Martineau Education Bulletin

August 2009

www.sghmartineau.com

Key contact:
Smita Jamdar
Partner and Head of Education
T: 0870 763 1332
E: smita.jamdar@sghmartineau.com

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Contents

Strategy, Students and Governance

Equality Impact Assessments | read
This article considers universities’ obligations to carry out equality impact assessments on their policies, suggests a process for doing so and highlights the possible consequences of failing to comply.
Education White Paper - universities’ involvement with schools | read
This article comments on the DCSF’s latest White Paper "Your Child, Your Schools: Our Future" which suggests local authorities should consider universities as candidates to take over poorly performing state schools.
Charities Act 2006 - public benefit update | read
Two out of five independent schools recently assessed by the Charity Commission failed to demonstrate public benefit. This article looks at whether there could be a knock-on effect in HE and updates readers on universities’ reporting obligations relating to public benefit.

Finance, Technology and IP

Investing in Hedge Funds | read
In this article we look at some of the issues universities should bear in mind when considering investing in hedge funds.
Failure to pay patent renewal fees | read
This article highlights the importance of taking a pro-active approach to IP portfolio management and sets out the risks involved in allowing patents to lapse by failing to pay renewal fees.

Estates

Should I stay or should I go? | read
As occupiers of commercial premises, universities often need to take strategic decisions about whether to remain in existing premises or to relocate certain parts of their operations. In this article we address the key questions often asked by universities who are approaching a break in, or the end of, their lease.
Renewable Energy Strategy launched - What’s in it for Universities? | read
Following last year’s Renewable Energy Strategy Consultation, the Government has now published the UK Renewable Energy Strategy. We look at the key aspects of this and other related strategies.

Human Resources

The Equality Bill - where are we now? | read
We update you on progress of the Equality Bill, highlighting the key amendments in the context of employment law.
Public sector equality duty | read
The Government Equalities Office has published a consultation paper setting out a number of specific duties designed to help public bodies meet their obligations under the expanded single equality duty. This article looks at what is being proposed.

Full article details

• Strategy, Students and Governance

Equality Impact Assessments | back to top

The obligation on institutions to carry out race equality impact assessments on their policies, has been in place since 2001. The obligation to carry out impact assessments on the grounds of gender has also been in place for a number of years. Yet, according to UCU and corroborated by our own experience of advising institutions, many universities are failing to carry out such impact assessments when making decisions about redundancies and other restructuring or about curriculum area development and cessation.

The requirements to carry out impact assessments in the areas of race, gender and disability are specific manifestations of the wider general duties to secure equality of opportunity and eliminate unlawful discrimination in these areas. The aim is to identify any discriminatory or negative consequences for a particular group or sector of the community on the grounds of race, disability or gender. There is currently no statutory requirement to carry out impact assessments in relation to religion and belief, sexual orientation or age, although this will change should the single equality duty proposed in the draft Equality Bill become law.

“Policies” are not defined in the Acts, although the Code of Practice on the Race Equality Duty defines them as “the formal and informal decisions about how a public authority carries out its duties and uses its powers”, potentially encompassing any decision or step that a university may take or propose to take. This could include small decisions or steps which may have an impact on a particular sector as well as more substantial decisions regarding funding and restructuring.

There is no prescribed way of conducting an equality impact assessment. The approach, process and scope of the assessment will instead be determined by each university’s plans and influenced by its own diversity profile and the diversity profile of the region(s) in which it operates. Guidance issued in the local government arena suggests the following 6 step process:

1. Initial screening

Initial screening should be carried out on all new and revised policies as this will determine whether a full equality impact assessment will be required. This should be done at the earliest opportunity.

2. Scoping and defining

An impact assessment should be completed before the formal implementation of a policy can take place. Usually the sooner an impact assessment is completed the better. The time each assessment will take will vary depending on the nature and complexity of the policy. It is important to identify and understand who the policy is intended to benefit and to identify any potential negative impact it may have.

