On the subject of compromise, there must be an even more uneasy atmosphere around the Cabinet table following the front-page report in the FT today saying that Vince Cable cannot support the government’s reforms of employment law.

Saint Vince is reported as saying he will resist “bonkers” proposals over “no-fault dismissals”.  Mind you, he was ready to go to war with News International over their proposed purchase of BSkyB until he shot himself in the foot.  Cable is also reported as having had conversations with Ed Miliband; so has Nick Clegg.  About what?  We’re not told apart from a vague reference to “important areas of public policy”. What’s happened to collective Cabinet responsibility?

The Cabinet seems to be lining up for a dispute between the Tories and the Lib Dems over the Beecroft report, with the Prime Minister apparently  in favour of the reforms.  I wonder if the Beecroft report might prove to be the Achilles heel of this government. The FT makes the point, which has also been echoed on Twitter this morning, that the author of the report, Adrian Beecroft, is a substantial Tory donor. Party funding and government policy do not sit easily together.  The Government has already commenced a “cash-for-access” enquiry, led by Tory Peer Lord Gold following its co-Treasurer Peter Cruddas’s enlightening revelations last month saying that £250,000 could buy you dinner with George Osborne and David Cameron.    Whether the Gold enquiry will gain public confidence as being an independent and fair investigation of the issues seems unlikely and was recently described as being a whitewash and “rather like asking the Kray twins to investigate gangland crime in the East End”.

It will be interesting to see to what extent the Lib Dems are prepared to oppose these proposals. Reform of employment law was in the Queen’s Speech, which presumably had the support of both Coalition partners. However, the Conservatives are in a weak position at the moment and they surely won’t want to gift the Opposition a chance to say that a contentious issue like employment law reform is being decided by Tory donors: cash for access writ large, in other words.  Having said that the Lib Dems are in an even weaker position following the caning they took in the local elections, so surely they won’t want the Coalition to fail at this stage?

Just maybe the Beecroft report might get filed away quietly somewhere, or be substantially diluted.

No related posts.

Vince Cable: In the Eye of the Storm originally appeared on Jobsworth by Michael Scutt on 21/05/2012.

The government promised us with reform of the Employment Tribunal system several months ago, but hard details have still to emerge.  Instead the Post Office Minister, Ed Davey addressed the Lib Dems at their conference in Birmingham on Monday and sandwiched between talk about more post offices and supermarkets he produced detailed proposals for a radical overhaul of the ET system, thus redressing the alleged imbalance between employers and employees.

No, he didn’t.  I made that last piece up.  Instead he waffled on about the usual stuff, about how lawyers were the only ones to benefit etc etc – cheap shots  to get the faithful on their feet, but a bit stale for wider public consumption and did nothing to add to the debate. The soundbite of choice was  ”that (It) needs a radical shift from confrontation to conciliation”.  Yes, ok, but how are you going to do it Ed?

Here, thanks to the Telegraph, is the relevant part of his speech;

“Some people have told me they are worried about the government’s agenda on employment regulations. That it’s not a Liberal Democrat agenda. Well, as Minister responsible, I promise you that I am delivering on the principles we share. Regulations that stop job creation betray people who want to work. For too long, our employment tribunal system has been bad for employers and bad for employees – but very good for lawyers. It needs a radical shift from confrontation to conciliation. That is my driving passion. But it’s not the only one. I’m especially proud to have signed an order to end legalised age discrimination at work. A law that allowed firms to force people to retire at 65 – even when they were good at their job, and did not want to go. From better rights for families to ending age discrimination. The Liberal Democrats have shown that – in government – we can and we have helped people and businesses – and we should campaign on that success.”

Yawn.

By the way, did anyone else clock Davey’s theft of Neil Kinnock’s line about “A Labour government … a Labour government…”? Kinnock originally uttered that line (I believe) at a Trade Union conference in c.1983 when he was fighting the malign influence of the Militant tendency and the Hard Left: reds under the bed etc . Here Davey was recycling the line to complain about Post Office closures. Yes, Post Office closures are an important issue, but it didn’t sound quite as good here coming from Davey as from Kinnock.

