The rules for engaging individuals through personal service companies (PSCs) are due to change for private sector organisations in April 2020. The government intends to shift the responsibility for determining how the fees should be taxed from the PSC to the end user and any organisation that regularly uses contractors will probably be affected by the proposed changes. HMRC has issued some guidance and we also have a ‘readiness’ review and advice service to help you to prepare.
Disability and reasonable adjustments
The EAT recently considered a claim by an employee who suffered from ulcerative colitis and claimed a reasonable adjustment was for her to be given a dedicated parking space close to the building, which was what she had been entitled to under the employer’s policy before she moved to a different site. Although she was told she could park in an unauthorised zone if she was unable to find a space near the building, she claimed this was not a suitable adjustment because the stress of trying to find a space exacerbated her medical condition.
The EAT provided some useful guidance on how the obligation to make reasonable adjustments should operate in practice. It held that a non-contractual policy is relevant in determining the reasonableness of an adjustment and an employer should have a cogent reason for departing from it. The EAT also confirmed that an employer is not required to select the adjustment requested by the employee, nor does it have to select the best or most reasonable adjustment where there are a number of possible adjustments, provided that the adjustment selected is reasonable and overcomes the disadvantage to the employee.
Cap on public sector exit payments
The government has begun a consultation, which will continue until 3 July 2019, on the draft regulations and guidance to implement its plan to impose a cap of £95,000 on public sector exit payments.
Subject to certain exceptions, the proposed exit payments that will be subject to the cap include redundancy payments, severance payments, ex gratia payments, payments to reduce or eliminate an actuarial reduction to a pension on early retirement, payments in lieu of notice that exceed one quarter of the employee’s annual salary or any other payment made in consequence of termination of employment.
A number of important employment law changes took effect last month including:
- Employers are required to show the number of hours worked on payslips where the worker’s pay varies
- Payslips are required to be issued to all workers, not just employees.
New maximum penalty
The maximum level of penalty an employment tribunal may order in respect of an employer's aggravated breach of employment law increased from £5,000 to £20,000 for breaches of workers' rights that take place on or after 6 April 2019.
The National Minimum Wage and National Living Wage increased on 1 April 2019 and increases in statutory rates also took effect, such as for statutory redundancy payments and maternity pay.
In our recent Hot Topics seminar we mentioned the case of Mayor and Burgesses of the London Borough of Lambeth v Agoreyo, in which the High Court held that the suspension of a teacher following allegations that she had used unreasonable force to deal with pupils breached the implied term of trust and confidence.
This decision has now been overturned by the Court of Appeal. It held that the High Court had erred in considering whether the suspension was necessary. The only test is whether there is reasonable and proper cause to suspend the employee and whether the suspension destroys or seriously damages the relationship of trust and confidence.
This is a helpful decision for employers but, when considering whether to suspend an employee, it is still important that it is not a knee jerk reaction and that it has been properly thought through, alternatives have been considered and the decision is documented.
(Mayor and Burgesses of the London Borough of Lambeth v Agoreyo)
Working time – rest breaks
Another case we mentioned in our Hot Topics seminar that has now been overturned on appeal is Network Rail Infrastructure v Crawford.
A worker has a right to an unpaid rest break of 20 minutes when working for more than 6 hours a day, unless a specific exemption applies, in which case the worker should be given an equivalent period of compensatory rest. The EAT had held that it was necessary to provide an uninterrupted break of 20 minutes and that rest breaks could not be aggregated, even though in this case the railway signalman was able to take lots of short breaks during his shift.
The Court of Appeal has now reversed the EAT’s decision and held that compensatory rest does not need to be an uninterrupted 20 minute break. This is a helpful decision for employers and means that, where a specific exemption applies, there may be more flexibility when setting shift rotas.
(Network Rail Infrastructure v Crawford)
In a separate case, the EAT has held that compensation for a breach of a worker’s right to a rest break may include an award for personal injury. In this case, the worker suffered no financial loss and the tribunal decided it was just and equitable to award £750 on the basis that the lack of rest breaks was more than a minor inconvenience and would have had some adverse impact, even though there was no medical evidence presented.
Claims of this nature may become more common in the future and the award for personal injury could be more substantial if the medical evidence justifies it, so employers should therefore ensure that their working arrangements allow their workers to take a twenty minute rest break, unless a specific exception applies.
(Grange v Abellio London Ltd)
The government has published a consultation on measures to prevent the misuse of confidentiality clauses.
The proposals for regulating the use of confidentiality clauses (both in employment contracts and settlement agreements) include:
- Prohibiting clauses that prevent disclosures to the police (and possibly others)
- Requiring all confidentiality clauses in settlement agreements, and written statements of employment particulars, to highlight clearly the disclosures that the clause does not prohibit
- Making a confidentiality clause void if it does not meet the new requirements.
The consultation recognises that confidentiality can benefit the worker and the employer so it does not propose a total ban on confidentiality clauses in settlement agreements dealing with cases of discrimination and harassment.
