After an announced delay, much canvassing from the CIPD, employer bodies and unions, and much speculation in the press as to whether the government would increase the National Minimum Wage this October, given the credit crunch and the number of businesses currently struggling, the new (slightly increased) rates have been announced, as follows:

• adult rate (for those aged 22 and over) - increases from £5.73 to £5.80 an hour
• rate for 18-21-year-olds - increases from £4.77 to £4.83
• rate for 16 and 17-year-olds (provided they are above compulsory school age) - increases from £3.53 to £3.57 an hour.

The new rates will apply from 1 October 2009.

In addition, as from this date, all tips, service charges, gratuities and cover charges, whether discretionary or mandatory, will no longer count towards the NMW. (Currently, tips, service charges or gratuities paid through the payroll may count towards the NMW, although payments made directly in cash to the workers do not.) This change will particularly impact the hospitality sector, although other employers such as hairdressers will also be affected.

It is worth starting to budget and plan now before the change takes effect on 1 October 2009.

The government has also announced that, as from October 2010, 21 year olds will get the standard adult rate.

Since 6 April 2009, HMRC has had enhanced powers to enforce the NMW. There is a new method for calculating arrears (based on the current NMW rate rather than the rate applicable at the time of the underpayment); penalties ranging from £100 to £5,000 which must be paid in addition to any arrears owed to workers; enforcement notices in respect of former, as well as current, workers; a single notice of underpayment (rather than a series of individual notices); extended powers of access to and sharing of information; and increased powers to investigate and prosecute criminal offences involving the NMW.

BERR has published a comprehensive guide which sets out its policy for enforcement of NMW offences - see www.berr.gov.uk/files/file50812.pdf

For further information on the NMW, see /docs/legal/minimumwage.html

The government has now published its consultation paper, 'Implementation of the agency workers directive', which gives more idea as to how the Agency Workers Directive is likely to be implemented in the UK and the extent to which permissible deviations, such as a period of qualifying service, may be applied here. The Directive has to be implemented by 5 December 2011.

The Government is advocating that only those workers placed with a hirer in the context of an employment business will be covered by the new regulations, including those commonly referred to as 'temps' but excluding the self-employed, those working through their own limited companies or employed on "managed service contracts". The Government also plans to exclude agency workers who have a permanent (open-ended) contract with the employment business whereby they continue to be paid between assignments by the employment business. This will be subject to a set minimum level of pay between assignments being maintained.

An agency worker will need to have "12 weeks' service" with the hirer in a "given job" before becoming entitled to the same basic working and employment conditions as 'a comparable worker doing broadly similar work in the same organisation'

• "12 weeks" will be 12 calendar weeks regardless of the number of hours/days worked during the week
• the government considers that the "given job" will usually be obvious. If during an assignment the worker's responsibilities change substantially so that they genuinely amount to a different "given job", a fresh 12-week qualifying period may commence.
• "comparable worker" is similar to the definition in the Fixed Term Employees Regulations. The Government is considering situations where an agency worker may not have to identify a specific individual comparator but could use existing pay scales for permanent staff and applicable collective agreements.
• equal treatment will include working time and pay. "Working time" includes duration of working hours, rest breaks, holidays, night work restrictions etc. "Pay" includes basic pay and 'other contractual entitlements that are directly linked to the work undertaken' eg holiday pay, overtime and shift allowances, unsocial hours premiums/bonuses etc. Where the hirer offers enhanced contractual holiday entitlement in excess of statutory holiday, it is proposed that agency workers should be able to take that as a one-off payment at the end of the assignment. Occupational social security schemes are specifically excluded so agency workers will not accrue the right to participate in company pension schemes. However, the Pensions Act 2008 will require automatic enrolment into a "qualifying workplace pension" for all workers, including agency workers from 2012.
• workers will have access from day one to amenities or collective facilities at the end-user, such as canteen or crèche facilities (unless there is objective justification to deny such access), vocational training and access to notice of job vacancies (except where existing permanent staff are being redeployed in order to avoid redundancies).