No related posts.

Ed Davey Talks Turkey originally appeared on Jobsworth by Michael Scutt on 20/09/2011.

I’ve been away in France for a couple of weeks, hence the silence on this blog.  It’s now time to burn off those calories with some serious typing and what better start than on a story that Robert Peston ran on his BBC blog on the 22^nd August (apologies if this is staler than yesterday’s croissant)?  Under a headline “Coulson got hundreds of thousands of pounds from News International”, Mr. Peston reported that Andy Coulson (yes, the one late of News International (NI) and News of the World) received several hundred thousand pounds in respect of

“contractual leaving pay … in instalments until the end of 2007 – which means he continued to be financially linked to News International for several months of his tenure as David Cameron’s main media adviser”.

The Guardian reported that the payments included a company car and health insurance for three years (I’m not sure if this means he received health insurance and the car for three years or just the insurance).

Mr Coulson is supposed to have received these payments as part of a severance package signed off with a compromise agreement.  The Guardian also reported that Tom Watson MP had said the money could be considered an “undeclared donation” to the Conservative Party and the Electoral Commission was asked to investigate.  It apparently intends not to do so, but Mr Watson has asked the Parliamentary Standards Commissioner to investigate why the payments were not declared in “a register of passholders”.

Before everyone starts jumping around too much, stand back and consider the allegation made. Coulson is said to have received the payments as part of a severance package after he left NI in January 2007.  He joined the Tories in July of that year. If these payments were merely payments of his contractual entitlements from NI then I think it would be hard to make any criticism.   If his contract of employment ever comes to light then it will be interesting to check this.  The payments look generous but he was a very senior executive in a massive organization, so perhaps it is not surprising he was well remunerated.  Had NI refused to honour Coulson’s contract, he would have had a claim against them for breach of contract. It is perhaps unusual for a company of the size of NI to stagger the payments over a period of time, but not that uncommon.  Cashflow is not likely to have been the reason; more like NI wanted to ensure Coulson kept his head down for several months and what better way than to withhold payment for several months? That is speculation though. In the cold light of one of the most bitter and far reaching political scandals of recent times it certainly doesn’t look good.

However, what if he was not contractually entitled to (all) these monies and, instead, the parties came to a deal, as any employer-employee can do?  That muddies the water but it isn’t evidence of illegality or wrong-doing without more background.  It could have been a reward for his loyal and effective service during his tenure.  Of course, it could have been a payment for something more sinister, but without hard evidence of that it can only be speculation.  There is nothing in Peston’s story that allows us to go further than this. On balance this is a bit of a non-story – fuelling the media frenzy on this subject without actually illuminating any of the main issues or revealing any wrongdoing.

The real story here though is whether Coulson disclosed these payments to his new employers when he joined the Tories.  Why should he?  For most employees, any payments received from a former employer have no relevance in their new job, provided that there is no conflict of interest in the two roles or there has been no illegality.  MPs are under very onerous duties of disclosure; whether that applies to advisers I don’t know, but if I was David Cameron I would have wanted to know about the payments, if for no other reason than to avoid being ambushed by it becoming common knowledge at some point in the future.  If Coulson was required to disclose the payments under Parliamentary (or other) rules and did not then that is a different matter.

Related posts:

1. Compromised Agreement?

Coulson’s Compromise Agreement: So What? originally appeared on Jobsworth by Michael Scutt on 05/09/2011.

On Monday I wrote about the government’s plans for reforming legal aid and the funding of civil litigation. One of the issues which confuses me is what will happen to no win no fee agreements now that contingency fee arrangements (or, Damages Based Agreements as they are to be known) are to be allowed in the courts. They have, of course, been allowed in Employment Tribunals for quite some time but were regulated by the Damages Based Agreements Regulations 2010 last year.

