IN THIS MONTH’S ROUND-UP OF IRISH legal developments we highlight a recent Employment Appeals Tribunal (EAT) decision that gives guidance on how to approach a redundancy situation when an employee is on maternity-related leave. We also look at the activities of the Press Council of Ireland (PCI) during its first six months of existence, and at the Irish courts’ powers to direct parties to mediation in medical negligence actions. Some news from the Irish Revenue (the Revenue) is highlighted, as is progress under the EU Directive on the Activities and Supervision of Institutions for Occupational Retirement Provision (the IORPS Directive) (2003/41/EEC) for pan-European pension schemes. Finally, we provide a brief overview of Ireland’s implementation of the EU Directive on Batteries and Accumulators and Waste Batteries (the waste batteries Directive) (2006/66/EC) and of the European Commission’s plans under the European Small Business Act (SBA) (SEC (2008) 2101) (SEC (2008) 2102).
REDUNDANCY OF EMPLOYEE ON MATERNITY LEAVE UPHELD
Maternity legislation has led to a general perception that pregnant employees are somehow ‘untouchable’ for the duration of any maternity-related leave. This, in turn, has led to reluctance on the part of employers to address termination issues with employees who are on such leave.
A recent decision of the EAT, however, shows that it is permissible to address such matters with employees during pregnancy-related leave, or even during maternity leave itself. The case is Gleeson v L’Oreal [2008].
In September 2006 an employee was on leave due to a pregnancy-related illness when she was told that the viability of her position was being reviewed. Following a meeting in November 2006 while still on pregnancy-related leave, she was informed that she would be made redundant. She was offered the choice of a redundancy package or alternative employment, but was told that she would not have to make her decision until her return from maternity leave.
The employee’s maternity leave commenced in January 2007, and her employer wrote to her on 30 January 2007 to discuss her ‘options for the future’. No reply was received.
The employee contacted her employer on 3 September 2007, ahead of her return to work date of 7 October 2007, saying that she did not want to return to work, but wanted to discuss the redundancy package. Her employer provided details of the redundancy package, which was in excess of her statutory entitlements. On 9 October 2007 she contacted L’Oreal’s human resources department to say that the redundancy package was insufficient, and that she did not accept that a valid redundancy situation existed.
The employee made a claim for unfair dismissal, arguing that she had been made redundant because of her decision to start a family and that the alternative position offered to her was a demotion.
Following a review of the background circumstances, the EAT held that her redundancy was fair, reasonable and genuine, that she had been offered suitable alternative employment, and that her redundancy was in no way related to her maternity leave.
The failure of this employee’s claim indicates that, although the Maternity Protection Acts 1994 and 2004 render void any attempt by an employer to terminate an employee’s contract of employment while they are on maternity leave, discussion of such issues with an employee while they are on maternity leave is permissible. This is provided, of course, that the reason for the redundancy is not linked to the fact that the employee has exercised her rights under the maternity legislation. However, the notice period for termination of employment cannot start to run until maternity leave has ended.
While employers are still urged to exercise caution when discussing termination of employment with employees on maternity-related leave, the EAT’s decision indicates that employers are not as restricted by this legislation as may have been believed.
PCI: THE FIRST SIX MONTHS
The PCI has made a number of important decisions, particularly in the areas of accuracy and privacy, in the first six months of its existence.
There is a two-tier complaints procedure. Cases are first heard by the Press Ombudsman who, in the absence of agreement after mediation or conciliation, makes decisions. Both the newspapers and persons concerned can then appeal to the PCI.
The Press Ombudsman received 193 complaints between January and June 2008. More than 100 were outside his remit. This is hardly surprising as, in the early stages of the process, a number of complainants incorrectly identified the publications covered by the Press Code of Practice (the Code) or made complaints about articles published before the relevant cut-off point.
About 38% of complaints related to inaccurate reporting, and a significant proportion, 17%, dealt with privacy. The Press Ombudsman made 20 decisions and successfully mediated three cases.
Twelve decisions were appealed, four by newspapers and eight by disappointed complainants. The PCI upheld the Ombudsman’s decision in all but one case, in which only part of his decision was overturned.