The annual increases to various statutory compensation limits have just been announced. These increases are of particular relevance to those making redundancies on or after 6 April 2019 as the maximum amount for a week’s pay (used to calculate statutory redundancy payments) will increase to £525 per week (from £508 per week).
The maximum compensatory award for unfair dismissal increases to £86,444 (from £83,682) where the effective date of termination is on or after 6 April 2019.
The EAT has held that it was not discrimination on the grounds of religion or belief for an ultra-orthodox Jewish nursery to dismiss a teacher for refusing to lie to parents when it discovered that she was cohabiting with her boyfriend.
The EAT considered the Lee v Ashers Baking case and confirmed that the motive for the discrimination is immaterial and must be based on the victim's beliefs (not the discriminator's, providing they would act in the same way regardless of who is affected). It held that the unfavourable treatment was on the grounds of the nursery’s beliefs, rather than the teacher’s, and so it was not discrimination on the grounds of religion or belief.
However, as the nursery had questioned her about her plans for marriage and children, this tended to show that the employee’s plans to have children outside of marriage was a significant influence in the decision to dismiss and so the teacher’s claim for sex discrimination was upheld.
(Gan Menachem Hendon Limited v de Groen)
The Court of Appeal has held that the end-user of agency staff was liable for payments to be made to agency workers in respect of underpayments where it had previously made the payments to the agency but the agency had failed to pass the payments on to the workers and then become insolvent.
In this case, London Underground had paid workers engaged through an agency less than comparable London Underground staff. London Underground then made a payment to the agency to cover the underpayment. However, the agency dishonestly failed to pass this on to the workers and then became insolvent.
The Court of Appeal held that, as London Underground had chosen to deal with that agency, they should bear the risk of the agency’s dishonesty and insolvency, rather than the Claimants, even if it meant that London Underground may end up paying twice for the breach. Employers are therefore advised to ensure they carry out appropriate checks when appointing workers through an agency.
(London Underground Ltd v Amissah)
The Court of Appeal has held that an employee was automatically unfairly dismissed when she was dismissed immediately before a TUPE transfer because she had a difficult relationship with someone who was to become a new director of the transferee company.
As the employee was dismissed because the transferee anticipated difficulties in the working relationship between the two individuals and it did not want her to transfer, the transfer was the reason for the dismissal and so it was automatically unfair.
(Hare Wines v Kaur)
Protection from dismissal
The EAT has held that an employee is only protected from dismissal for asserting a statutory right (under S.104 of the Employment Rights Act 1996) if the breach of statute alleged by the employee is an actual breach, not a threatened breach.
In this case, the Claimant alleged that he was dismissed for an allegation he made at a disciplinary hearing, that the employer had already made up its mind to dismiss him (and so the employer was about to breach the statutory right not to be unfairly dismissed).
The Claimant did not have two years’ service to bring an unfair dismissal claim so he brought a claim on the basis of an intended or threatened breach of a statutory right. However, the EAT held that the natural reading of S.104 of the Employment Rights Act 1996 requires an allegation by the employee that there has been an infringement of a statutory right, not that there would be one in the future, and so his appeal was dismissed.
(Spaceman v ISS Mediclean Ltd t/a ISS Facility Service Healthcare)
EU workers and Brexit
The Home Office has recently published a policy paper to clarify how the UK immigration rules will be apply to EU citizens in the event a deal with the EU cannot be reached. In summary:
EU citizens (plus family) who are resident in the UK on or before 29 March 2019:
EU citizens in the UK will have until 31 December 2020 to apply for pre-settled or settled status under the EU Settlement Scheme.
EU citizens who arrive in the UK on or after 30 March 2019:
Temporary transitional rules will apply between 30 March 2019 and 31 December 2020 which mean EU citizens may stay for up to 3 months without a visa and are permitted to study/work. Those wanting to stay longer will be able to apply for a non-extendable three year visa which will permit study/work.
After the transition period, all visa applications will fall under the new skills-based immigration system which is planned to take effect from 1 January 2021 and will be applied equally to EU and non-EU nationals.
Recording working time
In a recent Spanish case, the Advocate General has given his opinion that the Working Time Directive requires employers to set up a system which records the actual number of hours worked by workers each day in order to ensure the limits set out in the Directive (in relation to maximum weekly working time, rest breaks, daily and weekly rest periods etc) are actually observed and that workers are be able to exercise their rights.
Currently in the UK under the Working Time Regulations (WTR) employers are obliged to keep records for two years that are adequate to show that the statutory limits are not being exceeded. For example, to show a worker’s working time does not exceed 48 hours per week on average (unless the worker has opted out) and that the limits on night work have been complied with.
It remains to be seen whether the ECJ will follow this opinion in due course. If it does, it is likely to lead to the conclusion that the WTR do not properly implement the Directive and employers may be required to set up a system to more closely monitor their workers in order to keep more detailed records of their working time.
(Federación de Servicios de Comisiones Obreras v Deutsche Bank SAE)
New legislation comes into force from 6 April 2019 requiring employers to provide an itemised payslip to all workers and show the hours worked on payslips where the worker’s pay varies depending on the number of hours they have worked.