Jonathan Djanogly was on the Today programme on Tuesday morning discussing the Bill with Evan Davis: “access to justice means justice for defendants as well”, if I recall the Minister’s comments correctly. The new reforms will put Claimants at risk on costs because the “mark-up” will come out of their own compensation, not the Defendant’s.

The media-related blog Inforrm carried a post predicting the end of the CFA at least in as far as non-PI/CN cases are concerned, (e.g in defamation cases because of the non-recoverability of the success fee and ATE] From the practitioner’s point of view, what sort of no win no fee agreement should you offer a client?  There will be two options in future;

1. A Conditional Fee Agreement – as now, save that the success fee will not be recoverable from the Defendant and will be payable by the client.  Similarly the insurance premium will be payable by the client and only the client. CFAs work on the basis that the success fee is a percentage uplift on the solicitor’s base costs. The maximum amount that can be deducted by way of a success fee will be 25% of general damages, which excludes future losses.
2. A Damages Based Agreement, aka a contingency fee. It is envisaged what will happen to no win no fee agreements now that contingency fee arrangements (or, Damages Based Agreements as they are to be known) are to be allowed in the courts.by the government that they will be particularly useful in commercial disputes, although I think that underestimates their potential appeal. The lawyer will charge a “DBA fee” (aka a success fee) when taking the case on and if successful will take their fees from the client’s compensation.  However, if successful and a recovery of costs is made from the other party then those costs will be offset against the DBA fee. As above, the maximum success fee will be capped at 25% of general damages. In cases before the High Court or the County Court, in non-personal injury/clinical negligence (CN) cases, there will still need to be an ATE policy to protect against having to pay the winning side’s costs.  Only in PI/CN will there be QOCS, meaning no need for Claimant’s to insure against losing.

Both will be available, it seems, in all areas of civil litigation.  As a solicitor advising a client (let’s assume a Claimant) on the funding options available, which one of these would you advise?  If it’s an ET matter then it has to be a DBA, for obvious reasons.

However, if it’s a non-PI/CN case in the High Court, let’s say, then both are available. There’s a risk of incurring costs to the other side if you lose so ATE is needed, but the premium won’t be recovered.  The success fee you can charge is limited in both cases to 25% of the client’s damages, so there is no difference there. Again, the client pays the success fee, save that with a DBA the success fee chargeable to the client can be offset (or extinguished) by the sums recovered from the other side. With a CFA that can’t happen because the uplift is calculated on the base costs of the solicitor.

This is how I think it will work (but am happy to be corrected),

A. sues B. in the High Court in a non-PI/CN case and is awarded £100,000 compensation.  Costs follow the event. A’s solicitors base costs are £25,000 (inc. disbursements, VAT etc and these have been agreed or subjected to detailed assessment)

The insurance premium is £30,000 (in my experience insurers seem to quote a premium of around 25-35% in commercial cases).

The success fee is 25%.

If A’s solicitor is on a CFA then the success fee is £6,250 – payable by A. so he/she recovers £93,750.

A’s solicitor gets £25,000 – paid by B and £6,250 paid by the client. Total = £31,250.

If instead costs are assessed/agreed at £20,000 then the success fee is £5,000, paid out of A’s damages. A gets £95,000.

A’s solicitor gets £20,000 plus £5,000 = Total £25,000

A. pays the insurance premium out of damages, and is thus left with £65,000.

Assuming that A. signed up to a DBA then the result must be this;

A’s solicitor gets a fee of 25% of £100,000, being £25,000.  (A. would get £75,000 if no costs come from B.)

B pays costs of £25,000, which is offset against the DBA fee, meaning A suffers no deduction from damages and A’s solicitor gets paid £25,000. A. pays the insurance premium and so comes away with £70,000.

However, if A’s legal costs were £25,000 but B only agreed or was ordered to pay £20,000, there would be a deduction from A’s damages of £5,000.

