EWHC (Ch) 2665 Hot topics print (page 7) for this section Agency worker cases delayed more Update on working time opt-out more All change for Employment Tribunal chairmen more Contacts

2 Features New UK Immigration Laws What s the Points? From next year, immigration law in the UK is facing a major shake-up in what the Home Secretary is calling, the most significant change in managed migration in the last 40 years. Essentially, a point-based system, similar to that currently adopted in Australia, will be introduced and will replace the majority of existing immigration laws, including all work permit and HSMP schemes. With the aim of consolidating more than 80 existing work and study application routes into only five tiers, it is clear that the Home Office are determined to make a real and visible difference to how migrants are permitted entry into the UK. Why the change? Between 2001 and 2005, migrants contributed 15% to 20% of the growth in the UK and contributed to approximately 6 billion to output growth in The Government is keen to continue encouraging migrants to come to the UK for this reason. However, the current system is viewed by many as being cumbersome and offering little certainty to employers and to individuals wishing to come to the UK. It would also be naïve to fail to recognise the increased political spotlight that immigration has found itself under in recent years, and this has undoubtedly motivated a number of the proposals currently being discussed. The aim of PBS is to be firmer, faster and fairer. By making the application system simpler and more transparent, it is hoped that only those migrants that the UK actually needs will be allowed to come to work or study in the UK. The current HSMP is a hybrid of PBS and its success has helped to prompt the Government into introducing an across the board points-style system. Additionally, the introduction of the sponsor requirement for all but one of the tiers is a wholesale change in the way immigration is viewed, and places additional responsibilities on the employer. Only the statement of intent for the first of the five tiers has been issued, and many of the proposals are still being finalised. However, the basic principles are unlikely to vary too much from their current form and these are set out below. What are the new tiers? There are currently over 80 different application routes to work or study in the UK. It is hoped that the majority of these will be encapsulated into one of the following five tiers: Tier 1 Highly Skilled Individuals to contribute to growth and productivity The tier is aimed at attracting the most highly skilled workers and will replace the current HSMP scheme and points will be awarded on a similar basis to the current scheme. This tier will also include post-study work applications (replacing the current IGS), entrepreneurs and investors. Highly skilled migrants will be free to seek employment anywhere in the UK and these applicants will not be required to have a sponsor, making it easier for employers to take on such migrants. These migrants will be required to have English language skills at Council of Europe level C1. Tier 2 Skilled workers with a job offer to fill gaps in the UK labour force This tier will replace the current work permit schemes and will be available to migrants who are filling a particular job within the EEA, which no suitable worker from the EEA could fill. The applicants must pass the Resident Labour Market Test or RLMT, meaning that the jobs must be advertised for at least two weeks. This is similar to the current system and is a tool used to protect the domestic labour force. These migrants will be required to show English language skills at level B2 (approximately C grade at GCSE). Tier 3 Low Skilled Workers to fill specific temporary labour shortages (The implementation and design of this tier has been frozen until Bulgarian and Romanian quotas are lifted.) When this tier is developed, it is likely that it will be quota-based and permission to work will be strictly time limited.

3 Tier 4 Students These applications are available for those students who want to come to the UK to study for six months or more the educational institution will be the sponsor. The leave will be tied to the institution but not the course of study. Tier 5 Youth Mobility and Temporary Workers This tier will replace the current working holidaymaker scheme. It will cover, for example, creative workers and sportsmen and women. What is sponsorship? It is believed that those who benefit from migration should help in maintaining the integrity of control, and therefore the leave granted to migrants will now be tied to a sponsor (sponsors are not required for Tier 1 applicants). A certificate of sponsorship will be issued by the sponsor asserting that the applicant is suitable. Employers will be required to be on a list of licensed sponsors and will be required to show the following: it is a bona fide establishment; it is registered with HMRC and have audited accounts; and it is registered with the appropriate authorities. Sponsors will be under a duty to report to the authorities if the migrant fails to show up to work and provide details to the Border & Immigration Agency on request. All sponsors will be graded, either A or B. The B rating is transitional and gives sponsors who have not complied with the regulations a chance to get their house in order. If a sponsor does not improve, it is likely that their licence would be withdrawn. A licence will also be withdrawn if a key person in an organisation is convicted of a serious immigration offence. Licences will be required to be renewed every four years. Time Frames Everything in this article is subject to final confirmation, but the general principles of the five tiers and the introduction of sponsors are unlikely to change. It is envisaged that Tier 1 will be launched in the first quarter of 2008, with Tiers 2 and 5 in the third quarter of 2008 and Tier 4 in the first quarter of UKVisa Decision Making Process The issuing of visas to migrants is also changing. UkVisas are moving away from intention bases decision and most decisions will now be taken on paper alone. The rationale behind this is that PBS should make everything more predictable and transparent and therefore decisions regarding visa applications should not be as subjective as they were previously. Biometric information will need to be provided by all migrants by the end of More controversially, full appeal rights are being replaced by an internal administrative review therefore decisions will only be overturned if there has been an error of fact. So employers are encouraged now to start planning for the new regime, and to take special care that applications under the existing system do not damage their prospective sponsor s credit rating. By Mark McCanney 3