3. Information gathering

The sources of information will vary depending on the nature of the policy. Priority should be given to information that assists with identifying a potential adverse impact on one or more of the targeted equality groups or that there is unlawful discrimination taking place. If sufficient information is not available then this should be highlighted in the final action plan. Consultation should take place with appropriate stakeholders as part of the process.

4. Making a judgement

At this point all the information gathered in the earlier stages should be reviewed and decisions should be made as to whether or not there is potential for the policy to result in any unlawful discrimination or a less favourable outcome toward any group within the community.

There may be occasions where it is appropriate that an activity impacts less favourably on some communities or sections of the community (i.e. those that have traditionally been easier to reach) if it means being able to target those which have been historically difficult to reach or “traditionally disadvantaged”. However it will be necessary to consider whether the potential for less favourable impact on one or more communities or groups can be justified.

5. Action planning

The real value of completing an assessment comes from the actions that will take place and the positive changes that will emerge through conducting the assessment. The action plan should be meaningful and include actions that will remove or alleviate the potential for the activity to unlawfully discriminate or impact less favourably on one or more communities.

6. Publication and review

It is a legal requirement to publish equality impact assessments. All equality impact assessments are public documents that need to be published in a manner that meets the needs of the community. Progress against the action plan should be reviewed regularly.

The failure to carry out an impact assessment may result in enforcement notices being served by the Equality and Human Rights Commission. Alternatively, where the policy is particularly substantial or widespread in its impact, it could be argued that the failure to carry out the assessment is evidence of a wider failure to have due regard to the need to promote equality of opportunity between people of different races, between men and women and between disabled and non-disabled people. That wider failure could be challenged by any interested person by way of judicial review.

7. The Equality Bill - demonstrating the impact on equality of policies and services

The Government has published for consultation its proposals for a set of specific duties to support the single equality duty (i.e. in relation to sex, race, disability, age, sexual orientation, religion and belief, pregnancy and maternity). While these proposals include a specific impact-assessment duty, the emphasis has moved away from the process of assessing the impact of policies to one of assessing outcomes. Institutions will have to demonstrate how they have taken the evidence of the impact on equality into account in the design of their key policy and service delivery initiatives; identifying the difference which that assessment has made will therefore be essential. As a consequence, impact assessment is expressly required to exert a palpable influence on the design and delivery of policies and services. The Government anticipates that the regulations setting out the specific duties, including impact assessments, will come into force in April 2011. The consultation document entitled “Equality Bill: Making it work. Proposals for specific duties. A consultation” can be found at: http://www.equalities.gov.uk and the consultation period ends on 30 September 2009.

Smita Jamdar
Partner and Head of Education
T: 0870 763 1332
E: smita.jamdar@sghmartineau.com

Jane Byford
Partner and Head of Employment and Pensions
T: 0870 763 1378
E: jane.byford@sghmartineau.com

© Martineau 2009

Education White Paper - universities’ involvement with schools | back to top

Apparently encouraged by the University Technical Colleges scheme and the wider role of universities and colleges as sponsors of academy schools, participants in trust schools and saviours of failing schools under the National Challenge Trust School Scheme, the DCSF’s latest White Paper, published on 1 July 2009, continues the policy of encouraging the involvement of HE and FE institutions in the conduct of schools.

Your Child, Your Schools: Our Future suggests the creation of “Accredited Schools Groups”. In order to qualify for accreditation, an institution must demonstrate “ sound governance; effective leadership and management; a strong model for managing and improving schools; a track record of improving outcomes for children and young people; and the capacity to achieve transformational change in the schools they are supporting” . Government funding of £20 million will be available to the operators of Accredited Schools Groups “to develop their capacity and to take on underperforming schools in need of change”, and they will have “the freedom to recruit the best heads and reward them with substantial pay packages”.

We have advised a number of institutions on their involvement with schools projects. All have seen clear benefits in terms of progression, widening access and profile in the community, but they have also taken account of demands on management resources, the possibility of mission drift and the risk of reputational damage. The turnover amongst newly appointed head teachers of academy schools is notoriously high; dealing with the fall-out from a staff vote of no confidence, and the consequent suspension and departure of the head, as recently happened at an academy sponsored by a north-western university, must represent an unwelcome variance from what the project was designed to achieve.