The government has also published guidance to help employers comply with the new legislation.
Pregnancy and maternity discrimination
The government has launched a consultation, which runs until 5 April 2019, seeking views on extending the current redundancy protection which applies to women on maternity leave, to cover pregnancy and a period of 6 months after the mother returns to work.
The consultation also seeks views on whether similar protection should be afforded to those returning from adoption leave, shared parental leave and longer periods of parental leave. The possibility of extending the three month time limit within which a claim relating to discrimination, harassment and victimisation, including on grounds of pregnancy and maternity, can ordinarily be brought to an ET is also discussed.
EU workers and Brexit
The government’s position in relation to EU workers and their family members after Brexit is constantly changing. Keep up to date with developments with Employment Edit.
The Prime Minister has announced that there will be no fee for applications under the EU Settlement Scheme when the system fully opens on 30 March 2019. Anyone who has already applied, or who applies and pays a fee during the test phase, will have their fee refunded.
The EAT has held that a hospital interpreter’s complaint to HR (about false rumours that were being spread about him being responsible for breaches in patient confidentiality) was capable of being a qualifying disclosure for the purposes of the whistleblowing legislation.
The whistleblowing legislation makes it clear that the worker must have a reasonable belief that the information disclosed tends to show that one of the specified types of wrongdoing has occurred. This includes a breach of legal obligation and the EAT held that this was broad enough to cover defamation, even if the worker had not specified it as such.
However, in this case the EAT found that the worker was only concerned about the effect of the false rumours on him and he was not protected by the whistleblowing legislation as he did not have the reasonable belief that the disclosure was in the public interest.
(Ibrahim v HCA International Ltd)
In the latest decision in the long running equal pay claims against Asda and Sainsbury’s supermarkets, the Court of Appeal has held that for two or more claimants to present their claims on a multiple claim form their factual situations did not have to be identical in every respect. However, their roles and the work they did had to be the same or so similar to one another that the claims could properly be said to be based on the same set of facts.
The Court of Appeal made it clear that it was the work they did, not their job titles, that was important. One could have longer hours or a greater length of service and this would not matter. However, if one was a bakery assistant and the other a checkout operator, their claims could not be said to be based on the same set of facts, even if they were relying on the same male comparators.
Gender pay gap reporting
The government has published its response to the BEIS Committee report on gender pay gap reporting. The key points are:
- There are no current plans to extend the gender pay gap reporting obligations to companies with 50 or more employees
- There are no plans to introduce a mandatory requirement for all employers to produce an action plan in future reporting years, although employers will be encouraged to voluntarily produce an action plan that is relevant to their individual situation
- The guidance will not be altered to include partner remuneration now the reporting year has begun but the government will evaluate altering the guidance to introduce a voluntary reporting methodology for partnersin future reporting years
- Consultation has begun on mandatory ethnicity pay reporting and the government will take into account the responses to the consultation
- A framework is planned for voluntary reporting on mental health and disability for large employers but there will be no mandatory requirement for employers to report on their disability pay gap.
A statutory review must take place within five years of the introduction of the legislation and any major changes are more likely to be made then.
Employment law timeline 2019
As we begin the new year, we have prepared a timeline of the key dates in 2019 that employers, HR professionals and in-house employment lawyers need to know.
EU Settlement Scheme
The EU Settlement Scheme (the Scheme) will enter a public test phase from 21 January 2019. This means that any EU citizen resident in the UK who holds a valid passport, and their non-EU citizen family members who hold a valid biometric residence permit, will be able to submit their application under the Scheme to remain in the UK after Brexit.
In the event of a 'no deal', the Government has said that it will continue to run the Scheme, but applicants will need to be resident in the UK by 29 March 2019 (instead of 31 December 2020) and to apply for settled status by 31 December 2020 (instead of 30 June 2021).
Right to work checks
From 28 January 2019, employers will be able to rely solely on the Home Office online Right to Work Checking Service for non-EEA nationals who hold biometric residence permits or biometric residence cards and EEA nationals who have been granted immigration status under the EU Settlement Scheme.
Employers who use the online service will be excused from a civil penalty if:
- the online check confirms that the employee is allowed to work in the UK and perform the work in question
- the employer is satisfied that any photograph on the online right to work check is of the employee
- a copy of the online check is retained for at least two years after the employment ends
- in respect of students, details of the term and vacation dates of the individual's course of study are obtained and retained.
EEA nationals who have not been granted status under the EU Settlement Scheme will still need to demonstrate their right to work using the appropriate documents.
Senior Managers and Certification Regime
The Senior Managers and Certification Regime has been extended to the insurance industry and many firms will have already taken steps to ensure compliance.
SMCR comes into force for all FCA-regulated firms on 9 December 2019 and firms should start preparing in good time in 2019.
The Certification regime will be new to insurers and places responsibility squarely on firms to identify individuals who could pose a risk of significant harm to the firm, and to assess and certify them as fit and proper to carry out their role.
Good work plan
The government has published details of the changes it proposes to make to employment law following the Matthew Taylor Good Work review, together with draft legislation.
