New employment laws in the hotel sector

With the TUC and Labour Party Conferences over, and the year end fast approaching, now is perhaps a good moment to take stock of the new employment laws in the pipeline for the hotel sector over the next few years.

Europe

At European level, there are 2 key issues at the moment. First, the review of the dispensation for individual opt outs from the 48-hour week limit under the Working Time Directive. Second, the proposed directive on working conditions for agency temps might reach a major milestone in its progress to becoming law.

If the opt out was lost, much flexibility of labour would go with it and labour costs would inevitably rise as more staff had to be hired to cover the gaps. The opt out also has to be seen in the context of European Court decisions increasingly rejecting arguments that time "on call" is not working time. There are suggestions that the Government believes it can fix the situation by offering increased paid holiday rights in exchange for maintaining the individual opt out

The proposed directive on agency temps would give them the right to the same terms and conditions as equivalent permanent employees, so driving up costs again and a "common position" on the text might be reached by member states before the year end.

UK

At home, there is a welter of pending legislation, even if the Government does not plan another frontal advance on workers rights. They include:

- The implementation of the European Directives on equality in the workplace. Laws outlawing discrimination in the workplace over religion or belief, and sexual orientation will come into force on 1 December this year. Age discrimination will not be brought into force before 2006. But this assumes the Government's win in the Rutherford case in the Employment Appeal Tribunal on 2 October 2003 is not overturned on any further appeal to the Court of Appeal. If they did lose, the exclusion of over 65s from unfair dismissal and redundancy pay would be ended with immediate effect.

- The delayed provisions from last year's Employment Act on mandatory disciplinary dismissal and grievance procedures. They will come into force in October 2004. They will require employers at least to hold a disciplinary meeting before sacking a working for disciplinary reasons, and employees to raise grievances internally before taking a case to the Employment Tribunal. There are penal sanctions for non-compliance, in that compensation awards for unfair dismissal can be increased or cut by up to 50% depending on which side was in default over these requirements. The laudable aim was to decrease the number of cases going to Tribunals by getting the aggrieved party to explain its issue properly to the other side. But unless the Government can make better sense of the law as a result of its current consultation process, there may well be more rather than less litigation because of the additional bureaucracy being imposed.

- Consultation towards implementing the European Directive on workplace information and consultation closes on 7 November 2003. Implementation will begin from March 2005, when companies with at least 150 employees will be covered, through to March 2008, when the final threshold of companies with at least 50 employees will be reached. This will require companies to set up works councils if enough employees want them. Once they have been set up, at the company's cost, management will have to present an annual report on the business and the prospects for employment to the council. This will also have to cover anticipated threats to employment or terms and conditions. The council will also be entitled to be consulted about such matters well in advance of current legal obligations to inform and consult on collective redundancies and transfers of undertakings. Of course, the running costs of the council will be for the company's account as well.

- We are waiting for the long overdue publication of revised Transfer of Undertakings Regulations. Consultation on changes closed long ago but we are told publication is now imminent. These already have a major impact on many acquisitions, re-organisations and outsourcings. While there are likely to be some changes that the hotel sector will welcome, others will be less than welcome.

- We expect the new law will exclude from transfer many pre-insolvency debts owed to transferring employees. This will be a boon to purchasers of insolvent businesses. Also we expect that sellers will be put under a legal duty to disclose information about liabilities to employees who will transfer with the business. This should reduce the risk of buying the proverbial "pig in a poke" if you are a buyer or outsource provider, but require greater care in making disclosure if you are a seller or outsourcer. There is also likely to be clarification of when and how transferees can lawfully change the terms and conditions of transferred employees.

- On the debit side, transferees will have to provide a pension for transferred employees who were in their old employers pension scheme. The obligation will however be to provide access to a money purchase employer scheme or a stakeholder scheme and pay employer contributions to match the employee's own, up to b% of pay. There will also be less scope for avoiding TUPE, as the scope of transactions covered will be increased to try to make sure there are no loopholes.

There is much that will be challenging for employers in the sector in this agenda, but careful planning should enable disaster to be avoided.

This article first appeared in the October issue of Hotel Report.

For further information please contact Simon Jeffreys a partner in our employment group on +44(0) 20 7367 3421 or [email protected]