Smita Jamdar
Partner and Head of Education
T: 0870 763 1332
E: smita.jamdar@sghmartineau.com

© Martineau 2009

Charities Act 2006 - public benefit update | back to top

The failure of two out of five independent schools assessed by the Charity Commission to demonstrate public benefit, now a statutory component of charitable status, has been widely reported. The decisions seem to be based on findings of insufficient free or subsidised places for pupils, although the schools claimed to be providing public benefit in other ways, such as outreach schemes and shared use of facilities.

In England at least, universities need not fear the Commission’s rap on the door; responsibility for compliance with charity law is to be devolved to HEFCE as principal regulator of the great majority, which are already exempt charities, and even the 18 HE institutions which are currently registered charities will, subject to their agreement, also become exempt and therefore removed from direct control by the Commission. However, Oxford, Cambridge and Durham colleges, all students’ unions turning over £100,000, and all institutions in Wales will, as registered charities from a date probably in 2010, be subject to the Charity Commission’s regime. The Office of the Scottish Charity Regulator made its first assessment visit to a university, the University of Dundee, two years ago.

Dundee passed without difficulty, as all public sector universities would be likely to do on enquiry by either the Charity Commission or HEFCE, due to the fact that most courses are charged at less than cost, the existence of extensive bursary schemes as part of the trade-off for the fees regime, and, for most institutions, the relatively small percentage of total income accounted for by non-charitable research. The University of Glasgow’s decision to grant licences allowing companies to use IP derived from academic research without payment of royalties, provided that significant local socio-economic benefits are thus delivered, sounds good for public benefit, although there have been suggestions that this conflicts with the responsibility of charity trustees to maximise their assets.

The English universities which are still registered charities will need to report on public benefit in their 2008-09 annual reports, by reference to the Charity Commission’s guidance. HEFCE is to publish guidance on how to approach this, which will also be of interest to Welsh universities for the future.

The requirement in section 45 Charities Act 1993 to prepare and file annual reports does not apply to exempt universities, although HEFCE as principal regulator will need to be satisfied from 2009-10 that they are operating for the public benefit. Discussions about how the necessary information gathering will be carried out are taking place, and this is likely to be linked to the corporate governance report and operating and finance review.

Smita Jamdar
Partner and Head of Education
T: 0870 763 1332
E: smita.jamdar@sghmartineau.com

© Martineau 2009

• Finance, Technology and IP

Investing in Hedge Funds | back to top

In a desire in these difficult times to establish a broad investment portfolio with sensible risk mitigation but still maintaining a reasonable return, a number of universities have indicated to us that they are considering investment in hedge funds.

Hedge funds obviously have a high profile not least because of their use of offshore low tax jurisdictions, the tax status of their managers and the potentially incestuous nature of their investment portfolios and the possible returns to the operators/owners.

Hedge funds are a form of collective investment scheme which operate across national boundaries under various legal systems and are largely unregulated alternative investment vehicles. They can involve greater risk due to investment complexity. On the other hand, the object of that complexity is to mitigate risk through diversification and complex risk-management strategies.

A university obviously needs to ensure that it has suitable investment advice. From a legal perspective, it is conceivable that such products can form part of a diversified investment portfolio for a university. The general view of the Charity Commission is that “investment in Hedge Funds” may be “suitable for a charity, but it is likely that it would only be so as a small part of a well diversified investment portfolio” [The Charity Commission - Investment of Charitable Funds: Detailed Guidance]. Subject to a university’s ethical stance on investment, a university’s duties in relation to hedge funds “do not extend to the consideration of the investments which are made by the operators of the scheme” [Ibid]. What is key for a university considering investing in such a product is to take appropriate professional advice and have a structural, economic, investment and legal overview.