Key proposals include:
- legislation to improve the clarity of the employment status tests and align the employment and tax status frameworks
- a right to a written statement of terms and conditions for workers (as well as employees), from day one (rather than within two months)
- an increase in the reference period, from 12 weeks to 52 weeks, for calculating an average week's pay for holiday pay purposes where the worker has variable pay
- a right for workers to request a more fixed working pattern after 26 weeks of service
- a change in legislation relating to continuity of employment, so that a gap of up to four weeks between contracts will not break continuity of employment (an increase from one week currently)
- a repeal of the Swedish derogation – which currently allows agency workers to be paid less than other permanent employees in certain circumstances.
Many of the changes are intended to come into force on 6 April 2020.
The Court of Appeal has upheld the employment tribunal’s decision that Uber drivers are workers and were working when they had their app switched on and were ready and willing to accept trips. Interestingly the judges were not unanimous in their decision with one judge disagreeing with this conclusion.
The Court of Appeal has granted Uber permission to appeal to the Supreme Court.
(Uber B.V. v Aslam and ors)
In contrast, the judicial review application of the Central Arbitration Committee’s (CAC’s) decision that Deliveroo riders were not workers covered by the collective bargaining legislation has been dismissed by the High Court.
The High Court held that the right to freedom of assembly and association under Article 11 of the European Convention on Human Rights (ECHR) does not extend the right to collective bargaining to those without a contractual obligation to perform work personally.
(R (on the application of the Independent Workers Union of Great Britain) v Central Arbitration Committee)
The Supreme Court has held that an ill-health early retirement pension awarded to a disabled employee, based on the part-time salary that he was earning before he retired, was not unfavourable treatment for the purposes of a disability discrimination claim.
The Supreme Court agreed with the Court of Appeal and held there was nothing intrinsically unfavourable or disadvantageous about the award of a pension, to which the employee was only entitled because of his disability. Although the employer had reduced the employee’s hours from full-time to part-time as a reasonable adjustment because of his disability, had the employee not been disabled and been able to work full time he would not have been entitled to a pension at all at that time.
(Williams v Trustees of Swansea University Pension and Assurance Scheme)
New statutory rates
The government has published the proposed new statutory rates that will apply from April 2019:
- Statutory maternity pay, paternity pay, shared parental pay and adoption pay will increase to £148.68 (from £145.18)
- Statutory sick pay will increase to £94.25 (from £92.05).
Permanent health insurance
The Employment Appeal Tribunal (EAT) has held that an employer was in breach of an implied term when it dismissed an employee for incapacity whilst he was contractually entitled to long-term disability benefits.
The EAT held that a term could be implied into the employment contract that, once the employee has become entitled to payment of long-term disability benefits, the employer will not dismiss him on the grounds of his continuing incapacity to work.
This confirms previous case law and whilst employers should continue to include a contractual right to terminate the contract notwithstanding an entitlement to PHI, in view of the potential questions about the enforceability of such a clause, legal advice should be sought before dismissing an employee who is entitled to long-term disability benefits or PHI.
(Awan v ICTS UK Ltd)
The EAT has held that it was not disability discrimination to dismiss an employee with Post Traumatic Stress Disorder (PTSD) and associated amnesia for shoplifting. This was because the employee was dismissed because he had a tendency to steal and, as this is an excluded condition, he did not have a disability for the purposes of the Equality Act.
This decision serves as a useful reminder that not every condition will amount to a disability and there are a number of excluded conditions, including: addiction to nicotine, alcohol or any other substance, a tendency to set fires or to steal, a tendency to physical abuse of other people, exhibitionism and voyeurism, tattoos and body piercings and hay fever.
However, an impairment caused by an excluded condition could be a disability that is protected, so when considering a dismissal in such circumstances it is important to consider the position carefully.
(Wood v Durham County Council)
Reporting on disability, mental health and wellbeing
The government has published a voluntary reporting framework to support employers to voluntarily report information on disability, mental health and wellbeing in the workplace.
The framework sets out the benefits of increased transparency in the workplace and guidance on how data can be collected, and where it can be reported. It also links to other support including the new guide for line managers: Recruiting, managing and developing people with a disability or health condition published by the Department for Work and Pensions.
Pay ratio reporting
The Companies (Miscellaneous Reporting) Regulations 2018 come into force on 1 January 2019 and include a requirement that UK listed companies with more than 250 employees report on stakeholder and employee engagement and publish and justify the pay difference, known as the pay ratio, between their chief executive and their average UK worker.
The requirements apply to the financial year of companies beginning on or after 1 January 2019, with companies starting to report their pay ratios in 2020.
A former employee of an accident repair company has been sentenced to six months in prison as a result of the Information Commissioner’s Office (ICO) first prosecution under the Computer Misuse Act 1990.
The individual used a colleague’s log-in details to access thousands of customer records containing personal data without permission and he continued to do this after he had moved to a new job at a different organisation.
