Gowling WLG's employment, labour & equalities experts bring you the latest top five employment law developments that may affect your business - what they are, and what you can do about them.

1. National minimum wage and 'sleep-in' shifts

Treatment of "sleep-in" shifts for national minimum wage (NMW) purposes is an area that can often cause confusion. Where a worker is required to work a number of 'sleep-in' night shifts at the employer's premises, and be available in case of an emergency, does the full night shift constitute 'working' for the purposes of the NMW? Alternatively, is the worker only 'working' for NMW payment purposes when they are awake to carry out any relevant duties? The point is particularly significant in the care sector where sleep-in duties commonly arise.

In three combined appeals of Focus Care Agency Ltd v Roberts, Frudd v The Partington Group Ltd and Royal Mencap Society v Tomlinson-Blake the President of the Employment Appeal Tribunal (EAT) has considered the issues around 'sleep-in' shifts and answered:

"A multifactorial evaluation is required. No single factor is determinative and the relevance and weight of particular factors will vary with and depend on the context and circumstances of the particular case."

In other words the dreaded, "it depends on the facts of the case". On a positive note, the EAT has provided guidance on how a multifactorial evaluation is to be applied when considering whether the individual is 'working' during the sleep-in period.

For more on the latest EAT guidance see Sleeping on the job: national minimum wage and 'sleep' shifts

2. Redundancy or competing for newly created roles

During a redundancy exercise is there a difference between reducing three roles to two or restructuring to eliminate three roles and create two new roles? Does it matter?

In Green v London Borough of Barking & Dagenham, Ms Green worked in the planning and development department of the Council. She was a highly qualified employee and worked in a team of three with two other employees doing the same role as her.

The Council began restructuring its workforce and initiated redundancy consultation. The three existing positions would be eliminated and three members of the team would compete for two newly created roles which were very similar to the existing role. The selection for the roles would be done via an unseen test and subsequent interview.

Following Williams v Compair Maxam Ltd [1982], redundancy selection criteria should be capable of objective assessment by the managers who will apply them. Essentially, the employer must be able to demonstrate that any criterion adopted is reasonable and it has been applied rationally and objectively. However, in Ms Green's case, the tribunal held that this was not a case where fairness was to be judged in accordance with the Williams guidance, because the question was not why Ms Green had been selected for redundancy but why she had not been appointed to one of the remaining positions.

Instead the tribunal followed the test set out in Morgan v Welsh Rugby Union [2011]. Here, the EAT held that in relation to the appointment to new roles after a reorganisation, an employer is entitled to undertake a competitive interview process and appoint the candidate it considers to be best for the job, even if this is based on its subjective view. It simply needs to act fairly and reasonably.

On appeal, the EAT held that the tribunal had wrongly elevated Morgan to a rule of law. At all times, when employment tribunals consider dismissals, the touchstone is section 98(4) of the Employment Rights Act 1996; whether a dismissal is fair depends on the circumstances including the size and administrative resources of the employer's undertaking. The tribunal must review the decisions made and the processes followed and determine whether each stage fell within the range of reasonable responses.

Regarding the selection process in this case, the EAT held that the reduction of three jobs into two was part of the restructuring, but it was not the creation of a new job but rather a reduction of the number of roles. Having said that, it was still possible that the process used by the Council was fair. However, as the tribunal failed to approach the question of fairness correctly. The case was remitted to a fresh tribunal to determine whether each stage of the selection process fell within the range of reasonable responses.

Going back to the initial question posed, there is a subtle difference between allocating staff to newly created roles and selecting staff to remain in a dwindling number of roles. For the former, the employer has a greater degree of flexibility in using subjective selection criteria, in the latter the employer must follow a more objective selection process. However, in both cases employers should always remember the touchstone of the reasonable responses test.

3. TUPE: Watch out for Employee Liability Information

Under section 11 of the Transfer of Undertakings (Protection of Employees) Regulations 2006 (TUPE), the transferor must give the transferee specified employee liability information (ELI). This includes the particulars of employment of the employees that are required by section 1 of the Employment Rights Act 1996 (ERA), which includes remuneration levels.