A’s solicitor will be paid out of A’s damages and from B.

Even with a DBA, A. will need insurance so will pay £30,000 from his damages, leaving him with £65,000.

A. takes a hit in these examples but isn’t it better to get £65,000 than nothing at all?

It is only in indemnity cost cases where B has to pay all (or virtually all) of A’s costs that the DBA offset will wipe out the solicitor-client element of the costs.   In most cases the solicitor-client element will be fairly significant and I can see a situation where solicitors will come under pressure not to charge that element to the client.  In reality, that probably happens quite often anyway – for instance in cases where the claimant is supported by a legal expense insurer who won’t allow recovery of the “extra” bit.

On these sort of figures, a DBA looks like marginally better value for the client if the insurance premium is taken out of the equation and provided some costs recovery is made from the losing party.  If none made then it looks very expensive for the client.   But, in lower value cases where the costs will equal or even outweigh the damages awarded clients are going to either not be able to afford to litigate or will have to accept a lower offer than they otherwise would because they could not afford to go to trial.

Aside from this I cannot see there is much to choose between a DBA or a CFA in this type of situation, save that a DBA is a simpler concept to explain to a lay client.

In PI/CN cases where QOCS apply there will be no need for an insurance premium so the figures will look more appealing to the Claimant. The government is said to want to curb the so-called compensation culture yet it is in PI/CN cases where the worst of the alleged excesses have occurred, promoted by the insurance companies themselves as Jack Straw publicized yesterday (it’s referred to in the audio clip above).  These reforms then, will do nothing on the government’s own case to curb allegedly unmeritorious PI/CN claims.

These reforms ought to promote the insurance industry to either introduce cheaper premiums or to seriously raise the profile of Before the Event insurance (BTE), as the government would like. Lower value claims will be squeezed.  Predictable costs already exists for RTA claims where £10,000 or less is recovered and the RTA Portal is likely to be extended, taking lower value claims out of the “traditional” process. However, unless insurance becomes cheaper and lawyers can work more efficiently (so that the success fee is lowered) the future looks grim for lower value litigation – the sort of bread and butter work for many practices.

I would welcome all comments on the above, especially if it is to tell me I’m completely wrong.

Related posts:

1. The Legal Aid, Sentencing & Punishment of Offenders Bill: Access Denied?

The Justice Bill: CFA or DBA? originally appeared on Jobsworth by Michael Scutt on 28/06/2011.

Access Denied?

The government has finally published its long awaited bill on civil litigation cost reform, bundled in with legal aid and sentencing reform. It is highly controversial and the government has done nothing to calm fears by fast-tracking the bill through parliament.  In the foreword to “Legal Aid Reform in England and Wales: The Government Response” Ken Clarke sets out what he seeks to achieve with these reforms;

“My ultimate aim is a fundamental shift in the way justice works as a system, one based on continued access to justice where it counts, earlier resolution of disputes, less complexity and greater affordability. Not the least of my aims is for a reformed profession: one where there is enough provision to ensure people have access to justice; but more broadly, that we have competitive, consumer-focused law firms that can compete internationally.”

Further on Clarke sets out how the government thinks access to justice will be achieved;

17. We are also taking forward a programme for the modernisation of the regulation and delivery of legal services by implementing the reforms in the Legal Services Act 2007. This includes the introduction of Alternative Business Structures. These new structures, which can be partly or wholly owned or controlled by non-lawyers, will allow lawyers and other professionals to work together in a single entity to provide legal services (or a mixture of legal and non-legal services) to their clients.

18. These freestanding reforms will help us to move towards a simpler justice system, where fewer individuals, businesses and public bodies are forced to resort to formal court processes, and more people take up mediation and other forms of alternative dispute resolution to help solve their problems. We also expect that new ways of obtaining legal advice will become more prevalent as the legal profession modernises and takes greater advantage of technological advances – for example by offering advice over the internet or via a telephone helpline

There have been some excellent summaries of why the Act is rank bad news for those who will need legal aid – see this excellent round up from the UK Human Rights blog.