The ICO usually prosecutes a case like this under the Data Protection legislation. However, in this case it took the decision to prosecute under section 1 of the Computer Misuse Act 1990, which makes it a criminal offence to cause a computer to perform a function with intent to secure access to any program or data held on that computer, and carries a custodial sentence of up to two years.
Investigations – withholding evidence
When investigating allegations of misconduct, an employer is required to show that a fair and reasonable investigation was carried out and a higher standard of investigation is required when the employee is facing potentially career-changing consequences.
However, in a useful decision for employers, the EAT has held that an employer acted within the range of reasonable responses in withholding from a disciplinary panel the evidence of witnesses who would not have had a direct view of the incident and who had said they had seen nothing. In similar circumstances it would, however, be advisable for the investigatory officer to include in the investigation report the reason why any evidence has not been included or not been taken any further.
(Hargreaves v Manchester Grammar)
Women on boards
The Hampton-Alexander Review has now published its 2018 report which aims to increase the number of women in senior positions in FTSE 350 companies.
The report reveals that FTSE 100 companies have increased female board membership from 12.5 per cent in 2011 to 30 per cent in 2018 and are currently on track to hit the target of one third of board level positions to be held by women by 2020. However, the report highlights the comparably slower progress made by FTSE 350 companies, where almost one in four companies have only one woman on their board and there remain five all-male boards.
The Chair of the Hampton-Alexander Review, Sir Philip Hampton, said 'too many companies still have a long way to go'. To hit the target, half of the appointments to board level will now have to be filled by women over the next two years.
Performance management advice
Acas has published new advice for employers on performance management after its research revealed that only one in four employers have adapted their performance management systems for staff with disabilities.
The guidance explains when the duty to make reasonable adjustments arises where an employee with a disability is disadvantaged by performance measures and offers tips for employers on treating staff fairly.
Pay in lieu of annual leave
(Kreuziger v Land Berlin and Max-Planck-Gesellschaft zur Förderung der Wissenschaften eV v Shimizu)
The European Court of Justice (ECJ) has held that a worker who does not apply for paid annual leave does not automatically lose the right to that leave or a payment in lieu of untaken leave on termination.
The worker must have been given an opportunity to take that leave and it is for the employer to show that it encouraged the worker to do so, while informing him or her, accurately and in good time, of the risk of losing that leave if it is not taken.
Employers should ensure that they have appropriate wording in employment contracts and annual leave policies concerning the carry over and payment in lieu of unused holiday, and consider having procedures to remind workers to use their annual leave during the relevant holiday year.
Part time workers
(British Airways plc v Pinaud)
The Court of Appeal has held that a part time cabin crew member who had to be available for 53.5% of the hours of her full time comparator, but received only 50% of the salary, had established a prima facie case of less favourable treatment.
The questions remain as to whether the less favourable treatment was justified and, if not, what the appropriate remedy should be. The case will now return to the Employment Tribunal for this to be determined.
In particular, the Employment Tribunal will need to consider the Respondent’s argument that, in practice, the Claimant actually worked fewer days pro rata than her full time comparator. The Court of Appeal noted that "it would be a very surprising conclusion" to award compensation of 3.5% salary for the period of loss claimed if the Claimant in fact worked fewer days than her comparator.
(Evans v Xactly)
The Employment Appeal Tribunal (EAT) has confirmed that, when assessing whether workplace conduct amounts to harassment, it is appropriate to assess that conduct within the context in which it takes place.
In this case, the Claimant brought a harassment claim on the ground that he had been called a “fat ginger pikey”. He was diabetic and had strong links with the traveller community. The Employment Tribunal noted that the comment is potentially discriminatory but that the office culture in question was one of good natured jibing and teasing among competitive sales people and, at the time, the Claimant did not take the remark amiss. The EAT confirmed that the Employment Tribunal was entitled to make this finding.
Notably, the EAT stressed that harassment claims are highly fact sensitive and context specific. Employers should, therefore, remain wary of tolerating potentially discriminatory comments dressed up as workplace “banter”.
Autumn 2018 Budget
The key employment-related announcement in this Autumn’s Budget is that, as expected, the public sector off-payroll working rules will be extended to the private sector from 6 April 2020. Private sector businesses who use contractors should review how these changes will impact them and plan accordingly.
The Chancellor also announced that the introduction of Class 1A National Insurance contributions on termination payments over £30,000 has been delayed until April 2020.
Company liable for data breach
(WM Morrison Supermarkets plc v Various Claimants)
The Court of Appeal has upheld the decision of the High Court that Morrisons was vicariously liable for the actions of a disgruntled employee who posted the payroll details of around 100,000 employees online.
The Court held that there was a sufficient connection between the employee’s actions and his employment to make Morrisons vicariously liable. He had received the data in the course of his employment as a senior IT internal auditor and had been asked to send it to the company’s external auditor. The fact that he had copied it and disclosed it in an unauthorised way was closely connected to what he had been asked to do and his motive was irrelevant.
Morrisons have been granted permission to appeal to the Supreme Court.
Company liable for assault
(Bellman v Northampton Recruitment Limited)
In another vicarious liability case, the Court of Appeal has overturned the High Court’s decision and held that the employer was vicariously liable for its Managing Director’s assault of an employee at a drinking session after a Christmas party.