4 Case law update Dismissal over mistaken fear of immigration status was potentially fair Klusova v London Borough of Hounslow [2007] EWCA Civ 1127 Why care? Whilst the facts of the case are unusual it raises general points about the employment rights of immigrant employees and their employers. The case Ms Klusova, a Russian national, worked for the Council. It asked her to provide evidence of her right to work in the UK and was referred to the application for indefinite leave to remain. The Council asked for actual evidence of this, or her employment might be terminated. Ms Klusova s solicitors said it had been provided. The Council summarily dismissed her without following the statutory disciplinary procedure on the basis that (1) she could not lawfully continue working and it would have been an offence to continue to employ her under s8 Asylum and Immigration Act 1996 and (2) alternatively, on the basis of information provided by the Home Office, it genuinely believed that employing her would contravene a duty imposed under an enactment and that amounted to some other substantial reason to lawfully dismiss. The Council refused her appeal on the basis that she had provided no evidence of the right to work in the UK. The case went to the Court of Appeal, which found that there was sufficient evidence to show that an in time application to work had been made so that in fact her continuing employment would not contravene statutory restrictions. The CA did find that the Council genuinely (albeit wrongly) believed that her continued employment would contravene a statutory enactment. This could be sufficient to show that a subsequent dismissal was for some other substantial reason and therefore fair. But the actual dismissal by the Council was procedurally unfair by reason of non-compliance with the statutory dismissal procedures. What to take away It is key for employers to establish whether their employees have permission to work in the UK. Not doing so could lead to hefty fines (up to 5,000). Carrying out the prescribed checks can provide a defence to the charges, and terminating employments which do not seem to comply with the rules is sensible. In this case, the employee s continued employment did not in fact breach the immigration legislation, even though the employer believed that it did. A mistaken belief in immigration irregularity could justify the termination. (It did not do so here because of procedural irregularity). Just because someone s leave to remain in the UK has expired does not mean that they do not have permission to continue to work. Employers would be well advised to make genuine enquiries of the Home Office about someone s status and follow the statutory dismissal procedures when making any decision to terminate someone s employment on these grounds to guarantee a fair dismissal. In light of the changes to the work permit system referred to elsewhere in this Law at Work, it is sensible to avoid attracting the attention of the Home Office by acting hastily. 4

5 How contractual mobility clauses are exercised in a redundancy situation The Home Office v (1) Mr Peter Evans and (2) Mr Ian Laidlaw [2007] EWCA Civ 1089 Why care? In the context of a place of workplace closure, employers may wish to invoke mobility clauses as opposed to consulting with employees about a redundancy situation. It is potentially acceptable for an employer to take this decision if it has a contractual mobility clause, and to avoid paying redundancy payments. The case Mr Evans and Mr Laidlaw were immigration officers at Waterloo Immigration Terminal (WIT). Mr Evans was an immigration officer and was a mobile employee in that it was stated in his contract and correspondence from the employer, the Home office (HO), that he could be required to transfer anywhere in the UK or abroad. Although the situation with Mr Laidlaw s contract of employment was unclear, it was found that the staff handbook, which contained a mobility clause, formed Mr Laidlaw s terms and conditions of employment. As a result of immigration controls taking place at check points throughout Europe, the HO decided that the WIT would close. As mobile employees Evans and Laidlaw were told they would be transferred to Heathrow in order to meet the needs of the HO. They resigned alleging that they were non-mobile workers and had been constructively dismissed as a result of HO s breach of contract in transferring their employment to Heathrow. The ET found that the Claimants were mobile workers and held that that they had been unfairly dismissed. The situation at Waterloo was a redundancy situation and should be treated as such. The HO had breached the implied term of trust and confidence in trying to invoke the mobility clauses to avoid a contractual redundancy procedure. The EAT upheld the ET s decision. However, the Court of Appeal found that the question was not what was the HO s motive for invoking the mobility clause but whether it was entitled to invoke this clause. The Court of Appeal held that the statutory obligations to consult about redundancies arises in the event of dismissals on grounds of redundancy or when such dismissals are proposed. If, however, the HO preferred to invoke a mobility clause in order to avoid the redundancies, it was entitled to make that choice. The HO was entitled to change its mind regarding the way in which it dealt with the closure of the terminal. By the time the announcement of the terminal was made, the HO had decided to exercise its legal right to move the employees. It was not proposing to dismiss them and therefore the contractual redundancy procedure did not apply. What to take away Prior to any announcement being made to staff, employers should consider all avenues in respect of dealing with an office closure. It may be that redundancy can be avoided completely if contracts of employment contain a mobility clause. Employers still need to be wary of mobility clauses. Their use may result in indirect sex discrimination for example and tribunals will use the existence of implied obligations to restrict the way in which a mobility clause can be operated. Whilst an implied term will not override an express mobility clause, terms such as the implied term of trust and confidence restrict the way a mobility clause may be invoked. 5