In this post I want to focus on the issues for civil litigators and employment lawyers.

For a start, employment law is removed from the scope of legal aid. In reality this isn’t likely to affect many people because legal aid hasn’t been available in the ET ever as far as I’m aware.  However, it was available to assist people in the preparation of cases before the ET and that is now gone.  The rationale for that is contained at para 75 of the Government Response Reform of Legal Aid in England and Wales

“We accept that most people will find legal advice helpful in preparing a case for the tribunal, and that these cases are often not only about money. We do not consider that applicants in these cases are likely to be particularly vulnerable …  We consider that, given the need to prioritise resources, employment matters are of a lower importance than cases involving life, liberty or homelessness. It is also the case that a Damages Based Agreement may be made in appropriate cases.”

Legal Aid will also not be available in most cases to tort and “other general claims”. Clinical Negligence is taken out of scope.  Further the old rule that if a case that would otherwise be out of scope but raised issues of public interest would be allowed back into scope is also to be abolished. In a nutshell, unless the applicant can demonstrate that their case is within the remaining categories and involves some threat to life, liberty or homelessness, legal aid will not be available.

It prompted me to think that if a person lost their job in circumstances of unfairness and couldn’t pay the rent on their home shouldn’t they be allowed to qualify for assistance?  Legal aid will be available in debt cases where the home is at risk, but that is going to be much further down the track and doesn’t address the issue of the wrong that commenced the downward spiral.

The government clearly expects the private sector to take up the strain.  What does the reform of civil litigation costs introduce?  These are the headlines;

1. The recoverability of CFA success fees from the defendant will be abolished – turning the clock back to when the system was introduced in the 1990s
2. ATE insurance premiums will no longer be recoverable from the defendant – the cost will come out of the Claimant’s damages
3. QOCS will be introduced.  Possibly the worst sounding acronym ever, Qualified One way Costs Shifting will be introduced in personal injury and clinical negligence cases, meaning that Claimants will not have to pay the Defendant’s (insurer’s) costs unless they are adjudged to have acted “fraudulently, frivolously or unreasonably in pursuing proceedings” (para. 11)    or on “financial means grounds” – “only the very wealthy would be at risk of paying any costs”. (same para. again) The normal costs shifting rules will continue to apply in other cases. What’s that I see?  Ah, it’s the good ship “Satellite Litigation” getting ready to set sail to a court near you.
4. Damages Based Agreements (DBAs) will be allowed in civil litigation cases. This is the contingency fee option, i.e. the lawyer takes a percentage cut of the Claimant’s damages if successful (and nothing if not) subject to a cap of 25%.  It’s not clear how this will dovetail (if at all) with the provisions of s.154 Coroners and Justice Act 2009 which introduced DBAs in employment matters. Awards for future loss will be ring-fenced.
5. There will be a 10% increase in general damages for pain suffering and loss of amenity – presumably to compensate Claimants losing a proportion of their damages to CFAs or DBAs.
6. Part 36 CPR will be amended, to reverse the case of Carver v BAA plc on the issue of what is a more advantageous offer.  Under the government’s proposals if a Claimant beats a Part 36 offer, even by a small amount, the costs consequences will follow.  This is to be welcomed, as is the proposal that Defendants who fail to accept a reasonable offer by a Claimant face a penalty of 10% of the value of the claim if they lose at trial. The precise rules remain to be drafted.
7. The allowances for litigants in person (LIPs) will be uplifted, for the first time since the 1990s.  LIPs can’t claim costs like lawyers can i.e. to take their hourly rate and multiply it by the number of hours engaged, but they can claim a rate, which is currently £9.25 per hour plus expenses, unless they can prove actual loss incurred in preparing their case.  In all cases the maximum a LIP can recover is 2/3^rd of the rate a solicitor would have charged. (CPR Pt 48.6)

Some of this package is sensible and should make things simpler – take the proposed amendments to Part 36 CPR for instance. However, the QOCS proposals will only stimulate uncertainty and litigation when it comes to decide in what circumstances a losing personal injury/clinical negligence Claimant in the County or High Court will have to pay the Defendant’s costs.  The recoverability of success fees and ATE premiums provoked huge amounts of satellite litigation, much of which has probably now been settled and the system gets abolished.