The Court of Appeal undertook a broad analysis of the Managing Director’s functions and activities and took into account that he was in a dominant position and had a supervisory role. Although the drinking session at which the incident occurred was separate to the Christmas party, the company paid for taxis and drinks and the argument arose when the Managing Director was addressing the employees on his authority. The Court held there was sufficient connection between his job and the assault for his actions to be considered "in the course of employment" to render the employer vicariously liable.
Whistleblowing – non-executive directors liable
(Timis and anor v Osipov)
The Court of Appeal has held that an employee may make a whistleblowing detriment claim against individual workers for their conduct in relation to his dismissal after he made protected disclosures.
In this case, the CEO made protected disclosure and was then dismissed on the instruction of two non-executive directors. The CEO was found to have been unfairly dismissed but, as the employer was insolvent, the CEO sought to claim against the directors personally. The Court held that the non-executive directors were jointly and severally liable with the employer to compensate the CEO for the losses he suffered from his dismissal as a result of the detriment to which they subjected him.
Sexual orientation discrimination
(Lee v Ashers Baking Company Ltd and others)
As widely reported, the Supreme Court held on Wednesday that a bakery did not discriminate against a gay man when it refused, on the grounds of the owners’ religious beliefs, to bake a cake with a photo of Bert and Ernie from Sesame Street and the wording 'Support Gay Marriage'.
Mr Lee had previously been successful in his claim in the Northern Irish courts for direct discrimination on the grounds of sexual orientation and political beliefs. However, this decision now overturns the previous decisions.
The Supreme Court noted that the bakery had not refused to fulfil the order because of any personal characteristics of Mr Lee or of anyone with whom he was associated; they refused because they objected to the message on the cake.
The Supreme Court also considered the freedoms relating to religion and expression protected under Articles 9 and 10 of the European Convention on Human Rights. Those freedoms include a right not to be obliged to manifest a belief which you do not hold and the Court held that an infringement of those rights could not be justified by an obligation to supply a cake iced with a message with which the bakers profoundly disagreed.
Ethnicity pay reporting
The government has begun consultation on the introduction of mandatory ethnicity pay gap reporting for large employers and has asked for views on what ethnicity pay information should be reported in order to drive change without causing undue burdens on businesses. The consultation closes on 11 January 2019.
Alongside this consultation, the Prime Minister has also announced a Race at Work Charter, which has been designed with Business in the Community, and commits those businesses that sign up to the Charter to drive forward changes to increase the recruitment and progression of ethnic minority employees.
Tips, parental leave and flexible working
The government has announced new measures to support workers, businesses and entrepreneurs. These include plans to:
- prevent employers keeping tips intended to go to workers and to ensure tips left for workers go to them in full. Details will be set out in new legislation but as yet we do not have details o the proposed timeframe for implementation
- consult on requiring employers with more than 250 staff to publish their parental leave and pay policies
- create a duty on employers to consider whether a role may be done flexibly and to make that clear when advertising the role.
Following the recent publication of the final report on EEA migration in the UK by the Migration Advisory Committee (MAC), the government has announced more details of its skills-based immigration plans after Brexit and promised to publish a White Paper setting out the details in the autumn.
In the interim period, the EU settlement scheme is intended to apply to EU citizens resident in the UK before 31 December 2020 (and their family members), provided they apply for settled status before 20 June 2021.
Employers will need to evaluate the impact of new travel and work restrictions on their workforce after Brexit and ensure that any necessary applications for settled status are made within the deadline.
(Talon Engineering Ltd v Smith)
The EAT has held that an employer acted unreasonably by refusing to postpone a rescheduled disciplinary hearing by 10 days so that the employee’s chosen trade union representative could attend.
This refusal to postpone for a short time rendered the subsequent dismissal procedurally unfair even though it was not in breach of the right to be accompanied provisions in s10 Employment Relations Act 1999 (which only require an employer to agree to a request to postpone a hearing if the suggested rescheduled date is within five working days of the original date).
This does not mean that an employer should always agree to a postponement in such circumstances but it is important to note that an employer’s overriding obligation is to act reasonably and this may involve a degree of flexibility in the process.
The FRC has published the new 2018 UK Corporate Governance Code, which will apply to all premium listed companies for accounting periods beginning on or after 1 January 2019.
The key employment related changes include requirements for:
- a board-monitored whistleblowing mechanism
- a mechanism for workforce engagement
- additional diversity reporting, covering senior managers
- greater focus on gender, social and ethnic diversity in succession planning for both the board and senior managers
- additional executive remuneration reporting.
Employment tribunal statistics
The latest quarterly statistics published by the Ministry of Justice for the period April to June 2018 show:
- there has been an increase of 165% in the number of single employment tribunal claims lodged compared to the same period in 2017 (the last quarter when fees were in force)
- there has been an increase of 344% in the number of multiple claims lodged compared to the same period in 2017.
Parental bereavement leave
The Parental Bereavement (Leave and Pay) Act 2018 has received Royal Assent and is expected to come into force in 2020.