6 Right to object can be exercised after a transfer has taken place New ISG Limited v (1) Benjamin Vernon (2) Joseph McMullin (3) Tracey Harvey (4) Bryan Harvey and (5) Stacey Austin [2007] EWHC (Ch) 2665 Why care? In a business transfer, employees have the right not to move with the business by signing a notice of objection under Regulation 4(7) of TUPE This has the effect of terminating the objecting employee s contract of employment with effect from the date of the transfer, even if the employee sends his notice after the transfer has been completed, if he was not aware of the commercial terms of the transfer before it happened. Facts The High Court had to consider whether an objection could be effective even when provided by the employee after the transfer. In this case, although the employees were aware that discussions as to a sale had taken place, none was told the identity of the purchaser, their new employer, until later in the day following completion of the sale. None was notified of their right to object under TUPE, nor informed or consulted in accordance with regulation 13. The High Court accepted that the two working day period between the transfer being notified to the employees and their resignation did not mean that the employees were out of time to object. There were clear breaches by the transferee and transferor to inform and consult them. What to take away This case underlines how important it is to comply as far as possible with the information and consultation obligations of TUPE in order to achieve commercial certainty. The decision is unsurprising given the intention of the Acquired Rights Directive. Transferors should therefore be as open as to likely transfers and agree timing of communications with transferees so as to reduce the possibility of disgruntled employees walking out shortly after finding out details of a transfer, and thereby e.g. avoiding restrictions that they might have been bound by had they not felt kept in the dark. 6

7 Hot topics Agency worker cases delayed The president of employment tribunals in England and Wales has issued a Practice Direction staying cases concerning the employment status of agency workers. The agency workers cases are being put on hold pending a decision from the Court of Appeal in the case of James v Greenwich Borough Council [2006] IRLR 168. This is an important issue, as the EAT in a number of recent cases has suggested that employment relationships are unlikely to arise between an agency worker and an end-user where the arrangements are accurately recorded between the parties, and acted upon in practice. Also relating to agency workers, the UK government has recently published regulations to amend and simplify existing laws regulating employment agencies and employment businesses. At a European level, ministers of EU member states met on 5-6 December to discuss Portugal s amended proposals to the Temporary Workers Directive, the contents of which were discussed in a feature article in November s Law at Work. Unfortunately, no agreement was reached on the proposed changes and so no further progress was made. Update on working time opt-out The EU Council of Ministers met on 5-6 December to try to agree changes to the Working Time Directive such as on call time and how to address the current right to opt-out of the 48 hour working week. The Portuguese Presidency had tabled a set of proposals, including (1) the opt-out must be laid down by collective agreement; (2) agreement by social partners or by national law; (3) employers and employees consider other flexibility provisions; and (4) it not being possible for a member state to make use of longer reference periods and the opt-out provision. However, the ministers have decided to postpone a decision on proposed changes. However, the ministers have decided to postpone a decision on proposed changes. The ministers did, though, accept the Portuguese Presidency s suggestion to try to find a simultaneous and integrated solution to both working time and agency worker directive issues allowing member states to find a balance between the two directives that would be acceptable from the political point of view. And finally All change for Employment Tribunal Chairmen From 1 December 2007 the title Employment Judge has replaced the previous term Chairman in the Employment Tribunals. 7

8 Contacts If you would like to receive a hard copy of Law at work, be taken off the recipient list, or add a colleague's name, please send an to s.nesbitt@taylorwessing.com. If you are asking to be taken off the recipient list please insert 'Unsubscribe' in the subject line. Taylor Wessing employment specialists For further details on any of the topics raised in this update please contact your usual employment contact at Taylor Wessing or one of the practice leaders below, who will be pleased to answer your queries. Practice leaders: Employment Sean Nesbitt +44 (0) s.nesbitt@taylorwessing.com Pensions Carolyn Saunders +44 (0) c.saunders@taylorwessing.com Employee incentives Ann Casey +44 (0) a.casey@taylorwessing.com Immigration Charlie Pring +44 (0) c.pring@taylorwessing.com Vikki Wiberg +44 (0) v.wiberg@taylorwessing.com Taylor Wessing has offices in Berlin, Brussels, Cambridge, Düsseldorf, Frankfurt, Hamburg, London, Munich, Paris. Representative offices: Alicante and Shanghai. Associated office: Dubai For events and seminars, please contact: Lucy Hall +44 (0) L.hall@taylorwessing.com If you would like to receive a copy of our other newsletters please contact us on london@taylorwessing.com This bulletin is correct to the best of our knowledge and belief at the time of going to press. It is, however, written as a general guide, so it is recommended that specific professional advice be sought before any action is taken. We are required by law to protect personal data. Please write to Carmelite, 50 Victoria Embankment, Blackfriars, London EC4Y 0DX if you no longer wish to receive any of our future publications and we will amend our records accordingly. December 2007 Taylor Wessing LLP All rights reserved 8