Investment in hedge funds is likely to be within the general powers of investment of a university, but the consistency of any investment with a university’s internal policies will have to be considered and also the degree of risk the university wishes to bear in the context of an overall portfolio approach. The risk might be mitigated by investment in a scheme which itself invests in a number of Hedge Funds thereby balancing a diverse range of strategies.

Any overview would help the university to identify the structure of the particular fund (e.g. master feeder fund; parallel fund or fund of funds), the domicile and manager location, the approach on fees (in particular any duplication of fees and whether fees are compatible with normal market practice) and the basic provisions on liquidity and redemption. The provision of the investment advice and the decision taken obviously need to be on an arms-length basis and it is important to ensure that there is transparency regarding interests of advisers or investment committee members in the proposed destination of the university’s funds. Consideration would also have to be given to the tax consequences of the investment, as anti-avoidance measures can apply. An investment can look much less attractive if it does not fall within the normal tax exemptions for charities.

David Doogan
Partner, Banking & Insolvency
T: 0870 763 1618
E: david.doogan@sghmartineau.com

© Martineau 2009

Failure to pay patent renewal fees | back to top

No university can be criticised for implementing costs saving measures at the current time. When looking at an IP portfolio, there are some areas where cost cutting is sensible and possible, and this is why conducting an IP audit is recommended during these challenging times.

Equally, there are other areas where universities should exercise caution. One such area is in respect of patent renewal fees. Patent fees increase during the lifetime of the patent, and in some cases it can be the best decision to allow a patent to lapse in these expensive later years. In other cases it can be disastrous.

For example, a decision to allow a patent to lapse can be taken if the patented product is no longer of commercial promise, or if the patent no longer prevents effective market entry by others (perhaps because they have found effective ways to design around the patent).

However, perhaps not surprisingly, recently there have been a number of reported instances of patent owners failing to pay renewal fees purely because of economic pressures. This decision should not be taken lightly. If the patent is still of value, failing to pay the renewal fees may reduce the value of the university IP portfolio and the ability to commercialise the technology. It is almost certainly likely to breach any current licensing arrangements. As and when the university has more funds available for IP portfolio management, the decision to abandon the patent may be regretted.

In some instances it is possible to apply for a lapsed patent to be restored if the failure to pay the renewal fees is unintentional, or if reasonable care was taken to see that any renewal fee was paid within the prescribed period. But the patent registries and courts are taking a very dim view of patent owners seeking to restore patents which have lapsed due to economic pressures, even in the most severe of cases.

The High Court has recently stressed the serious nature of the restoration step, and that it is not a casual administrative procedure. It must be remembered that other people are affected by the restoration of the patent monopoly, who then are unable to make use of the patented technology freely.

The court therefore upheld the decision of the UK Intellectual Property Office to refuse restoration of patents which had lapsed for non payment, where the application for restoration merely stated that the lapse was unintentional without further evidence. Patent owners must provide full justification.

But even where evidence is given, the courts are still rejecting restoration applications. The High Court has confirmed that serious shortage of funds is no excuse where the owner used available funds elsewhere, even if there was good reason to prioritise spending in this manner. Where shortage of funds is pleaded as the reason for non-payment, the patent owner also has to show that this shortage was not attributable to any lack of care on his part.

Even where no funds were available at all, the UK Intellectual Property Office refused to restore five patents which had lapsed because the administrators of the patent-owning company did not have the necessary funds at the time to pay the renewal fees. They decided that the administrator knew of the renewal deadlines, and that the company did not have the monies to pay the fees, therefore the decision not to pay the fees could not be said to be unintentional (even though the administrator may not have fully understood the consequences of not paying the fees).

The take-home message is that even if the university has very limited funds to maintain its IP portfolio, it should carefully examine the consequences of letting a patent lapse. A proactive approach to portfolio management has to be promoted. If costs savings are necessary then conducting a full IP audit will help to identify the safest way to achieve savings and potentially identify new income streams, without damaging the value of the portfolio and ability to commercialise promising university technology in the future.

