1. Statutory holiday: employers must permit carry-over for 18 months where unused due to sickness

Employees unable or unwilling to take their 4 weeks’ EU-derived statutory holiday because of sickness absence continuing to the end of the leave year can carry it forward, but must take it within 18 months of the end of the leave year in which it accrued.

Previous case law has established that workers off sick have a choice whether or not to take annual leave during sickness absence. If they choose not to, and do not return to work before the end of the leave year, EU law requires that UK regulations be read as permitting carry-over. The carry-over period does not have to be unlimited, but must be “substantially longer” than the leave year.

The UK Government has not yet amended the regulations to specify an appropriate limit on carry-over. The EAT has now filled this gap by ruling that the regulations be read constructively as permitting a worker to take annual leave within 18 months of the leave year in which it accrued in these circumstances.

The EAT also confirmed that an employee who is absent from work on sick leave continuing to the leave year end can simply choose not to take it and carry it over, and is not required to demonstrate that he is physically unable to take annual leave by reason of his medical condition. The lack of request to take holiday was enough to show that the employee was unwilling to take annual leave during his sickness absence and therefore to qualify for carry-over.

Permission to appeal to the Court of Appeal has been given to both parties.  (Plumb v Duncan Print Group Ltd)

2. Indirect discrimination: those who suffer alongside a disadvantaged group may bring claims

The ECJ has ruled that the EU concept of indirect discrimination permits claims to be brought by individuals who are not actually part of the protected group disadvantaged by a policy, if they “suffer alongside” that group.

The ruling in Chez Razpredelenie Bulgaria concerned the provision of goods and services, but the same concepts apply in employment law. Here, a policy of placing electricity meters at a greater height in a certain area with a history of tampering and unlawful connections was indirectly discriminatory against members of the Roma ethnic group who formed a majority of those living in the area; a non-Roma inhabitant of the area suffered from the policy alongside the Roma inhabitants and the ECJ ruled that she was also able to claim indirect race discrimination.

The Equality Act currently prohibits associative direct discrimination (eg associative disability discrimination where an employee is dismissed because he has a disabled son) but does not prohibit associative indirect discrimination (eg where a policy of requiring full-time work disadvantages an employee who cares for and so is ‘associated with’ a disabled person). Under UK law, the claimant in an indirect discrimination case must show he is a member of the protected group which is disadvantaged by a policy and that he suffers that disadvantage. However, because the principle of non-discrimination is a fundamental principle of EU law, claimants may be able to rely on this new ECJ ruling even against private employers.

Employers may therefore face claims from individuals who ‘suffer’ from a policy which disadvantages a group with a protected characteristic such as gender, race and so on, even where the individual is not a member of that group. An obvious example is the working father who may claim that he too suffers from a policy to require full-time work which is indirectly discriminatory against working mothers.

No doubt there will be arguments as to whether the nature of the ‘suffering’ must be the same. Is the person who wants to work part-time in order to improve his golf handicap “suffering alongside”? Will the employee who cares for a disabled dependent and needs a particular reduced hours pattern in order to take them to medical appointments also be able to rely on the working mother associative claim, or will he need to point to the same suffering of disadvantage by disabled employees?

The potential for indirect discrimination claims has clearly been increased by this ruling. The case highlights the importance of carefully considering the potential discrimination angles when devising workplace rules and policies.

3. Anti-suit injunctions: Court of Appeal rules that EU jurisdiction rules should prevail over US exclusive jurisdiction clause

The Court of Appeal has overturned a controversial High Court ruling (summarised in our blog post here) concerning the enforcement of non-EU exclusive jurisdiction clauses which conflict with EU jurisdiction rules.

Petter v EMC Europe Ltd concerned a dispute with a UK-domiciled ex-employee regarding a share incentive scheme operated by the employer’s US parent company and subject to a Massachusetts exclusive jurisdiction clause.

EU jurisdiction rules provide that in “matters relating to individual contracts of employment” an employer can only bring proceedings against the employee in the country where the employee is domiciled. The Court of Appeal adopted a broad interpretation of “matters relating to individual contracts of employment” and “employer” to cover the dispute in this case. It then exercised its discretion to grant an anti-suit injunction restraining the US company from pursuing the proceedings it had begun in Massachusetts pursuant to the exclusive jurisdiction agreement.

The Court felt constrained to follow its decision in Samengo-Turner v Marsh & McLennan that a company which provides benefits to employees of associated companies within the same group may be regarded as an employer for the purposes of the EU jurisdiction rules if it provides those benefits in order to reward and encourage those employees for the benefit of their immediate employer and the group as a whole. Further, in cases where the EU jurisdiction rules apply, an anti-suit injunction should ordinarily be granted to restrain an employer from bringing proceedings outside the Member States in order to protect the employee’s rights.