Two significant decisions involved politician Tony Gregory TD and the model Katy French, who died late last year.
Ms French’s mother successfully claimed that a number of newspapers had published speculative material on the causes of her daughter’s death while presenting it as fact. This was a breach of principle 2.1 of the Code, which provides that speculation should not be presented as fact.
Tony Gregory TD complained about the actions of a journalist from the Evening Herald, which had reported on him suffering from a serious illness. The PCI criticised the newspaper’s practice of ‘door-stepping’ at Mr Gregory’s private residence. It decided that the journalist’s intrusion into Mr Gregory’s home, especially at a time of illness and anxiety and when other ways of contacting him were available, was not justified either by his public position as a Dáil deputy or by the significance of the information being sought.
Mr Gregory’s case, in particular, shows an increased use of the privacy protections afforded by the Code, even for public figures.
MEDIATION IN MEDICAL NEGLIGENCE ACTIONS
Mediation, as an alternative to litigation, is increasingly popular. A neutral third party helps parties to a dispute to arrive at a private, non-binding, negotiated settlement. The mediator does not have decision-making powers. They control the process and create an environment allowing a settlement to be reached. However, it is the parties who decide on the settlement and its terms.
Courts have a statutory power to direct parties in personal injury cases to mediation. However, once a mediation begins, the parties themselves are in charge of the outcome and all that leads up to it. There is a huge difference between directing parties to take part in mediation and directing parties to reach a settlement.
Recently, the High Court decided that an unwilling party could be directed to mediation so long as there is a reasonable chance of success. The decision in McManus v Duffy was the first example of an Irish medical negligence case being directed to mediation. It arose in circumstances when the claimant requested but the defendant refused to agree to mediation.
The judge believed that mediation in a medical negligence case could greatly help parties to reach settlement. It would help experts to fully understand conflicting experts’ views. The strengths and weaknesses of the parties’ cases would also come to the fore, and this would aid settlement.
The significance of this decision is that litigants and lawyers in the medical negligence field now need to consider seriously the suitability of their case for mediation from the outset, rather than having it imposed by the courts. If successful, mediation in medical negligence cases may save costs and time for all involved.
PAN-EUROPEAN PENSION SCHEMES: WHERE ARE THEY NOW?
September marked the fifth anniversary of the coming into force of the IORPS Directive (transposed into Irish law in 2005). On a practical level, the legislation allows Irish employers to establish a central pension scheme in Ireland for the benefit of employees throughout Europe. Equally, Irish employers can pay contributions on behalf of their Irish employees into a pension scheme set up in another EU member state. Such arrangements facilitate administration and can lead to considerable savings for multinational companies.
A recent William Fry-moderated teleconference organised by the International Pension and Employee Benefits Lawyers Association reviewed progress. A number of speakers around Europe contributed to the discussion.
It emerged that many multinational employers are exploring the establishment of cross-border pension schemes. So far, the trend towards doing so on a defined-contribution basis, largely due to funding requirements placed on cross-border defined-benefit schemes. However, a stumbling block is the lack of consistency of relevant social and labour laws (a component requirement of a cross-border scheme) across the EU member states. Further work at an EU level to harmonise the applicable social and labour laws would facilitate the operation of cross-border pension schemes.
DON’T THINK BIG: THINK SMALL FIRST
With almost 99% of all European companies classed as small and medium-sized enterprises (SMEs), the Commission’s new initiative, the SBA, will be of interest to many. This ambitious agenda will refocus attention on SMEs in Europe and encourage their growth and jobs potential.
Although described as an ‘Act’, the SBA is a policy document containing a package of political principles, including new legislative proposals and policy measures.
The SBA is underpinned by ten guiding principles intended to create a level playing field for SMEs throughout Europe. The principles include the need to better adapt public policy tools to SME needs and to facilitate SME access to finance. The SBA also intends to make public administration more responsive to SME needs, and to help SMEs to benefit more from the opportunities offered by the European single market.