Joanne Flack
Solicitor, Intellectual Property & Technology Team
T: 0870 763 1613
E: joanne.flack@sghmartineau.com

© Martineau 2009

• Estates

Should I stay or should I go? | back to top

As occupiers of commercial premises, universities often need to take strategic decisions about whether to remain in existing premises or to relocate certain parts of their operations, for example when they are approaching a break right in a lease. The current economic conditions are likely to affect the way in which universities approach this decision-making process and in this article we address the key questions that are currently being asked by universities who are approaching a break in, or the end of, their lease.

Q: How are you seeing the changed economic landscape affecting the commercial rental market?

One interesting aspect of the present recession is that its impact is not restricted to property prices alone. The ‘credit crunch’ is affecting many facets of the wider economy, including the business incomes of commercial tenants, including universities. As a result, fewer new tenancies are being taken, many existing tenants are going through a process of retrenchment and there is, unfortunately, an increased incidence of commercial tenant insolvencies. This has inevitably reduced the demand for the rental of commercial property, at a time when many new commercial development schemes have just arrived on the market. This high supply, low demand, market means that the balance of power is very much with any tenant looking to relocate or renew a lease in the near term.

Q How has this translated into the way that landlords are behaving and why?

When answering this question it is important to understand that landlords are having to deal with a number of different issues as a result of the present economic conditions. For the reasons mentioned above they are finding it harder to find and retain tenants but in addition, where properties are empty, they are not only being hit with the loss of income but are also having to pay rates following the change to the void rates regime. On top of this many of them are under pressure from their lenders to reduce the size of loans secured on their properties as capital values have fallen with a concomitant effect on loan-to-value ratios.

All of this can mean that while, on the one hand, landlords are keen to secure occupiers if only to offset the rates liability in the short term, on the other, they may have to maintain the on-paper capital valuation of the property to ensure they do not breach their loan-to-value covenants with their funders. Hence, although landlords may be willing to offer the incentives necessary to attract or keep a tenant, they may find themselves having to dress up those incentives in a way which maintains the overall headline rental value. Universities should not, therefore, be too surprised to see some seemingly curiously packaged incentive deals.

Whilst we are not valuers, our understanding is that there is currently a debate going on in the market as to whether there has actually been a wholesale rebasing of rental values, or whether the incentives currently being offered are a short term phenomena not reflective of rents in the longer term. On balance, it seems difficult to argue that there has not been some genuine reduction in rental values that will be retained in the development of rental prices going forward.

Of course, each landlord’s situation is unique and the nature of the concessions and enticements they will be willing to countenance will vary. The strength of the relationship between landlord and tenant is very important too, but the over-arching message is that everything is open to negotiation and landlords are likely to be as flexible as they possibly can be to secure a viable tenant, particularly one such as a university which will be seen very much as a safe bet.

Q: What about universities, how are they best to address lease expiries and break clauses?

Universities whose leases are coming to an end will usually find that they are in a strong bargaining position: they will be seen as a safe tenant; there is plenty of choice available in the market; a move may secure a property in a better location or of a better quality; and as a new tenant a university is highly likely to achieve competitive rental levels, rent free periods or even capital contributions (or perhaps a combination of all three). Of course, an occupier doesn’t need to move premises to secure these advantages. Landlords are generally just as keen to keep existing tenants as they are to secure new ones.

It must also be remembered that, even if a rent free period could be negotiated with a new landlord, moving comes at a cost which, by the time you factor in removal costs, interruption of your operations, fit out and other logistical expenses, can be quite significant.

There will also be some unavoidable costs in the arrangement of any new lease, including legal costs and Stamp Duty Land Tax, but these are likely to be similar whether a tenant decides to stay in their current property or moves on.

The other point universities need to allow for when thinking about moving is their dilapidations liability should they vacate their current premises. Even the best kept premises will have some dilapidations liability and the outgoing occupier may also have to remove alterations previously carried out and make good the premises they are leaving. Our experience is that landlords are being increasingly stringent with respect to dilapidations claims when tenants leave not least as it is rare for there to be a new tenant lined up to come into the premises on their departure.