The overall thrust of the legislation is to reduce the burden on the state and to get lawyers to take more risk on board. It is also intended that clients should have a direct financial interest in the litigation because they will be paying the lawyer’s costs from the success fee. This might look like a negative outcome for the lawyer, especially in lower value cases but it will certainly suit some clients in higher value cases who will be happy to swap having to put their hands in their pockets for a straightforward deduction at the end of the case.

The problem, of course, is that those people with lower value claims, i.e. the majority of people and probably not highly paid will not see the advantage of such an arrangement. They are going to struggle and will be denied access to justice because their cases won’t be economically viable.  In lower value cases only those lawyers with very low cost bases will be able to do the work at a profit.  Perhaps they’ll be outsourced abroad?

The legal aid reforms are all part of a much wider, profession altering, series of reforms.  Note the expectation that advice will be delivered over the internet or the telephone.  In the bid to remain competitive lawyers are going to have to find ways to monetize the internet and that is a challenge that many sectors face.  Is it really reasonable to think that they can access to justice via telephone helplines?  No.  There is, of course, a role for the internet to provide such advice, but that won’t be an option for people who have limited or no access to the internet, or whose literacy (or language) skills are not good.

Make no mistake:  this bill is all about reducing the amount of litigation around.  It’s got nothing to do with access to justice.

Related posts:

1. The Justice Bill: CFA or DBA?

The Legal Aid, Sentencing & Punishment of Offenders Bill: Access Denied? originally appeared on Jobsworth by Michael Scutt on 27/06/2011.

The Independent reported yesterday that an “influential” group of City figures was urging the government to restrict compensation payments in discrimination cases to £50,000.  Currently such awards are unlimited in size, unlike in unfair dismissal cases where the compensatory award is (currently) capped at £68,400.  I have never understood the rationale behind one being restricted and not the other: why should unfair dismissal awards be capped and not those in discrimination cases? Or, conversely why shouldn’t unfair dismissal awards be uncapped?

The answer to both questions is politics and Europe.  Employment law is a football to be kicked around by the government of the day and what gets enacted as legislation depends on the colour of the government in power at the time and by what is allowable under European law and regulation.  At the moment employment law is taking a leathering with the government consulting on reforms to both law and procedure. The consensus amongst many commentators (and businesses) seems to be that there is not much more to this than words.  The “Employers Charter” launched in January was underwhelming and the announcement of the extension of the government’s review of employment announced last month to consider restricting discrimination awards, and whether the TUPE regulations do more than required by European legislation looks like little more than window dressing. The ECJ could get very busy if the government does try to seriously prune these rights.

There is a widespread perception that employment rights have swung too far in favour of employees and prevent employers from running their businesses as they would like.  I think more of this is made than is strictly correct, but it is true that employers face an ever increasing amount of burdensome employee rights.   I’ve written before how I think the government’s proposal to reduce the number of unfair dismissal claims by increasing the qualifying period of continuous employment experience from 12 to 24 months will backfire.  At present there is no qualifying period of employment needed to bring a discrimination claim.  Therefore if the length of time for unfair dismissal is increased, it will merely make employees look harder to find a discrimination element into their grievance so that they can present a claim to the Employment Tribunal.