Employers should bear in mind that they are unlikely to be able to rely on exclusive jurisdiction clauses, whether in favour of an EU or non-EU court.

For further information, see the HSF litigation blog post here.

4. Discrimination arising from disability: ‘unfavourable treatment’ test does not require comparison

The EAT has overturned a tribunal ruling that it was unlawful disability-related discrimination for an ill health early retirement pension to be based on an employee’s final salary, where the employee’s hours had been reduced prior to his early retirement as a reasonable adjustment to accommodate his disability and his pension was based on this reduced salary. The case was remitted to decide if there was in fact ‘unfavourable treatment’ as the tribunal had wrongly looked for comparators and had erred in comparing the claimant’s treatment with that of others whose disability had come on suddenly.

The EAT confirmed that the unfavourable treatment test does not require comparison, and treatment which is advantageous cannot be said to be “unfavourable” merely because it is thought that it could have been more advantageous. “Unfavourably” should be “measured against an objective sense of that which is adverse as compared with that which is beneficial”. (The Trustees of Swansea University Pension & Assurance Scheme v Williams)

5. Summer budget and tax consultations: employment law implications

The Chancellor of the Exchequer’s second Budget of 2015 is summarised in the HSF tax briefing available here. Points of interest from an employment law perspective include:

  • from April 2016, there will be a compulsory national living wage for workers of 25 years and older of £7.20 per hour (compared with the national minimum wage, currently £6.50 an hour and due to rise to £6.70 in October 2015), rising to £9 an hour by 2020; the impact of this will be offset by a reduction in national insurance contributions for small employers;
  • the introduction of a new apprenticeship levy on all large firms to support all post-16 apprenticeships in England, to provide funding that each employer can use to meet their individual needs. The funding will be directly controlled by employers via the digital apprenticeships voucher, and the Chancellor stated that firms that are committed to training will be able to get back more than they put in;
  • consultation will take place on devolving powers on Sunday trading to city mayors and local authorities, looking at allowing them to extend Sunday trading for additional hours within parameters they set (the consultation document was published here on 5 August);
  • working age state benefits are to be frozen, but this will not apply to statutory maternity, paternity and sickness payments or disability benefits;
  • the cost of certain employee insurances is likely to increase given an increase to insurance premium tax from 6% to 9.5% from November 2015.

The Budget also confirmed that the Government would consult on simplifying the tax and NICs treatment of termination payments. The HMRC has now published this consultation for views by 16 October 2015, available here.

The proposals include:

  • to remove distinctions between contractual and non-contractual payments;
  • to replace the current £30,000 allowance with an exemption for redundancy (voluntary or compulsory) at a rate rising in line with length of service subject to a minimum of 2 years’ service;
  • to introduce new exemptions (possibly subject to a cap) for wrongful dismissal, unfair dismissal and discrimination;
  • to remove most of the other exemptions (except the existing illness, disability and armed forces exemptions); and
  • to introduce anti-avoidance provisions.

The government also seeks views on possible alignment of income tax and NICs rules. Although simplification is welcome, the proposals are likely to mean an increase in the cost to employers of terminations, where employees seek to negotiate a higher overall sum on the basis that exemptions are no longer available. The outcome of the consultation is expected to be announced in the Autumn 2015 statement.

The summer Budget confirmed additional consultations on:

  • draft legislation to include almost all Benefits in Kind in the statutory framework for payrolling. Additional reporting requirements for employers payrolling cars will be introduced from April 2017 (details here);
  • removing tax relief on home-to-work travel and subsistence expenses for individuals employed through an employment intermediary (details here);
  • how to improve the effectiveness of the existing employment intermediaries legislation (‘IR35’) which is designed to protect against disguised employment. The HMRC has now published a discussion document on this, seeking views by 30 September. Options include administrative changes, increased involvement by engagers in ensuring the correct amount of tax is paid and/or a limitation in the scope of what falls within IR35 to engagements above a certain duration, with a possible adoption of the deemed employment criteria set out in the intermediaries legislation (the consultation document is here).

A further target for potential future reform is the growing use of salary sacrifice schemes. The Government has said that it will actively monitor the growth of such schemes and their effect on tax receipts.

6. Consultation on gender pay reporting requirements

The Government Equalities Office has published an initial consultation paper on the proposal to require companies to publish pay information to show whether there are differences between the pay of their male and female employees.

Under section 147 of the Small Business, Enterprise and Employment Act 2015, regulations must be made under section 78 of the Equality Act 2010 to require companies with at least 250 employees to publish gender pay information. The regulations must be made no later than 25 March 2016. There will then be a period for employers to prepare, before the rules are brought into force.

