1. Whistleblowing: a protected disclosure must include specific facts, but these can be deduced from the context of an allegation

Workers may be entitled to whistleblower protection in broader circumstances than employers expect. It is clear that specific facts must be conveyed (which the worker reasonably believes tend to show one of six specified types of wrongdoing). However, although a simple allegation that an employer has breached a particular legal obligation is not enough by itself, the Court of Appeal has confirmed that the context can be taken into account, including gestures communicated at the same time, in determining whether facts have also been conveyed. The example given was a statement that the employer was breaching health and safety law while gesturing to sharps left on the floor of a hospital ward. The Court also confirmed that there is no clear divide between information (which can be protected) and allegations (which cannot) – sometimes a statement can be both.

Given the enhanced protection from detriment for whistleblowers, employers should err on the side of caution when considering if a disclosure could be protected. If so, extra care should be taken to avoid this influencing decisions in relation to the worker, and to ensure there is a paper trail evidencing lawful reasons for action taken. (Kilraine v London Borough of Wandsborough).

2. Disability discrimination: need to consider possible link between misconduct and an employee's disability before deciding disciplinary action

When disciplining a disabled employee, employers need to consider carefully whether they should obtain medical evidence on any possible link between the employee's actions and their disability.

The Court of Appeal has upheld a tribunal ruling that an employer was liable for discrimination arising from disability where it dismissed a teacher with cystic fibrosis for showing an 18-rated film to younger children, despite the employer having reasonably concluded on the evidence available that there was no connection between the employee's misconduct and his disability (City of York Council v Grosset). The employee accepted that he had made an error of judgment but contended that this was due to the high levels of stress he was suffering, caused by the effect of increased work demands on his disability. The potential link had been mentioned by the employee, but the medical evidence available to the employer at the time of dismissal did not suggest a causal link.  However,  medical evidence available by the time of the tribunal hearing clearly established that link.

The Court ruled that the employer's knowledge of the causal link was not relevant.  An employer will be liable if the reason for its actions was something which in fact arose from the disability (and the employer cannot objectively justify the treatment). In this case the tribunal had concluded that dismissal was not objectively justified given that reasonable adjustments would have reduced the stress level and avoided the incident occurring.

Employers will need to consider whether an employee's disability could be causing the behaviour directly or indirectly – here the behaviour arose due to the stress caused by the disability in conjunction with increased work demands. This type of indirect causal link could potentially be argued by employees with a wide range of disabilities, even if their disability by itself does not impact on behaviour. Employers who identify a possible link will then need to consider carefully whether reasonable adjustments have been or could be made and whether disciplinary action can be objectively justified in the circumstances.

Similar care needs to be taken when issuing a sickness absence warning to a disabled employee. The employer in DL Insurance Services Ltd v O'Connor issued a warning after a disabled employee had had absences well in excess of the usual threshold under the sickness absence policy, and in consequence company sick pay stopped.  Almost all of the absence was disability-related and the employee claimed discrimination arising from disability.   The employer argued that its action was justified as a proportionate means of achieving its legitimate aim, which was to ensure adequate attendance levels and improve the individual's attendance. This choice of aim was fatal to the employer's case, given that it was unable to explain how issuing a written warning would improve the individual's attendance in light of the fact that the absences were genuine and disability-related.  The employer might have fared better had its chosen aim been to enable it ultimately to dismiss an employee for prolonged poor attendance.  However, for its action to be justified, the employer would have needed first to have sought evidence from occupational health (as required by its policy) and from the individual's team to demonstrate the impact of the absences.

3. Relying on a series of acts: courts confirm approach to 'final straw' constructive dismissal claims and summary dismissal for acts which are not individually gross misconduct

Employers should note that, even where an employee seems to have 'moved on' from complaints that a series of acts by the employer cumulatively amounted to a breach of trust and confidence, a further act could revive the employee's right to resign and claim constructive dismissal.

It is well established that an employee can claim constructive dismissal (in the form of a wrongful dismissal claim and, if they have sufficient service, unfair dismissal) where the employer acts in breach of the implied duty of trust and confidence.  This occurs where the employer, without reasonable and proper cause, acts in a manner likely to destroy or seriously damage the relationship of trust and confidence between employer and employee. The employee can rely on a single, sufficiently serious incident, or a series of acts which cumulatively amount to a breach of the duty. It is clear that, in the former case, the employee must resign promptly in response to the breach or otherwise will be deemed to have affirmed the contract.

What is less clear is whether the same applies to a cumulative breach case. The EAT in Vairea v Redd Business Information Ltd considered that it does. It ruled that, once the series of acts have amounted cumulatively to a breach of the implied duty, the employee must elect whether to resign promptly after the 'last straw'. If they choose not to resign, they will be deemed to have affirmed the contract, in effect wiping the employer's slate clean. Any future act by the employer cannot be a second 'last straw' reviving the right to resign in reliance on a series including the earlier acts.