The Act will give all employed parents who lose a child under the age of 18, or suffer a stillbirth from 24 weeks of pregnancy, a right to two weeks' leave and statutory parental bereavement pay, if they meet the eligibility criteria. Details of how and when the leave may be taken will be set out in regulations in due course.
The Director of the SFO v Eurasian Natural Resources Corporation Limited
Case: The Court of Appeal has held that documents, prepared during the course of an internal investigation by lawyers and a firm of forensic accountants, for the purpose of resisting or avoiding contemplated legal proceedings or criminal prosecution, were protected by litigation privilege.
This important decision overturns the previous High Court decision and will be welcome news for any organisation faced with conducting an internal investigation into allegations of wrongdoing but it will be important to note that the application of legal privilege is fact-sensitive and will depend on the circumstances of each case. For more details see our briefing.
HMRC has changed its enforcement of national minimum wage (NMW) liabilities where there has been a TUPE transfer. With effect from 2 July 2018, all NMW liabilities will be enforced against the transferee employer. Penalties triggered by arrears that accrued before employees transferred under TUPE will also be enforced against the transferee rather than against the transferor (as was previously the case).
Calculating the correct NMW is notoriously difficult and the penalties for getting it wrong can be substantial (currently 200% of the total NMW underpayment, with an overall maximum penalty of £20,000 per underpaid worker), so organisations taking on employees under TUPE should undertake thorough due diligence to determine whether the correct NMW has been paid and, if not, what the likely liability may be.
The government has announced a new pilot scheme to allow 2,500 workers from outside the EU to come to the UK to undertake seasonal work for up to 6 months on fruit and vegetable farms in order to alleviate labour shortages during peak production periods.
The pilot scheme will run for 2 years and the results of the pilot will be reviewed by the government to decide how best to support the longer-term needs of the farming industry outside the EU.
Acas has published new guidance for employers and employees on employment references.
Saad v Southampton University Hospitals NHS Trust
Case: The EAT has held that an employee will be protected from victimisation if they wrongly but honestly believed the allegations they made to be true, even if they had an ulterior motive for making those allegations.
The claimant had made an allegation of racial or religious discrimination. The tribunal found that the allegation had been made in order to postpone an assessment of his skills and that the allegation itself was false, but because the claimant subjectively (albeit unreasonably) believed his allegation to be true, the tribunal concluded that it had not been made in bad faith. The claimant was therefore entitled to protection from victimisation.
Employment contracts and resignation
Brown & another v Neon Management & another
Case: The High Court has held that resignation on a lengthy notice period could constitute affirmation of an employment contract. The claimants in this case had resigned in response to breaches of their employment contracts, but did so on notice periods of six months and 12 months respectively.
The High Court found that it would be unconscionable to keep one’s right to discharge a repudiated contract for that length of time – in the face of a repudiatory breach of contract, the employee must not leave it too long before resigning. By resigning on such lengthy notice periods, the claimants in this case had affirmed their contracts.
Brooknight Guarding Ltd v Matei
Case: The EAT has held that an employee on a zero hours contract was an agency worker due to the temporary nature of his assignment.
Mr Matei was employed by the respondent on a zero hours contract and was assigned to work as a security guard for different clients, but mainly worked for one client. Mr Matei claimed he was an agency worker, but the respondent argued that he worked permanently for one client and was therefore not an agency worker.
The EAT said that the question of whether Mr Matei was an agency worker came down to whether he was working temporarily and concluded that he was – the position was not indefinite. Mr Matei was therefore an agency worker and entitled, after 12 weeks service, to the same terms and conditions as someone employed directly by the client.
The government has published a technical notice on workplace rights in the event of a no-deal Brexit. The notice states that there will be minimal change to UK legislation derived from EU law and existing employment rights would not be changed.
However, there may be changes in relation to employee rights on an employer’s insolvency and in respect of European Works Councils. In that regard, the notice recommends that:
- UK and EU employees working in an EU country should make themselves aware of the relevant implementing legislation in that country to confirm whether they will still be protected in the event of their employer's insolvency under the national guarantee fund established in that country
- UK businesses with EWCs may need to review those agreements in light of there no longer being reciprocal arrangements between the UK and the EU.
Employment status and personal service companies
Sprint Electric Ltd v Buyer’s Dream Ltd and another
Case: The High Court has expressed concern about the level of artificiality involved with the use of personal service companies for tax avoidance reasons in an employment context.
In this case neither party had questioned the status of their relationship, which was governed by a service company arrangement. However, the High Court said that where a court had concerns that labels chosen by the parties to apply to their relationship were untrue and had been applied as a tax avoidance scheme, it could and should consider the issue of its own motion.
The dispute in this case primarily concerned the ownership of intellectual property. The High Court determined that the relationship was really an employer-employee relationship, and decided the intellectual property dispute accordingly. The case illustrates that courts are prepared to challenge the use of personal service companies of their own volition and in wide-ranging contexts.
EU settlement scheme
The Home Office has published an employer toolkit to help guide employers through the new EU settlement scheme.