While some of the information required under section 1 of the ERA will be contractual employment terms, others may and often are non-contractual terms. In the first appellate level judgment on ELI, the EAT has confirmed that there is no obligation to state whether the ELI given is contractual or not.

In Born London Limited v Spire Production Services Limited, the transferor gave information to the transferee that there was a non-contractual Christmas bonus. The transferee said this was incorrect in that the Christmas bonus was contractual not non-contractual. The transferee then issued a claim for £100,000 in compensation for incorrect ELI.

The EAT held there was no breach of the duty to provide ELI under section 11 TUPE. Whether the Christmas bonus was contractual or non-contractual was irrelevant because:

  1. the information required for ELI is not limited to contractual terms;
  2. there is no requirement to label the entitlement as contractual or otherwise; and
  3. the tribunal cannot consider a claim where the transferor has volunteered additional information (on the contractual status or otherwise of the bonus) which goes beyond the requirements of s1 ERA 1996.

So, it is up to the transferee to conduct thorough due diligence to establish whether terms are contractual (where possible). Where there is uncertainty over the contractual status of a term, the uncertainty should be factored into the commercial considerations.

Warranties and indemnities on the accuracy and status of ELI can help but these are less common in outsourcing scenarios. The message from the case is to tread carefully where the discretionary nature of benefits is unclear. While there might be information provisions and warranties/indemnities, both may have limitations. As a transferor, care should be taken to avoid expressing a view as to whether certain particulars are contractual where it is not necessary to do so. In some cases, depending on the facts, there may be a claim for misrepresentation.

4. Indirect discrimination and the reason why

Indirect discrimination is broadly concerned with an apparently neutral provision, criterion or practice ('PCP') which is not intended to treat anyone less favourably, but which in practice has the effect of disadvantaging a group of people with a particular protected characteristic when compared with others who do not share that protected characteristic ("group disadvantage"). Where a PCP disadvantages an individual with that characteristic, it will amount to indirect discrimination unless it can be objectively justified.

In the combined cases of Essop and ors v Home Office and Naeem v Secretary of State for Justice, the Supreme Court considered whether for an individual to establish a prima facie case, it is necessary to show not only why the PCP had disadvantaged the group, but also why they as an individual have been disadvantaged.

There may be some cases where it is clear why an individual was disadvantaged. However, in other cases, there may be no clear explanation as to why an individual was affected by the interaction between the PCP and the protected characteristic. Essop concerned strong statistical evidence that older, ethnic minority candidates had a poor success rate in the civil service exam, but why that is the case is unknown.

On 5 April, the Supreme Court held that where an employer's PCP results in a group disadvantage shared by those with a protected characteristic and the individual claimant also suffers from that disadvantage, then the claim will succeed unless the employer can objectively justify its PCP. It does not matter whether the claimant can prove the 'reason why' there is group disadvantage. It is enough that the disadvantage exists.

5. Government to produce guidance on workplace dress codes

Last year, Parliament considered a petition calling for employers to be banned from requiring female employees to wear high heels at work which had gained more than 152,000 signatures. This led to the Petitions and Women and Equalities Committees' joint report on High heels and workplace dress codes published at the end of January.

The report called for the Government to take urgent action to improve the effectiveness of the Equality Act in preventing discriminatory practices relating to dress at work. In particular, the report made recommended that the Government should review this area of the law; that more effective remedies should be available against employers who breach the law, including injunctions against potentially discriminatory dress codes; and that detailed guidance and awareness campaigns targeted at employers and workers should be developed.

We now have the Government's response to the report. The Government has rejected any recommendations that would require legislative change, favouring an approach based on more detailed guidance and awareness campaigns. This is because the Government believes that existing law is sufficient to protect women who are subjected to discriminatory dress codes. The Government has undertaken to produce guidance this summer and to explore other options for raising further awareness of the law on dress codes.

For more on the dress codes and equality see, Views on shoes or gendered ageism? and Dress codes and religious discrimination in the workplace - Understanding the issues.