The Court of Appeal in the recent case of Kaur v Leeds Teaching Hospitals NHS Trusthas disagreed. It has confirmed that an employee can still resign and claim constructive dismissal in response to a contributing act in the series which occurs after an earlier affirmation. The new 'last straw' (which must not be innocuous or trivial and must contribute to the cumulative breach) revives the right to elect to terminate the contract. It does not matter that the acts amounted to a breach of the implied duty at an earlier stage, at which the employee chose not to resign.

The Court also noted that exercising a right of appeal against what is said to be a seriously unfair disciplinary decision is not likely to be treated as an unequivocal affirmation of the contract; and, even if it were, its upholding on appeal would revive the employee's right to resign. However, on the facts of the case, the employer's actions in pursuing disciplinary proceedings and imposing a final warning were found to be entirely proper and therefore could not constitute a breach of trust and confidence.

Correspondingly, an employer can theoretically rely on a series of misconduct issues to justify a summary dismissal where these are sufficiently serious cumulatively to undermine the relationship of trust and confidence, even if individually none amount to gross misconduct.

In Mbubaegbu v Homerton University Hospital, a series of breaches of internal reporting procedures by a consultant indicated non-compliant behaviour and a lack of capacity for change that would put patient safety at risk.  In these circumstances the EAT agreed that the employee's cumulative behaviour breached the implied duty of trust and confidence and made summary dismissal a reasonable response, notwithstanding that there was no single act of gross misconduct.  The public safety angle was clearly relevant to this decision. Employers in less safety-critical sectors may find it harder to persuade a tribunal that a series of acts of misconduct are sufficiently serious to amount to a breach of trust and confidence justifying dismissal without prior warnings.

4. Status: Supreme Court upholds ruling that Pimlico Plumbers operative is 'worker'

The Supreme Court has dismissed Pimlico Plumbers' appeal against a tribunal decision that plumber Gary Smith was a 'worker' (ie an individual who has undertaken to perform work personally for someone who is not his client or customer) with workers' rights. Although widely covered in the media, the ruling actually leaves the law largely unchanged, and its fact-specific nature means that it only provides limited guidance for similar cases.

The Supreme Court found that Mr Smith's ability to choose to use a substitute did not prevent there being a sufficient obligation of personal service, given that he could only use a substitute from the ranks of other Pimlico Plumber operatives bound by similar obligations. The Court considered that the "dominant feature of the contract" remained an obligation of personal performance given that the company had a clear interest in who performed the work, as opposed to caring simply that the work got done. The factors in favour of Pimlico Plumbers being a client of Mr Smith were outweighed by features militating against this, in particular the branding requirements, post-termination restrictive covenants and one-sided payment terms which "betrayed a grip on [Mr Smith's] economy inconsistent with his being a truly independent contractor".  See our blog post for further details. (Pimlico Plumbers Ltd v Smith)

The Court of Appeal is due to hear the appeal in the Uber driver case on worker status on 30 October 2018. 

5. Discrimination during employment: tax treatment of compensation, zero hours claims, and equal pay comparators

  • In Pettigrew v HMRC the First Tier Tribunal has held that settlement payments made by reference to underpaid past earnings arising out of a claim of discrimination against part-time workers were fully taxable as employment income. The appellant referred to the earlier case of Mr A v Commissioners for HMRCwhere it was held that a settlement sum representing underpaid salary and bonuses due to racial discrimination was not taxable, a decision which HMRC did not appeal. However, the Tribunal in Pettigrew did not accept this - noting in particular that the Tribunal in Mr A were not referred to the correct legal authorities and in particular the principles in Kuehne + Nagel (that for a payment to be an emolument, employment need not be the sole cause but only sufficiently substantial) and Mairs v Haughey (that a payment will usually take its taxable character from the payment which it substitutes). Both Pettigrew and Mr A are only First Tier Tribunal decisions and so not binding, but the case is a firm indication that HMRC is now likely to seek to fully tax compensation for loss of earnings arising from discrimination during employment.
  • Employees on zero hours contracts are able to bring part-time worker claims comparing themselves with full-time employees. Individuals are only able to compare their treatment with that of individuals on the 'same type of contract'; the EAT has confirmed that a zero-hours employment contract is the 'same type' as a full-time employment contract.  The difference in the number of hours cannot render the contract a different type otherwise the purpose of legislation would be defeated. (Roddis v Sheffield Hallam University)
  • The EAT has confirmed that the promotion or departure of an equal pay comparator part way through the period for which equal pay is claimed cannot be used to restrict the claim. Once a tribunal implies a contractual equality clause providing for pay equal to that of a male comparator from a specified date, the right is crystallised and ongoing from that date, regardless of what happens to the comparator subsequently and regardless of whether other valid comparators remain in post. (Reading Borough Council v James)

6. Compensation: impact of flexible PHI options on loss of earnings claim

Employers should be aware that, where they provide different levels of PHI benefit through a flexible benefits scheme, this may mean that only part of the PHI benefits being paid to an employee can be offset against a loss of earnings claim against the employer.