Q What about universities who have a break clause in their lease? Should they be exercising this?

The first thing to say here is that there is no simple answer. Universities need to be aware that once they give notice to exercise their break clause they cannot then withdraw it. This means that, if it is being done purely to put pressure on their existing landlord, it may work in the landlord’s favour to some extent. If the university does not actually want to move, and the landlord is aware of the fact, the landlord may be able to negotiate a better lease, from his point of view, than the one that has just been terminated.

The strategies of using an impending break clause as a basis for opening negotiations with a landlord vary depending upon the exact terms of the lease and the position of the parties. For this reason, occupiers should always diarise their break clauses as much as twelve months in advance of the clause becoming operable. This will allow adequate time to consider properly whether or not they want to move and to examine the specifics of the break clause in question.

Break clauses can have conditions attached. This is not always the case but such conditions appear more frequently than one might expect. The problem this raises for occupiers is that compliance with the conditions is often a pre-requisite to the break clause taking effect. In the current market conditions, landlords are looking very closely at break clause conditions and, if they are not duly complied with, may seek to use them as a way of avoiding an occupier’s purported break in its lease taking effect.

Universities with a break clause on the horizon may want to open discussions with their landlord about what sort of concessions may be available to them if they agree not to exercise the break, and similar issues to those which are touched upon in this article need to be considered. The important thing is to have agreed concessions recorded formally in a contract in advance of the last date on which the notice by the university has to be given. If not, then the university may have no choice but to exercise the break clause and relocate or continue under the pre-concession lease conditions.

The area of break clauses is definitely one where early planning and obtaining good advice pays dividends. A university occupier, whether or not it has conditions attached to its break clause, should seek legal advice well before the break notice has to be served to be sure that it is properly exercised.

James Spreckley
Partner, Property Team
T: 0870 763 1672
E: james.spreckley@sghmartineau.com

© Martineau 2009

Renewable Energy Strategy launched - What’s in it for Universities? | back to top

Following last year’s Renewable Energy Strategy Consultation, the Government went into overdrive last month with the issue of a plethora of publications including The UK Renewable Energy Strategy.

The UK Renewable Energy Strategy (the “RES”)

The RES is the means by which the UK will meet its obligation, agreed at EU level and enshrined in the EU Renewable Energy Directive, to source 15% of energy from renewable sources by 2020.

Focus has been placed on electricity, heat and transport.

In addition to meeting the UK’s greenhouse gas reduction targets, the RES aims to decrease our reliance on fossil fuels and imported gas.

The Government’s “lead scenario” to deliver the 15% share of energy from renewable sources would see:

more than 30% of electricity generated from renewables - up from about 5.5% currently. Primarily, this will come from onshore and offshore wind but there will be important contributions from hydro, sustainable bioenergy and marine.
12% of heat generated from renewables - up from about 1% currently. This will come primarily from biomass, biogas (including injection of biomethane into the national gas system for transport to end users), solar and heat pumps.
10% of transport energy from renewables - up from about 2.6% currently. Note that this is not limited to an increase in biofuels but sustainable biofuels are likely to play a major role.

But to drive investment in this area, there must be financial incentives. In the Energy Act 2008, which came into law at the end of last year, the Government took the power to introduce a feed-in tariff for renewable electricity (now known as the “clean energy cash-back scheme”) and a renewable heat incentive. In addition:

the Renewables Obligation (the major incentive scheme for renewable electricity generators) (the “RO”) has already been revised and further significant changes are being considered, including:

an extension of the RO to 2037 for new projects;
removing the current 20% maximum obligation within the RO;
introducing a mechanism to maintain a floor price for Renewable Obligation Certificates (“ROCs”) through a “revenue stabilisation mechanism” (which is likely to be a contract for difference rather than a change to the RO itself); and
increasing the headroom of 8% introduced this year, to 10% from 2014/15.

it is planned to amend or replace the Renewable Transport Fuel Obligation (the “RTFO”) which has had limited success in bringing “green” fuels to the UK market and supports suppliers rather than producers.