The consultation paper proposes to make agencies primarily responsible in the event of non-compliance, but because they will be reliant on information provided by the hirer, liability would switch to the latter where it has provided inaccurate, incomplete information.

Workers and employer representatives can agree collective agreements or workforce agreements to negotiate standard terms for agency workers, rather than conduct a review of each assignment.

Those who seek to get round the rules, by adjusting the assignment (so that it is different) or having short breaks between assignments, may find this difficult. The Government states that attempts to avoid agency worker protection by enforcing short breaks of, for example, a week between assignments in the same job will be invalid. In addition, only substantial changes to an assignment will trigger a new qualifying period.

Consultation closes on 31 July 2009 - for further details see www.berr.gov.uk/consultations/page51233.html. Draft regulations are likely to be published for further consultation before the end of the year.

The Migration Advisory Committee has published its first review of the shortage occupation list for skilled workers coming to the UK from outside the European Economic Area.

As may be expected in the current economic climate, it has recommended that certain jobs be removed from the list and the definition of others be narrowed. 270,000 fewer posts will be on its list of occupational shortages.

The main recommendations include:

• adding/removing certain job titles in the healthcare profession
• changing the skill thresholds for care assistants and chefs
• removing social workers from the list apart from social workers for children and families
• removing quantity surveyors and managers in the construction industry
• adding various job titles in areas such as culture.

The Government will announce shortly whether it accepts the Committee's recommendations. The Committee will also start an urgent review of all of the other occupations on the shortage occupation lists, which will be completed in autumn 2009.

For large organisations (with at least 1000 employees within the European Economic Area and at least 150 employees in each of two or more member states), there are requirements to consult if a formal request is made by at least 100 employees in two or more countries. These organisations must have in place a European Works Council (EWC) to provide 'transnational information and consultation' for their entire workforce.

It has been announced that the proposed updates to Directive 94/45/EC (European Works Councils) have been approved and will go ahead. These aim to strengthen EWCs in order to better inform and consult workers during restructuring. No implementation date has been published.

See: /docs/legal/consult.html

Research by the Ministry of Justice has found that many employers are not paying tribunal awards:

Of those they polled:

• 26% of 93 claimants awarded less than £500 did not get any payment
• 40% of 497 claimants awarded between £500 and £4,999 did not receive any payment.
• 44% of 377 claimants awarded more than £5,000 did not receive any payment
• overall, 39% of those polled who had been granted awards had not been paid, while 53% had been paid in full.

36% of those not paid had tried to enforce the award through a county court, while 40% of unpaid claimants did not know they could do this. High Court Enforcement Officers will now be given powers to recover awards granted by employment tribunals or in out-of-court settlements.

Dismissal: redundancy and length of service as a selection criterion

You may recall that last year, in Rolls Royce plc v Unite the Union, the High Court was asked to advise whether the use of a length of service criterion in a redundancy collective agreement was discriminatory on grounds of age. Rolls-Royce had two collective redundancy agreements which provided for the use of a selection matrix; length of service was one of the criteria.

Under their agreed selection process, employees were assessed against five criteria:

• achievement of objectives
• self-motivation
• expertise/knowledge
• versatility/application of knowledge
• wider personal contribution to the team.

Length of service was a 'deciding factor' where two employees had the same score, with one point awarded for each year of service.

The case was subsequently appealed by Rolls Royce, which incidentally had not made any redundancies at that stage but was seeking advice on its procedures. The Court of Appeal agreed with the High Court that their selection matrix was lawful but also gave some guidance about applying age discrimination rules in practice.

The Court of Appeal looked firstly at whether a length of service criterion indirectly discriminated against younger employees. If so, could it be justified and therefore lawful?