The Government Equalities Office’s consultation paper considers the issues to be addressed in the regulations, but no draft regulations have yet been published.

The consultation paper contains information about the gender pay gap, its causes, the progress that has been made so far and ongoing work in this area. It asks for feedback on, among other things:

  • whether publication of gender pay information will encourage employers to take action that will help close the pay gap, whether there are any associated risks or unintended consequences, and whether there is anything that warrants dropping or modifying section 78;
  • when the obligation should come into force (by reference to a specific date such as 1 January, 6 April or 1 October, or by reference to a company’s year-end) and whether it should be phased in, perhaps for employers with between 250 and 500 staff;
  • where information should be published (for example, on the company’s website);
  • how frequently it should be published (the suggestions are every 1, 2 or 3 years);
  • how easy it would be for employers to publish the different levels of information requirement being considered (one overall figure for their workforce, separate figures for full and part-time employees, or figures broken down by grade/job type);
  • whether there should be an option or obligation to include contextual information about the figures to explain any pay gap and set out remedial action the employer intends to take (although there is no obligation to take any); and
  • whether the obligation should apply to all companies with at least 250 employees (which suggests that a higher threshold may be considered, although this seems contrary to recent Government announcements referring to the 250 employee threshold); the definition of “employee” will cover workers “under a contract of employment, contract of apprenticeship or a contract personally to do work”.

Responses are requested by 6 September 2015. The consultation paper is available here.

Publication of gender pay gap information is likely to increase the risk of equal pay claims or reputational damage. Larger employers may therefore wish to audit their position now, preferably ensuring any documents are created for the purposes of taking legal advice so as to benefit from legal advice privilege protection from disclosure. Where disparities are evident, employers should consider whether steps can be taken to address this ahead of the regulations coming into force.

7. Trade unions: draft bill and consultations

The Trade Union Bill announced in the Queen’s Speech has now been published, revealing further details of the government’s proposals. In addition to the trailed requirements for a 50% turnout for industrial action and, in certain key public services, for 40% of eligible voters to vote in favour, the Bill confirms that:

  • the ban on using agency staff to cover the duties of striking employees will be lifted;
  • there will be a four month limit on a strike mandate, after which another ballot will be required;
  • voting papers will have to include a clear description of the trade dispute, the type of planned industrial action and the periods within which it is expected to occur;
  • automatic opt-ins to political donations from trade union subscription fees will be banned;
  • the amount of notice of a strike to be given to an employer will be increased from 7 to 14 days;
  • there will be new requirements for unions to supervise picketing, a failure to comply with which will make the picketing unlawful and therefore actionable in tort.

The Government has also launched three consultations running until 9 September 2015 on:

  • which roles and occupations in the specific public services should be subject to the 40% ballot threshold (details here);
  • picketing, intimidation and leverage tactics by unions: the Government proposes making certain aspects of a revised Code of Practice on Picketing legally binding so that employers can seek injunctions or damages for breach, and it also seeks views on whether further steps are needed such as a new criminal offence of intimidation on the picket line (details here)
  • the repeal of a ban on the use of agency workers (details here).

8. Summer consultations: minimum wage, posted workers, apprenticeships, tribunal fees

  • The Low Pay Commission is consulting until 25 September seeking views on the government’s proposed changes to the national minimum wage and the introduction of the new National Living Wage; see here for details.
  • BIS is consulting until 24 September on its proposals to implement the Posted Workers Enforcement Directive, required by 18 June 2016. The main impact for UK law is a new right for a construction worker posted to the UK to bring a wages claim for any unpaid national minimum wage against the contractor immediately above their employer, if their employer has defaulted. The contractor would have a defence if they had exercised due diligence in their choice of subcontractor. Click here for the consultation document.
  • The Government is consulting until 19 August on prohibiting training providers using the terms “apprentice” or “apprenticeship” in relation to any course or training in England unless it is in relation to a government funded apprenticeship. The consultation document is here.
  • The Government’s decision to carry out an internal review of tribunal fees only, and not a public consultation, has been much criticised. The parliamentary Justice Committee has now sought to remedy this, seeking views by 30 September on the impact of the introduction of employment tribunal fees and increases to court fees; more details are available here.

9. New publications: EHRC pregnancy/maternity research and toolkit, Acas equality guides

  • The Equality and Human Rights Commission has published new research on the prevalence of pregnancy and maternity discrimination, alongside a practical toolkit and guidance for employers, available here.
  • Acas has published three new equality guides: Understanding the basics, Preventing discrimination, and Discrimination: what to do if it happens. They are available here.