The government’s hands are said to tied by European regulation from tinkering with Equality legislation.  Therefore, perhaps the way forward, even if it might seem counter-intuitive, is to uncap unfair dismissal awards and reduce the qualifying period, so that there is no need for employees to try and bring spurious discrimination claims.  That would leave discrimination cases for those cases that genuinely revolve around discrimination. A more robust approach on costs by ETs as well as issue fees for presenting an ET1 should reduce the number of unmeritorious claims.

Will it happen?  No, that would mean taking what Sir Humphrey Appleby of “Yes Minister” fame would have called a “courageous” political decision, and that’s not going to happen.

Related posts:

1. Enforcing Unfair Dismissal Awards Part II
2. Race Discrimination and Redundancy
3. Age Discrimination – a damp squib?

Should the Government Cap Discrimination Awards? originally appeared on Jobsworth by Michael Scutt on 06/06/2011.

Not so cuddly Dave

According to today’s Mirror, the government is considering (“in leaked plans”) to double the qualification period for acquiring the right not to be unfairly dismissed to two years. At present, an employee needs to have 12 months continuous employment experience in order to be able to challenge the reason for their dismissal.  Without that right, unless there is an issue of discrimination, whistleblowing, trade union membership or health and safety involved, the only challenge available to an employee is if they don’t get paid their notice pay.

If that is right and the government enacts these plans, presumably in an attempt to appease employers and the business community, it will severely restrict employees’ rights and will enable unscrupulous employers to dismiss employees without having to justify their actions or have fear of redress.  It’s a regressive step and will turn the clock back approximately 20 years.

These “leaked plans” come to light less than two weeks since the number of redundancies predicted in the public sector (and the inevitable knock-on effect in the private sector) was announced: just a coincidence?

What next?  A reduction in the maximum compensatory award?

(Thanks to @daniel_barnett for bringing this to my attention and @ljanstis for his input,  both via Twitter)

PS. Lord Young announced on Radio 4 today (Monday 1st November) that the government is indeed considering this step,

Related posts:

1. Compromise Agreements and The Equality Act
2. Enforcing Unfair Dismissal Awards Part II
3. Unfair Dismissal to be Abolished?

Unfair Dismissal Rights to be Restricted? originally appeared on Jobsworth by Michael Scutt on 31/10/2010.

I’ve been maintaining radio silence for too long – sorry about that but the day job got in the way – and thought it was about time I put up another post. Part of the problem is that there has been a lot of stuff to write about and knowing where to start. However, our darling Chancellor, or should that be Mr Darling, Chancellor – has made my task a little easier today following his Pre-Budget Report, particularly with his tax on bankers’ bonuses.

More learned commentators than me are calling this the most political PBR for a long time and that is the only way to see the imposition of the temporary payroll tax on banks that pay discretionary bonuses in excess of £25,000. The measure will raise £550mn which is a mere drop in the cesspool of debt in which we are currently swimming. It won’t apply to guaranteed bonuses (which are often the most criticised element of remuneration policies) and is presumably relatively easy to avoid by paying larger salaries instead, or paying smaller bonuses quarterly, for example? So, in missing the main target and being easy to avoid is this just another example of “gesture politics”? It looks like it.

The government must have (or ought to have) had two real concerns. One, in implementing a genuinely swingeing tax on bankers’ bonuses it would merely have recycled the money back to the taxpayer, particularly where RBS and Lloyds Group, are concerned. The second concern would be to avoid harming London as a financial centre by making it unattractive to work and trade from there. With this new supertax it seems to me that Mr Darling has addressed both issues – it won’t raise much income and won’t cause much pain, but does allow the government to say it is “doing something”: gesture politics.

My firm has a lot of experience in advising employees on bonus schemes, discretionary or otherwise. Please call me if you need any further advice on these issues. I can be contacted on 0207 464 8433 or at michaelscutt@dalelangley.co.uk

Related posts:

1. Bonus Hysteria vs Expenses Sleaze
2. Bonus – what bonus?
3. Bonus Rage and Clawbacks

Bonus Supertax: Nothing more than a gesture? originally appeared on Jobsworth by Michael Scutt on 10/12/2009.

