Our July update considers recent developments in employment law, including cases on shared parental pay, holiday pay calculations and whistleblowing disclosures.  We also outline other points of note, including proposed developments to the modern slavery regime, gender pay gap reporting and executive remuneration.

Equal treatment for employees on shared parental leave and statutory maternity leave?

In two combined cases, the Court of Appeal held that there was no discrimination or a breach of the equal pay sex equality clause as a result of the employer not paying male employees enhanced shared parental pay on the same basis as the enhanced maternity pay available to female employees.

In the first case, the claimant brought a claim for direct and indirect discrimination against his employer on the grounds of his sex, arising from the differences in remuneration between his paternity leave and shared parental leave, and the remuneration entitlement of his female colleagues on statutory maternity leave. The Tribunal upheld his direct discrimination claim and dismissed his indirect sex discrimination claim. 

The Court of Appeal, upholding the decision of the EAT, found that there was no direct discrimination because the purpose of shared parental leave is fundamentally different to that of maternity leave.  It was emphasised that the primary purpose of the Pregnant Workers Directive (92/85/EC) is the health and wellbeing of the pregnant and birth mother, whilst the purpose of the Parental Leave Directive (2010/18/EU) is the care of the child. In addition, the former requires employers to pay employees on maternity leave for a minimum of 14 weeks at the same level as statutory sick pay.

In the second case, the claimant argued that by virtue of the sex equality clause at section 66 of the Equality Act 2010, the more favourable terms relating to his colleague who was on maternity leave also applied to him upon taking shared parental leave.

The Court of Appeal found that even if the claimant could be said to fall within the scope of section 66 of the Equality Act 2010, he could not succeed because a female colleague on maternity leave was not a suitable comparator since her more favourable terms related to matters concerned with her pregnancy and childbirth.

Why this matters?

This is a helpful decision for employers.  As the law currently stands, shared parental pay arrangements do not have to be enhanced as a failure to provide such an enhancement is unlikely to be discriminatory.

 Ali v Capita Customer Management Ltd/Chief Constable of Leicestershire Police v Hextall

Voluntary overtime and holiday pay

The Court of Appeal has provided further clarification that, assuming it is regularly worked over a sufficient period, voluntary overtime should be included in holiday pay calculations.

In this case, the employee undertook non-guaranteed overtime (when their shifts overran) and voluntary overtime.  However, the employer failed to include any elements of overtime when calculating holiday pay.

The Tribunal distinguished between the non-guaranteed overtime and voluntary overtime, finding that voluntary overtime should not be included in any holiday pay calculations.

The EAT allowed the employee’s appeal on the above issue and found that voluntary overtime should also be included in the calculation of holiday pay due to the consistent pattern it was worked.  The Court of Appeal upheld the decision of the EAT.

Why this matters?

There has been a clear direction of travel in favour of employees in relation to the calculation of holiday pay.  Employers need to carefully analyse the pattern and frequency of all overtime that is worked in order to make an assessment as to whether it should be included in holiday pay calculations.

East of England Ambulance Service NHS Trust v Flowers

When is a disclosure a protected disclosure?

For a whistleblower to be protected against dismissal or detriment, the worker must have made a protected disclosure.  In this case, the EAT upheld the decision of the Tribunal and found that a protected disclosure made been made.

The employee was a health care assistant at a hospital.  He complained to management that his supervisor had been taking food from a patient and asked for the matter to be investigated as he considered that it breached the terms of the staff handbook and may amount to a safeguarding issue.  The employee then raised further complaints that the investigation was not being carried out properly and objectively. 

The employee was later moved to site away from his supervisor, received an intimidating email and was unsuccessful in a promotion application.  As a result, he brought a whistleblowing claim alleging that he had been subjected to a detriment because he had made protected disclosures.  His claim was successful in the Tribunal and the decision was upheld by the EAT.

The EAT found that the employee had indeed held a subjective belief that a legal obligation was being breached, despite the fact that he had not used that legal terminology.  In addition, the EAT found that the employee had a reasonable belief that his disclosure was in the public interest.

Why this matters?

Employers should be alert to the fact that an allegation by one worker that a fellow worker has committed a wrongdoing could amount to a protected disclosure if, as was the case here, the allegation relates to a breach of a legal obligation and also has a public interest element.

Elysium Healthcare No 2 Ltd v Ogunlami

Round up of other developments

Gender pay gap reporting:  The Director of the Government Equalities Office has informed the House of Commons Treasury Select Committee that plans are underway to develop gender pay gap reporting for small employers with less than 250 employees.

Executive remuneration:  The Business, Energy and Industrial Strategy Select Committee has published the government’s response to its report on executive rewards.  The government does not agree with the recommendation that all companies should be required to appoint at least one employee representative to the remuneration committee.  The government also disagrees with the recommendation that pay ratio reporting obligations be extended to include all organisations with over 250 employees and include a requirement to publish the ratio between the Chief Executive and the lowest pay band, as well as the bottom quartile.

Directors’ remuneration:  The Department for Business, Energy and Industrial Strategy has published a Q&A document to help companies to understand their reporting obligations under the Companies (Directors’ Remuneration Policy and Directors’ Remuneration Report) Regulations 2019.  The Q&A document clarifies a number of issues, including those in relation to the duration of director service contracts and the decision-making process for the determination of the directors’ remuneration policy.

Modern Slavery:  Following an independent review of the Modern Slavery Act 2015, a report has been published.  The government will need to respond to the report recommendations, which include making it mandatory to publish a modern slavery statement, prohibiting companies from stating that they have taken no steps to address modern slavery issues in their supply chain and strengthening sanctions for non-compliance.