Summary: Our June 2017 blog outlines the five key employment law developments over the last month. These include recent cases on maternity discrimination, national minimum wage, disability discrimination, employment status and holiday pay. We also outline other points of note this month including recent cases regarding the gig economy, privilege and jurisdiction, and policy statements from the PRA and FCA.

Test for maternity leave discrimination

It is unlawful discrimination under s.18 Equality Act 2010 to treat a female employee unfavourably because she is exercising the right to take maternity leave. In determining whether an employee is treated unfavourably ‘because’ she is exercising this right, case law distinguishes between cases where a policy is inherently discriminatory (‘criterion’ cases) and cases where it is necessary to consider the alleged discriminator’s mental processes (‘reason why’ cases).

The employer in this case had a policy of treating as a leaver any employee who had not received payment for the last three months. This had the effect of disadvantaging the claimant, who did not qualify for statutory maternity pay, so she did not receive payments from the employer whilst on maternity leave and was treated as having left the company. The Tribunal upheld her discrimination claim, treating the policy as inherently discriminatory on maternity grounds (a ‘criterion’ case). However, the EAT overturned the decision and remitted the case to a fresh Tribunal, concluding that the policy was not inherently discriminatory because not all women on maternity leave would be caught by the policy, and other employees who were not on maternity leave might also be caught. The Tribunal should instead have considered the alleged discriminator’s mental processes (a ‘reason why’ case).

Why this matters?

This decision is consistent with previous authority that unless a policy is inherently discriminatory, the Tribunal must consider the mental processes of the alleged discriminator.

The EAT acknowledged that an indirect sex discrimination claim may have been possible in this case. The application of the blanket policy may have had a disparate adverse impact on women because they take maternity leave and may not qualify for statutory maternity pay, and therefore may be more likely to be disadvantaged by such a policy than their male colleagues.

National Minimum Wage: employees carrying out sleep-in shifts may be entitled to NMW

In deciding three joined appeals, the EAT confirmed that a multifactorial evaluation is needed when determining whether workers who sleep during shifts engage in ‘time work’ and are therefore entitled to the National Minimum Wage (NMW). Four potentially relevant factors the EAT identified when considering whether an individual is working by being present are:

  • the employer’s particular purpose in engaging the worker. For example, if there is a regulatory requirement to have someone present at all times this may indicate that the individual is working;
  • the extent to which the worker’s activities are restricted by the requirement to be present and at the disposal of the employer, for example whether the individual may be disciplined if they are not present;
  • the degree of responsibility undertaken by the worker. For example, heavier personal responsibility being placed on the individual indicates that they are ‘working’; and
  • the immediacy of the requirement to provide services if something untoward occurs or an emergency arises.

Why this matters?

This judgment provides useful guidance, although each case will depend on the circumstances of the particular situation. Employers should be mindful that the fact that a worker has little or nothing to do during certain hours does not mean they are not working for the purposes of NMW legislation. Employers should consider their pay practices for ‘sleep-in’ shifts carefully in order to avoid potential civil and criminal sanctions.

Focus Care Agency Ltd v Roberts; Frudd and another v The Partington Group Ltd; Royal Mencap Society v Tomlinson-Blake

Reasonable adjustments: multiple choice test for applicants

The EAT has upheld a Tribunal’s decision that requiring a job applicant with Asperger’s Syndrome to complete a multiple-choice test, and refusing to allow the applicant to provide written answers instead, constituted indirect disability discrimination and a failure to make reasonable adjustments.

The requirement for all applicants to take and pass a multiple-choice ‘Situational Judgment Test’ was a ‘provision, criterion or practice’ (PCP) which put people with Asperger’s, including the particular job applicant, at a disadvantage. Whilst the PCP served the legitimate aim of testing a fundamental competency for the role, the means of achieving the aim were not proportionate.

The employer argued that the test was inextricably linked to a required competency of the role, namely the ability to make effective decisions. It contended that it should not have to adapt the test to the point where it no longer effectively assessed whether someone would be able to do the job. The EAT accepted the need to assess the applicant’s competency, but found no fault in the Tribunal’s reasoning that, without the requested adjustments, the test was not a proportionate means of achieving this. The extra expense and logistical difficulties that would be caused by allowing the applicant to provide written answers did not outweigh the factors in its favour.