The toolkit includes a briefing pack for communicating key facts to employees, a leaflet with important info for EU citizens in the UK, a leaflet with steps to apply for settled status, a leaflet with key terminology, and various posters with important dates, the benefits of applying and steps to apply.
Gender pay gap reporting
The House of Commons’ BEIS Committee has published a report which includes a number of recommendations for strengthening gender pay gap reporting and closing the gender pay gap, including:
- reporting obligations to extend to companies with 50 or more employees
- reporting to include a narrative explanation for pay disparity and an action plan to tackle the gender pay gap
- partner remuneration to be include in reported figures
- salary quartiles to be replaced by deciles (to allow a more nuanced analysis)
- further guidance to be provided to clarify areas of ambiguity (e.g. how bonus figures are calculated)
- giving the EHRC specific enforcement powers to levy fines for non-compliance.
It is now up to the government to consider these recommendations and decide which, if any, to implement.
Meanwhile, the Government Equalities Office has also published guidance setting out recommendations on how employers can close the gender pay gap.
Enforcement of the Equality Act 2010
The Women and Equalities Committee has launched an inquiry into the enforcement of the Equality Act 2010.
Among other things, it has invited evidence on how easy it is for the public to understand and enforce their statutory rights, and whether enforcement of the Equality Act 2010 succeeds in securing change.
Implied term of trust and confidence
James-Bowen v Commissioner of Police of the Metropolis
Case: The Supreme Court has found that an employer does not owe a duty of care to conduct litigation in a manner which protects its employees from economic or reputational harm.
This case arose from the arrest of a suspected terrorist who made allegations of serious assault against the arresting officers and argued that the Commissioner of Police was vicariously liable for their actions. As part of a settlement, the Commissioner made an admission of liability and apologised for the officers’ actions.
The officers then claimed that, in entering such a settlement, the Commissioner was in breach of an implied duty owed to the officers to protect them from economic or reputational harm. The Supreme Court said it would not be fair, just and reasonable to impose such a duty.
The Women and Equalities Commission has produced its report on Sexual Harassment in the Workplace. Its recommendations include:
- a mandatory duty on employers to protect employees from sexual harassment in the workplace
- a duty for public sector employers to conduct risk assessments for sexual harassment and then mitigate risks
- reintroducing employer liability for third party harassment
- extending sexual harassment protection to interns and volunteers
- extending the time limit for bringing a claim to 6 months
- enabling tribunals to award punitive damages
- limiting the use of confidentiality clauses in settlement agreements to government approved standard clauses.
It is now up to the government to consider these recommendations and decide which, if any, to implement.
The government has decided not to add ‘caste’ as a protected characteristic under the Equality Act 2010.
The government expects that emerging caselaw, such as Chandok v Tirkey in which the EAT held that caste could be protected under the Equality Act 2010 to the extent that it is bound up with ethnic origin, will continue to provide some measure of protection against caste discrimination.
Philosophical belief discrimination
Gray v Mulberry
Case: The EAT has held that a belief in the sanctity of copyright law was not sufficiently cogent to qualify as a protected belief under the Equality Act 2010.
Even if it was a protected belief, the EAT held that an indirect discrimination claim could not succeed since the claimant was the only person known to hold such a belief. As a result there could be no ‘group disadvantage’, which is required for a successful indirect discrimination claim.
Holiday pay and voluntary overtime
Flowers and others v East of England Ambulance Trust
Case: Following its earlier decision in Dudley Metropolitan Borough Council v Willetts, the EAT has confirmed that voluntary overtime can qualify as “normal remuneration” for the purposes of calculating holiday pay under the Working Time Directive, if it is paid over a sufficient period of time on a regular basis.
In this case, the EAT also held that a clause in the NHS Terms and Conditions of Service, which stipulates that holiday pay is calculated on the basis of what an employee would have received had he/she been at work, gives the employees a contractual entitlement to have non-guaranteed and voluntary overtime included in the calculation of holiday pay.
The government has published its White Paper "The Future Relationship between the United Kingdom and the European Union" (PDF), in which it proposes that there be no regression in employment laws.
This would mean that EU based laws (such as TUPE, the Working Time Regulations and collective consultation requirements) would not be repealed. However, the eventual outcome remains subject to the terms of any Brexit deal reached with the EU.
Discrimination arising from disability
Ali v Torrosian and others t/a Bedford Hill Family Practice
Case: The EAT has provided a reminder that employers should always ensure that there is not a less discriminatory way of achieving a legitimate aim before taking action such as dismissal.
In this case, for example, the employer should have considered whether its aims could have been achieved by permitting Dr Ali – who had been absent on long-term sick leave following a heart attack – to return to work on a part time basis.
Minimum wage for on-call carers
MenCap v Tomlinson-Blake
Case: The Court of Appeal has held that carers who are required to sleep-in at work are not entitled to the national minimum wage while they are asleep.
Overturning the previous EAT decision, the Court of Appeal held that only time spent awake and working should be included in the calculation of national minimum wage entitlements, even if facilities for sleeping are provided by the employer.