The move to a low carbon economy is seen as a major opportunity for UK PLC. It should generate jobs, inward investment and world class, leading technology development. But, that will only happen if the level of financial incentives is sufficient.

The Government has also announced that it will facilitate £4bn of lending from the European Investment Bank to help projects through the current economic downturn and give grant funding to support projects coming to market before the clean energy cash-back scheme and the renewable heat incentive come into effect.

The Office for Renewable Energy Deployment (“ORED”) has been established, with a focus on making sure that the building blocks are in place to enable the investments to be made. It will focus on the planning process, supply chains, feedstock supplies and grid connections, all of which have been blamed to some degree for the slow progress to date.

At the same time that the Renewable Energy Strategy was published, the Government also published:

The UK Low Carbon Transition Plan, National Strategy for Climate Change - this is the “route map” for the UK’s transition to a low carbon economy from now up to 2020. The key measures are:

30% of electricity from renewables
carbon capture and storage for coal powered stations
new nuclear plants
energy efficient homes
smart meters
clean energy cash-back scheme
renewable heat incentive
further investment in offshore wind and marine energy
cut emissions from cars
cut emissions from farming
smart grid

The UK Low Carbon Industrial Strategy - the core objective of this strategy is to ensure that British business and workers are equipped to take advantage of the opportunities and minimise the costs of the move to a low carbon economy, that is, a Britain with at least 80% less emissions of greenhouse gases in 2050 compared to 1990.

Low Carbon Transport: A Greener Future - A Carbon Reduction Strategy for Transport - the strategy covers all forms of transport from road to aviation and shipping, private travel and public transport.

Consultation on Renewable Electricity Financial Incentives 2009 - this looks at the options for revising the RO referred to above.

This is a lot of information to absorb and there is more to come, including a consultation later this year on the renewable heat incentive and a consultation early next year on support for renewable transport.

Universities have a key role to play, not only in being at the forefront of research and development of new and improved technologies but also by leading by example in the way that they power and heat their estates and utilise transport within, to and from their estates.

Andrew Whitehead
Partner and Head of Energy, Projects and Commerce
T: 0870 763 1528
E: andrew.whitehead@sghmartineau.com

© Martineau 2009

• Human Resources

The Equality Bill - where are we now? | back to top

In our May Bulletin we reported on the publication of the Equality Bill which aims to harmonise and strengthen existing equality legislation relating to gender, race, disability, age, religion or belief, sexual orientation, pregnancy and maternity. The Equality Bill completed the Commons Committee stage on 7 July 2009. There are few significant amendments to the original Bill save for the ones highlighted below.

Combined discrimination

Some of the worst discrimination is suffered by people falling into more than one disadvantaged group. However, a claimant treated less favourably because she is, for example, a “black woman” would currently have to bring separate race and gender claims and prove her case in relation to each strand of discrimination.

The proposed “combined discrimination” clause provides that it will be discriminatory to treat someone less favourably because of a combination of two of the following protected characteristics: age, disability, gender reassignment, race, religion or belief, sex or sexual orientation . Marriage and civil partnership, and pregnancy and maternity, which are covered in other parts of the Bill, are rather surprisingly not potential grounds of combined discrimination.

The treatment that the person experienced must be prohibited for each protected characteristic, but it would not be necessary for claimants to show that the claims would succeed if they were brought separately. Claimants will not be able to bring claims of indirect combined discrimination but will be able to bring single strand claims alongside combined discrimination claims.

Pregnancy and maternity discrimination

The Bill originally prohibited less favourable treatment of a woman for a reason related to pregnancy and maternity (both in the workplace and in certain situations outside work). Significantly, less favourable treatment was defined as "being treated less favourably than is reasonable". The effect of this was to water down the current protection afforded to employees, giving employers a defence of reasonableness to a pregnancy/maternity discrimination claim. The clause has now been amended and prohibits "unfavourable" treatment on pregnancy or maternity-related grounds. Such treatment can never be justified.