In Colt Technology Services Ltd v Brown, the employee had opted for 75% salary PHI when he could have chosen to reduce this to 50% and take a higher salary. As a result of workplace discrimination, he went on long-term sick leave receiving 75% salary. When calculating the loss of earnings arising from his successful discrimination claim, the EAT ruled that the employee had indirectly contributed to the PHI premiums for the top up from 50% to 75% cover, and therefore only PHI based on 50% salary should be deducted.

7. Contract: Supreme Court breathes new life into “no oral modification” clauses

Employers can have more confidence that an "entire agreement" or "no oral modification" clause in an employment contract is likely to be effective in preventing extraneous contractual terms or oral variations respectively, following a Supreme Court ruling overturning the Court of Appeal in Rock Advertising Ltd v MBB Business Exchange Centre Ltd (see our Litigation blog for further details). The Supreme Court in Pimlico Plumbers referred to this ruling confirming its applicability in the employment sphere.

Best practice is always to record any changes to contracts in writing, to avoid subsequent dispute. This case suggests that if the contract provides that it can only be varied in writing, this may render oral variations ineffective (although in some limited circumstances the doctrine of estoppel might apply). Employers should therefore ensure they follow any formal process for variation set out in the employment contract.

8. Diversity developments: presentation of pay gap data, proposals on parental leave and dress code guidance

  • The Government Equalities Office has published the findings of a commissioned study (here) concluding that the clearest and most accessible way of presenting gender pay gap figures is to display them visually as coins or as the amount which women earn for every £1 men earn (rather than percentages). The latter approach has now been added to the data on the government's pay gap website, which also now includes bar charts to show the gender split by pay quartile and displays an employer's data all on one page. The study also found that benchmarking improved comprehension, so may lead to pressure on the government to add visual benchmarking to the published data in future.
  • The government has published its response to the Women and Equalities Committee report on Fathers and the Workplace. The Committee's recommendations included for paternity leave to be made a 'day one' right, improved paternity pay and time off for antenatal appointments, and the replacement of shared parental leave with an additional 12 weeks' paternal leave. The government's response is to state that further consultation is needed. A Maternity and Paternity Rights Survey is planned and a taskforce is also examining the issue of flexible working.  Further details are available here. 
  • A Private Members' Bill with cross-party support has been introduced to parliament to require employers with more than 250 employees to publish information on their leave and pay policies for parents (including all the different types of leave available in connection with parenthood of a child under 18). The draft draws from the gender pay gap obligations, requiring a statement of policy accompanied by a written statement (confirming its accuracy and signed by a director or equivalent) to be published on the employer's website and on the government's gender pay gap website. However, in contrast to the gender pay gap regulations, the draft includes express enforcement powers for the HMRC to impose non-compliance and penalty notices (for a fine of up to £5,000).
  • The Department of Health has published an action plan to help in-work carers over the next two years. This includes promotion of flexible working best practice, a toolkit for returners to be published this summer, a review of the current right to request flexible working in 2019, a carer-friendly employer benchmarking scheme to be introduced from July 2018, and the consideration with BEIS of the question of dedicated employment rights for carers to sit alongside existing employment rights.
  • The Government Equalities Office has published guidance on dress codes. The (perhaps overly) brief guidance makes clear that a requirement to wear high heels, make-up, skirts or provocative dress is likely to be unlawful, as is prohibiting religious symbols that do not interfere with an employee's work.

9. Proposed legislative reforms: extension of IR35 reforms to private sector and corporate governance

The government is consulting until 10 August 2018 on plans to extend IR35 public sector reforms to the private sector. The proposals could have a very significant impact on private sector clients which contract extensively with individual service-providers. In particular, it contemplates shifting responsibility from service-providers to clients for payroll compliance and associated income tax and National Insurance liabilities in circumstances where a deemed employment relationship is found to exist between the client and the service-provider. See our briefing here for further details. The Government has laid before Parliament draft regulations creating a range of new reporting requirements for UK-incorporated companies which, subject to Parliamentary approval, will apply for financial years beginning on or after 1 January 2019. These requirements form part of the Government’s corporate governance reform agenda. They cover areas including performance of the directors’ section 172 duty, employee engagement, and CEO pay ratios. Draft governance principles for large private companies have also been published for consultation. Please contact Jemima Coleman if you would like a copy of our briefing explaining the new requirements.

10. New data protection and trade secrets laws in force; new Acas guidance published

  • The General Data Protection Regulation (GDPR) came into force on 25 May 2018 bringing with it additional rights for individuals and additional obligations for organisations. Our Data Protection and Privacy Team have published a range of useful information, available on our GDPR Hub.

 

  • The Trade Secrets (Enforcement etc) Regulations 2018 came into force on 9 June. These regulations provide a new remedy for the misuse of trade secrets in addition to the existing common law regime. Employers should note that the Regulations place greater importance on whether a business has taken reasonable steps to keep information secret. Businesses should include appropriate terms in employment (and other) contracts, provide regular staff training, and clearly identify and restrict access to confidential material. See our briefing here for further information.

 

  • Acas has published new guidance on: pregnancy and maternity discrimination, religion or belief discrimination, overtime, suspension and hot weather tips.