They found that it did indirectly discriminate against younger workers but felt that the criterion could be justified as it was a 'proportionate means of achieving a legitimate aim' Rewarding loyalty, experience and the 'overall desirability of achieving a stable workforce in the context of a fair process of redundancy selection' was a legitimate aim. Evidence suggesting that younger employees accepted it as fair, that it was not determinative in the selection process and that all employees would benefit at some time, were believed to demonstrate its proportionality.

The Court then considered whether using length of service in this way was a benefit? If so, did it fall under Regulation 32 of the Employment Equality (Age) Regulations 2006, which allows employers to offer employees benefits, based on length of service, which would otherwise be age discriminatory? All three judges agreed that it was capable of being a benefit for the purpose of Regulation 32. Because service of more than five years was rewarded, in order to take advantage of Regulation 32, the employer must be able to show that such a criterion reasonably fulfils a business need. Only one judge felt that 'having a loyal and stable workforce' was such a business need; the others decided that they were not required to decide this point!

It is important to note that in this case, length of service was one of a number of factors, and it only became a deciding factor when all others were equal. The wording of the judgement makes clear that the outcome would have been different had it been the only criterion.

Employers who wish to use length of service as a criterion for redundancy selection should ensure that it is one of a number of criteria and not determinative: this case does not give the green light to decisions based on LIFO. Issues such as how much weight is given to the service criterion when compared to other selection criteria, and considerations of fairness and loyalty, judged on the actual circumstances of each case, would be relevant. It is also relevant that the Court of Appeal appeared to be swayed by the fact that the redundancy selection matrix had been negotiated in the context of a collective agreement with the union.

Dismissal: it's best not to lie to a tribunal!

In Daleside Nursing Home v Mrs C Mathew, the EAT ruled that because Mrs Mathew had made up a "deliberate and cynical lie" the Employment Tribunal could award costs against her.

Mrs Mathew made two claims: firstly direct race discrimination (she alleged that she had been called "a black bitch" by her manager), and secondly that she had been underpaid after a change of management at the Birkenhead care home. The original tribunal (Liverpool) found that the "allegation of explicit and offensive racial abuse was false". However, they did not order her to pay costs.

On appeal, the EAT said that "where there is such a clear-cut finding that the central allegation of racial abuse was a lie, it is perverse for the ET to fail to conclude that the making of such a false allegation at the heart of the claim does not constitute a person acting unreasonably. This was plainly a case where some order for costs ought to have been made."

We understand the costs awarded were £7,500.

As for the underpayment, the ET ruled that since the claimant had accepted it for 14 months it was reasonable for the employer to assume it was the right rate of pay.

Discrimination: is climate change a 'philosophical belief'b>

In Nicholson v Grainger plc and others, a pre-hearing review decided that an individual's (strongly held) beliefs about climate change and the environment were capable of being a "belief" for the purposes of the Employment Equality (Religion or Belief) Regulations 2003 and Mr Nicholson was therefore protected under the Regulations.

When they first came into force, 'religion or belief' was originally defined as 'any religion, religious belief or similar philosophical belief' but since 30 April 2007, the Equality Act 2006 amended the definition to remove the requirement for a philosophical belief to be 'similar' to a religious belief, thus broadening the potential scope of protection.

The tribunal felt that the claimant's beliefs gave rise to a moral order similar to most religions and went beyond mere opinion as they affected the way he led his life. The employer is appealing against this decision. Provided the decision is upheld, the actual claim will then be determined at a full hearing.

Pay: tips and the minimum wage

You will already have read above that as from October tips and gratuities will not count towards the NMW.

However, just to report on the (final) outcome of HMRC v Annabels restaurant and night club and others.

The Court of Appeal ruled in favour of HMRC and confirmed that, where restaurant or bar service charges are paid by the customer to the employer, but are then paid into a troncmaster's bank account for distribution in accordance with a tronc scheme agreed between the troncmaster and workers, the sums distributed to workers are not "paid by the employer" and so cannot be included in National Minimum Wage pay.

Annabel's must now pay over £125,000 in arrears to its workers.

The Court of Appeal judgement is legally binding and sets a precedent for other cases.