This is a thought that has been exercising me (and some of my colleagues) today. In comparison to some of my commuting co-workers (particularly those training in to Waterloo) I had a fairly smooth journey in; not that I want to seem smug about it you understand.  It took Nicola, our trainee solicitor, two hours to get from Waterloo into the City.  She wasn’t alone with nightmare tales to tell.   Reading over someone’s shoulder at the station I saw that the London Lite newspaper has also been questioning it given the travel chaos the RMT has foisted on us today. On their letters page they published a selection of readers’ comments which were 4 – 3 against the RMT. The general consensus around my office was that tube workers shouldn’t be allowed to strike, given the amount of chaos and severe disruption it causes.  Is it just me or do the RMT always seem to call a strike when there is a major sporting event on (the Lions tour to South Africa and the ICC Twenty20 World Cup spring to mind and the Ashes Test series starts next month – are there any strikes planned for then?).  At least the weather isn’t that brilliant for them this week.

The days of hard-left Union bosses holding the public to ransom should be long over.  I have distant memories of the winter of discontent in 1978/79 and then the tanker drivers strike gave us a few days off school: I was all in favour of industrial action in those days! Those days though are long gone; tube drivers are paid pretty reasonable salaries in comparison to other public workers and I would support a ban on them being allowed to strike.  Firemen too.  Particularly firemen.

I fully accept that Unions once had a vital role to play in protecting employees’ rights – I’m thinking of the appalling deprivation suffered by the Tolpuddle Martyrs and the railway workers involved in the Taff Vale case in the early years of the last century.  The RMT workers aren’t the Tolpuddle Martyrs though.

What do you think?  Here is another poll.

[polldaddy poll=1696597]

Related posts:

1. Why Agency Workers Should Expect a P45 for Christmas
2. What do workers want?
3. Agency Workers – the New Regulations

Should Tube Workers be allowed to strike? originally appeared on Jobsworth by Michael Scutt on 11/06/2009.

I’ve written before about the National Staff Dismissal Register (NSDR) in the Retail Sector and the blacklist published by The Consulting Association (TCA) in the construction industry.  The former is a joint venture between Action Against Business Crime (a consortium formed between leading retailers and the Home Office), the latter a database compiled by a private company that then sold details to about 40 leading construction companies.  News comes this week that the government is planning to introduce regulations to proscribe blacklists used by companies to identify Trade Union members and thus not employ them.  The TCA blacklist appears to have identified trade union members as trouble – e.g “ex shop steward definite problems” and similar.  The government thinks, rightly, that potential employees should not be discriminated against because of their Trade Union membership.

Back in January the House of Lords ruled that care workers accused (note accused, not convicted) of harming children or vulnerable adults and placed as a result on a provisional blacklist could sue for infringement of their rights under the Human Rights Act.  It was estimated by the Royal College of Nursing that there were 5,500 names on the list.  The particular harm with that blacklist was that the people on it were undergoing investigation and could not work in the months it took for the investigatory and appeals process to be completed. Compensation claims will undoubtedly result.

All seems to have gone very quiet on the NSDR, which was a system retailers put in place to notify other members of staff dismissed for theft, fraud, forgery and criminal damage.  Again, no formal criminal investigation or conviction is required, leaving open the possibility that a malicious employer could prevent an employee getting back into work just by placing an entry in the register.   Safeguards are said to exist and all members have to agree to a strict code of practice, but I am struggling to see any fundamental difference between the NSDR and the TCA type blacklist – other than in the latter case the government might be trying to appease its friends in the Trade Union movement.  On the other hand the government is prepared to promote a scheme in the retail sector which surely infringes Data Protection legislation.  Is this yet another example of the government’s rather oppressive attitude towards civil liberties?

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Blacklists to be blacklisted? originally appeared on Jobsworth by Michael Scutt on 15/05/2009.