Summary: Our December update considers recent developments in employment law, including the Government’s Good Work Plan, cases on harassment and PHI benefits and developments in the use of non-disclosure agreements.

Government announces its Good Work Plan to implement Taylor Review proposals

The government has published its Good Work Plan, setting out a large package of workplace reforms. These reflect the government’s vision of the future of the UK labour market and take account of the various consultations the government held in light of the Taylor Review. Key changes include:

  • An intention to legislate to improve the clarity of the tests for employment status. This will include arrangements to stop businesses from trying to misclassify or mislead staff about their employment status
  • An intention to align the employment status frameworks for employment law and tax purposes
  • Workers will have a right to request a more stable contract
  • Employment tribunals will be able to impose sanctions on an employer who commits repeated breaches of employment rights
  • The period required to break a period of continuous service will be extended from one week to four weeks
  • The holiday pay reference period will be extended from 12 to 52 weeks
  • The Swedish derogation under the Agency Workers Regulations will be abolished
  • A statement of written particulars will become a day one right for workers and employees
  • The threshold required for a request to set up an information and consultation arrangement will be lowered from 10% to 2%.

Good Work Plan

Harassment or ‘banter’ - where to draw the line

When deciding whether there has been harassment under the Equality Act 2010, an employment tribunal is required to take into account the claimant’s perception of the conduct. However, the tribunal must also consider all of the circumstances of the case, including whether it is reasonable for the conduct to have had the effect alleged by the claimant.

In Evans v Xactly Corporation , Mr Evans brought claims for harassment related to his alleged disability and his race. Mr Evans, who was associated with the traveller community and had type 1 diabetes (although he did not provide any medical evidence to support this), complained that his colleagues referred to him as a ‘fat ginger pikey’, ‘fat yoda’ and a ‘salad dodger’.

The EAT upheld the decision of the Employment Tribunal. While the conversations were ‘indiscriminatingly inappropriate’, they were not necessarily ‘unwanted’. Mr Evans appeared to be comfortable participating in the such banter and did not complain about it during his employment. The EAT found that the employment tribunal has correctly assessed the context in which the comments were made and was therefore entitled to make the decision that it did based on the evidence in the case.

Why this matters?

This case demonstrates that there is a limit to an employee’s ability to bring a claim over workplace behaviour in which they willingly engaged. However, while the employer escaped a finding against it in this case, this was entirely because of the claimant’s own inappropriate conduct. Employers should not view the decision as a green light to permit such workplace behaviour – they owe a duty of care to their employees to ensure that such conduct is not permitted.

Evans v Xactly Corporation  [2018]

Can an employer dismiss an employee in receipt of long term disability benefit?

A benefit which allows an employee on long term sickness absence to be paid salary for a specified period is relatively common. In this case, the EAT was asked to consider whether an employee was entitled to continue to benefit from a very generous term (which paid him two thirds of salary until return to work, retirement or death) or whether the employer could rely on an express right to terminate on notice.

The employee in question was dismissed, having been absent for nearly two years due to depression. He brought a claim for unfair dismissal and disability discrimination, on the basis that his dismissal deprived him of the right to benefit from the disability benefit.

The EAT, overturning the Tribunal’s decision, found that the dismissal breached an implied term of the employee’s contract that “once the employee has become entitled to payment of disability income due under the long-term disability plan, the employer will not dismiss him on the grounds of his continuing incapacity to work.” It therefore remitted the case for a tribunal to consider whether, given the existence of the implied clause, the dismissal was unfair and/or discriminatory.

Why this matters?

The finding that an employer cannot dismiss an employee who is in receipt of disability benefit without an express power to do so is not a new point. However, this case makes it clear that any clause that attempts to deal with this issue must be clearly drafted. Here, a general power to dismiss, although an express clause, did not prevent a clause being implied to protect the employee’s right to receive the benefit. To try and manage this issue, the contract should contain an express power permitting the employer to dismiss even if the dismissal will deprive the employee of their disability benefit. This is especially crucial if, as in this case, the benefit is very generous. Mr Awan’s benefit potentially paid him through to retirement and in some cases, this can equate to a very significant sum.

Awan v ICTS UK Ltd UKEAT/0087/18

Inquiry into use of NDAs

The Women and Equalities Committee has launched an inquiry into the use of non-disclosure agreements (NDAs) in the context of harassment and discrimination claims. This inquiry follows the narrower consideration of the use of NDAs in sexual harassment claims which has received significant focus recently due to the “Me Too” campaign.

The Committee has asked for written submissions by 31 January 2019. The terms of reference cover issues such as whether there are particular areas where NDAs are more likely to be used, whether they should be banned, and whether employers should be required to disclose their use.

Why this matters?

This remains a difficult issue. The use of NDAs to cover up serious, potentially criminal behaviour, has rightly received widespread criticism as the issue has come to light. However, confidentiality is often a key term for employers seeking to reach settlements in employment litigation, particularly if the employer does not admit liability but chooses to settle for commercial reasons. Should NDAs or confidentiality clauses become unlawful, there is a risk that employers will not settle cases, placing a further burden on the already overstretched tribunal system. 

Select Committee – Inquiry into use of Non-disclosure agreements in discrimination cases

Autumn 2018 Budget – key employment implications

IR35 has long been relied upon by end-users who engage independent contractors via personal services companies. The impact of IR35 is that it insulates the end-user from any employment-related tax liability if the individual providing the services is deemed to be a de facto employee of the end-user. Instead, the personal services company will be responsible for such taxes. The benefit of IR35 was closed from 6 April 2017 in respect of services provided to public sector bodies. In his Autumn Budget, the Chancellor said that he will extend the removal of this benefit to large and medium-sized private businesses with effect from 6 April 2020. Small businesses will, however, continue to have the protection of the IR35 regime.

The Chancellor also announced that the government’s proposal to introduce employer Class 1A National Insurance contributions on termination payments over £30,000 has been delayed until April 2020.