Why this matters?

Many employers rely on multiple-choice tests in the recruitment process in order to assess large numbers of applicants with the aim of creating a level playing field for applicants. However, this case illustrates that such testing is not exempt from discriminatory issues, and employers should consider whether reasonable adjustments should be made in situations where disabled applicants may be put at a disadvantage.

Employment status: workers may have more than one employer for the purpose of whistleblowing protection

The Court of Appeal has ruled that an individual can in principle fall within the extended definition of ‘worker’ under s.43K of the Employment Rights Act 1996 (ERA) notwithstanding the fact that they also fall under the general definition of ‘worker’ in s.230(3) in respect of another employer.

The individual in this case brought claims in relation to alleged detriment as a result of making protected disclosures both to the NHS Trust where he was posted, and Health Education England (HEE), which had placed him there. The EAT had previously interpreted the legislation to mean that since the individual whistleblower fell within the definition of s.203(3) in relation to the NHS Trust, he was precluded from claiming that he was a worker under s.43K in his claim against HEE. However, the Court of Appeal overturned the EAT’s judgment and held that words should be added to the statutory language in order to maximise the protection offered.

The case has been remitted to a fresh Employment Tribunal to determine whether HEE substantially determined the individual’s terms of engagement.

Why this matters?

This judgment confirms that individuals are able to bring whistleblowing claims against more than one employer. Although this case is specific to whistleblowing claims, it follows the growing trend in recent employment status cases to use a wide interpretation of the definition of ‘worker’ for the purposes of employment law protection.

Holiday pay: scope of retrospective claims limited

The EAT has confirmed that that a gap of more than three months between underpayments of wages breaks the ‘series’ of deductions for the purpose of bringing an unlawful deduction from wages claim. Claimants are therefore limited to obtaining back pay in relation to holidays they have taken since the most recent three month gap.

Why this matters?

This decision is not surprising, but its confirmation will be of comfort to employers, as the rule significantly limits the potential value of such holiday pay claims. Claimants may now look to issue a new claim every three months in order to avoid the risk of being out of time where they have a history of holiday pay underpayments over a period of time with gaps between holidays of potentially more than three months.

The President of Employment Tribunals (Scotland) recently stated that there are approximately 17,000 holiday claims pending in the Scottish Employment Tribunal system alone, many of which had been stayed pending the final outcome of this litigation. Provided permission is not granted to appeal further, these cases will now be able to proceed.

Round up of other developments

Unlawful deductions claims: In Weatherilt v Cathay Pacific Airways Ltd, the EAT held that Employment Tribunals have jurisdiction to consider questions of contractual interpretation when determining unlawful deductions from wages claims.

Jurisdiction: Under the Recast Brussels Regulation, in addition to being able to bring claims against employers in the courts of the Member State where the employer is domiciled, an employee can bring claims in the courts of the ‘place where the employee habitually carries out his work, or in the courts for the last place where he did so.’ In Nogueira and others v Crewlink; Moreno Osacar v Ryanair, the Advocate General has given his Opinion on this wording, stating that it means the place where, or from which, the worker principally carries out his duties vis-à-vis his employer. Employers should be aware that jurisdiction is unlikely to be determined according to an employer’s convenience, but must focus on the particular employee’s circumstances.

Gig economy: The Work and Pensions Committee has published a report into the gig economy, following its inquiry launched in December 2016. The report calls for a presumption of worker status, and recommends that the incoming government commit to equalising national insurance contributions for employees and the self-employed.

Senior Managers Regime: The FCA and PRA have published a number of policy statements regarding the Senior Managers and Certification Regime and whistleblowing rules for UK branches of overseas banks:

  • FCA policy statement on guidance on enforcing the duty of responsibility under the SMR
  • FCA policy statement on whistleblowing rules for UK branches of overseas banks
  • PRA policy statement on amendments and optimisations to SMCR and SIMR

Privilege: The High Court decision in Director of the Serious Fraud Office v Eurasian Natural Resource Corporation Ltd reinforces existing case law in confirming the narrow scope of legal professional privilege in the context of internal investigations.