The legislative proposals in the SBA are guided by the ‘think small first’ principle, and aim to implement a general block exemption regulation to allow member states to provide state aid to SMEs, as well as a directive on reduced VAT rates for locally supplied services, and an amendment to the Late Payments Directive (2000/35/EC) to help ensure that SMEs are paid within a 30-day time period.
The Commission has already set out its proposals for a new company form, the European private company, or Societas Privata Europaea (SPE). Companies seeking to operate in several member states will be able to set up as an SPE rather than having to set up several subsidiaries using the local company form. The SPE will be a private limited-liability company, with provisions as to its formation, internal organisation and share and capital requirements set out in a European regulation. However, the proposal does not regulate matters related to labour law, tax law, accounting or the insolvency of the SPE, all of which will continue to be governed by national laws and existing EC laws, where relevant.
The measures set out in the SBA are in addition to the target already set of reducing the administrative burden on businesses by 25% by 2012. These measures combined should go some way towards facilitating the growth of SMEs in Europe.
REDUCE, RECHARGE, RECYCLE
September saw new rules to promote the recycling of waste batteries and rechargeable batteries come into force. Producers, distributors, retailers and final users of batteries will all be affected.
The regulations reduce the levels of mercury, lead and cadmium permitted in batteries generally, and require that where they exceed those levels, this must be clearly marked. After an introductory period, batteries not meeting these requirements will be prohibited, although there are exemptions for emergency and alarm systems, and medical equipment, as well as for the types of smaller batteries commonly found in watches.
Distributors (including retailers) must provide collection facilities for waste batteries, and meet specified standards for the storage and transport of these batteries.
Final users of batteries have various recycling options – either at authorised collection points such as local authority civil amenity sites (workplaces and schools may also be designated as collection points), or through a retail ‘take-back’ scheme, at any retail outlet selling equivalent batteries. These are free of charge.
Under the new rules, producers will have various obligations, including the requirement to finance the collection and management of waste batteries, and related public information campaigns. They must also arrange for the collection of waste batteries from the authorised collection points, and minimum targets are set for this. Producers must prepare a waste batteries management plan but may sign up to certain approved bodies or schemes in order to meet some of these obligations.
Producers have until September 2009 to meet certain obligations relating to labelling and treatment, and until September 2011 to meet obligations relating to recycling.
MANDATORY ELECTRONIC FILING
Mandatory tax e-filing and payment for certain companies, government departments, government offices and state bodies has been introduced. These mandatory e-filing and payment obligations will apply to all tax returns that can currently be filed through the Revenue online system (ROS).
The first phase of these obligations is to apply to companies in the Large Cases Division of the Revenue, as well as to government departments and to named government offices. This phase will apply to specified tax returns such as corporation tax returns, VAT returns and employer PAYE/PRSI returns, to be filed on or after 1 January 2009. The second phase will extend to companies that are obliged by the Companies Acts 1963- 2006 to produce audited accounts, as well as to local authorities and state agencies. This second phase will apply to such specified returns to be filed on or after January 2010. A penalty of €1,520 is to be applied to any relevant companies and departments that fail to file and pay electronically.
The Revenue has indicated in recent publications that it is planning to develop e-registration (registration for tax online) and e-RCT (relevant contracts tax) functions in the near future.
FOIL STAMPING: A THING OF THE PAST
The Revenue is currently engaged in a major strategic development that will see the introduction of a self-service e-stamping system. This is intended to modernise and simplify the Revenue’s administration of stamp duty.
The current ROS facilitates the submission of returns and payment of direct taxes and VAT online. The Revenue proposes that the current method of foil stamping be replaced by e-stamping in the second quarter of 2009. E-stamping is expected to enable practitioners in up to 90% of cases to use a self-service online process, at any time of any day, to file stamp duty particulars, pay stamp duty, and obtain an electronic stamp without the Revenue requiring the production of the document to be stamped. Although e-stamping will not be mandatory it will have certain benefits, including the speed of stamping.
It is understood that under the new proposals it will still be necessary to submit applications directly to the Revenue in adjudication cases, applications for refunds, and mitigation of penalties.
By John Larkin, partner, William Fry. E-mail: john.larkin@williamfry.ie.