Discrimination arising from disability

Last year’s House of Lords’ judgment in Mayor and Burgess of London Borough of Lewisham v Malcolm [(2008) 3 WLR 194] changed the comparator in disability discrimination, in essence making it more difficult for employees to succeed in disability-related discrimination claims.

The government attempted to redress the balance by introducing the new concept of “discrimination arising from disability” into the Bill to replace the outgoing disability-related discrimination provisions. The new provisions prohibit an employer from treating a disabled employee in a particular way if, because of the employee’s disability, that treatment amounts to a detriment and there is no justification for the treatment. The employer has a defence if it can show that it did not know and could not reasonably be expected to know that the employee had the disability.

This new clause is broadly equivalent to that of disability-related discrimination as it existed before Malcolm with the difference that there is no requirement for a comparator against which the treatment of the disabled person is judged. Lack of knowledge is a potential defence and discrimination can be objectively justified if it is a proportionate means of achieving a legitimate aim.

Following concerns about the drafting of the clause , the government has now indicated that it intends to produce revised wording before the Report Stage.

What next?

The Bill will now proceed to the Report Stage when all MPs in the Commons will be able to debate the Bill and propose further amendments. No date has yet been set for this.

Jane Byford
Partner and Head of Employment and Pensions Group
T: 0870 763 1378
E: jane.byford@sghmartineau.com

© Martineau 2009

Public sector equality duty | back to top

The Equality Bill contains a new clause to replace the existing provisions which impose equality duties on public sector bodies, including universities, in relation to race, disability and gender . The new clause, the Public Sector Equality Duty, brings together the existing duties and also covers sexual orientation, age, religion or belief, pregnancy and maternity, and gender reassignment. This will require universities to have regard to the need to eliminate discrimination, harassment, victimisation and any other conduct prohibited under the Bill; advance equality of opportunity; and foster good relations across these protected characteristics.

The Government Equalities Office has published a consultation paper entitled Equality Bill: Making it work - policy proposals for specific duties which sets out a number of specific duties. These are not an objective in themselves but are intended to be a clear framework designed to help public bodies meet their obligations under the Public Sector Equality Duty.

The proposed specific duties are:

Setting equality objectives - based on the evidence they have gathered, public bodies will have to set out their equality objectives and the steps they intend to take to achieve them over the following business cycle (which the consultation suggests should be a three-year period). They would then be required to implement the steps unless it would be unreasonable or impractical to do so.

Reporting on Progress - public authorities should report annually on progress against their objectives, and review their objectives at least every three years.

Reporting important equality data in the workforce - public authorities with 150 or more employees will have to publish their gender pay gap figures, their black and minority ethnic employment rates and their disabled people employment rates.

Demonstrating the impact on equality of policies and services - when developing and delivering policies and services, public authorities will have to take into account the impact these will have on equality. They will need to show how they have done this and what difference it has made.

Involvement and consultation - when setting their equality objectives, developing their action plans and reviewing progress, public authorities will be required to take reasonable steps to consult and involve employees (or their representatives), service users and other parties with an interest in how they carry out their functions. In particular, those from protected groups whom the duty is designed to help should be consulted.

Procurement - the government is proposing specific duties where authorities are letting contracts subject to the public procurement regulations. These will require contracting authorities to:
- set out, as part of their equality objectives, how they will ensure equality is considered as part of their procurement activities;
- consider the use of equality-related award criteria where they relate to the subject matter of the contract and are proportionate; and
- consider incorporating equality-related contract conditions where they relate to the performance of the contract and are proportionate.

The consultation closes on 30 September 2009. The government will then consult on draft regulations and the specific duties will eventually be set out in secondary legislation, subject of course to the Equality Bill being enacted.

Jane Byford
Partner and Head of Employment and Pensions Group
T: 0870 763 1378
E: jane.byford@sghmartineau.com

© Martineau 2009

© Martineau

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