Employment Law Newsletter – November 2020

Cases:

• Health & Safety: UK government in breach of EU law to protect workers, not just employees
• Tribunals: No apparent bias or unfairness where lay member sat on two related tribunals
• Indirect Discrimination: The ‘costs-plus’ rule justification
• Contract: Firm could rely on manager’s repudiatory conduct to justify summary termination despite itself being in breach of contract
• Indirect Discrimination: Permission for judicial review granted in SEISS indirect sex discrimination case

Other news:

The High Court considered other Directives and cases, and concluded that the definition of worker for the purposes of these Directives should be the same as used in other Directives, such as those on free movement, equal pay, and working time. Therefore, the legislation did not give the same level of protection to workers as employees, and the court granted a declaration to that effect. This is a significant judgment. The government now has to choose whether to appeal this decision, or if not, legislation will be required to extend the scope of the protections to include the broader category of workers. A formal response from the government is due shortly.

Tribunals: No apparent bias or unfairness where lay member sat on two related tribunals

In Lyfar-Cisse v Brighton And Sussex University Hospitals NHS Trust [2020] UKEAT 0100_19_2810 the EAT had to consider whether the fact that the same lay member sat concurrently on two separate tribunal panels considering claims which involved the same parties gave rise to apparent bias and thus unfairness? And, if so, had the Appellant waived the right to take the point?

The Claimant had brought two claims against her employer. One, for direct race discrimination on the grounds of race and victimisation was heard before EJ Bryant QC, and the other, brought a few months later for unfair dismissal, was heard before EJ Baron. Tribunal panels usually consist of an employment judge and two lay people, who are not legally qualified. One of the lay members (Ms Campbell) sat in both cases. In addition, an overlap arose because both tribunals were adjudicating upon issues which either referenced or related to the decision made by a Ms Cashman (chair of the disciplinary meeting).

In dismissing both appeals, the judge, Lord Fairley, clearly found little overlap, commenting that a “fair minded and informed observer…” would not have seen a real possibility of bias in the circumstances, but would have concluded that the tribunals were properly trying to determine the issues before them. Nothing that Ms Campbell learned about Ms Cashman’s decision in the first tribunal could have affected her decision making in the second.

Indirect Discrimination: The ‘costs-plus’ rule justification

In Heskett v Secretary of State for Justice [2020] EWCA Civ 1487, a probation officer brought a claim against the MoJ for indirect age discrimination because the Ministry changed its pay structure resulting in employees taking a longer time to make their way up the pay scale. This meant, effectively, that Mr Heskett, over the long term, earnt less than his longer serving (and therefore typically older) colleagues. The MoJ had made this change in order to meet a cap on increases in public sector pay.

In Cross v British Airways [2005] IRLR 423 it was held that cost grounds can properly be a factor for an employer objectively justifying indirect discrimination, if combined with other reasons. Cost considerations alone are not sufficient to justify a discriminatory provision, criterion or practice for indirect discrimination. This became known as the “costs-plus” rule, which was broadened in Woodcock v Cumbria Primary Care Trust [2012]  EWCA Civ 330 by focusing on the issue of how the employer’s “legitimate aim” is identified. The Claimant, Mr Heskett, argued in this case, however, that the MoJ’s aim to save costs could not amount to a legitimate aim, and therefore the discriminatory effect of the new pay structure was unjustifiable. The tribunal found that the pay progression policy was prima facie discriminatory, but that it was a proportionate means of achieving a legitimate aim and therefore justified, and the EAT agreed, so Mr Heskett appealed to the Court of Appeal.

After much consideration, the Court of Appeal found that cost alone is not sufficient to justify some action or rule which would otherwise amount to indirect discrimination on the grounds of age, but it can be a legitimate aim for the purpose of a justification defence if the employer uses it combined with something else such as the “need to reduce its expenditure, and specifically its staff costs, in order to balance its books” – Lord Justice Underhill at para.98. Mr Heskett’s appeal was therefore dismissed on all grounds. The decision established that the need to operate within a budget or balance the books should be treated as a legitimate aim that is more than just saving cost.

Contract: Firm could rely on manager’s repudiatory conduct to justify summary termination despite itself being in breach of contract

In Palmeri & Others v Charles Stanley and Co Ltd [2020] EWHC 2934 (QB) the High Court has held that a firm was entitled to rely on a stockbroker’s repudiatory conduct to justify the summary termination of his contract, despite the firm itself being in repudiatory breach. Mr Palmeri was a self-employed investment manager contracted to Charles Stanley & Co Ltd, with a three-month notice period and no PILON clause (pay in lieu of notice). The firm decided to change its operating model to take a larger portion of Mr Palmeri’s revenues. This was resisted by Mr Palmeri. At a meeting on 21 April 2017, the firm offered him an ultimatum: sign the new terms there and then, or leave immediately with pay in lieu of notice. Mr Palmeri reacted furiously and verbally abused the managers present, as well as the firm generally. He then said that he would accept the new terms under protest, for the duration of his notice period. However, his abusive rhetoric escalated and the firm withdrew the offer of new terms and summarily terminated his contract.

Mr Palmeri issued a claim for breach of contract in relation to the summary termination. He also alleged that the failure to allow him the opportunity for an orderly transition of his clients’ business was a breach of the implied term of mutual trust and confidence. The firm sought to rely on Mr Palmeri’s repudiatory conduct at the meeting, as well as several serious regulatory compliance failures during his engagement, which were only discovered after termination.

The High Court found that the firm had had no contractual right to present Mr Palmeri with the ultimatum in April 2017, since it had no right to make a payment in lieu of notice. However, Mr Palmeri’s conduct as a whole, including his outburst at the meeting and the history of regulatory issues, amounted to serious misconduct and a breach of the implied duty of mutual trust and confidence, justifying summary termination. The fact that the firm had been poised to deny Mr Palmeri his notice period did not affect its entitlement to rely on the repudiatory conduct that ensued or was later discovered. The court therefore did not need to consider Mr Palmeri’s claim to an implied right to an “orderly transition” of business.

Indirect Discrimination: Permission for judicial review granted in SEISS indirect sex discrimination case

Pregnant Then Screwed, a charity that supports, promotes and protects the employment rights of pregnant women and mothers, announced on 6 November 2020 that it has been granted permission for judicial review against the Chancellor of the Exchequer.

The charity will argue that the Chancellor’s Self-Employment Income Support Scheme (SEISS), introduced in April 2020, indirectly discriminates against self-employed women who took maternity leave between 2016 and 2019. It argues that, because the SEISS does not account for the subsequent reduction in self-employed women’s average income, they are entitled to smaller grants than their peers. The charity has devised three grounds to its challenge:

• That the SEISS calculation clause violates Article 14 (the right to protection from discrimination) read in conjunction with Article 1 of Protocol No.1 (the right to property) of the European Convention on Human Rights.
• The SEISS calculation clause is indirectly discriminatory, breaching section 19 of the Equality Act 2010.
• The SEISS scheme does not comply with the public sector equality duty under section 149 of the Equality Act 2010.

The application for judicial review followed the charity’s decision to send a pre-action protocol letter to the Chancellor, whose legal team responded by correlating maternity leave to a sabbatical or any other type of leave. It is estimated that as many as 75,000 women may have been affected by the alleged discrimination.

Other news:

COVID-19: New government guidance on using volunteers during the pandemic

On 13 November 2020, the Department for Digital, Culture, Media and Sport (DCMS) published new guidance for organisations and groups in England on how to safely and effectively involve volunteers in their work during the COVID-19 pandemic. The guidance, which reflects current lockdown restrictions:

• Encourages those who can volunteer from home to do so. It then says that people can volunteer outside their home (including within a workplace, unless it has been ordered to close) if they are unable to volunteer from home, don’t need to self-isolate, are not clinically extremely vulnerable, and follow social distancing or (if volunteering in a workplace) COVID-secure guidance.

While this also applies to those who are clinically vulnerable, including those aged 70 and over, the guidance warns that such volunteers may require additional support to follow social distancing rules and minimise contact with others, and should be especially careful. Clinically extremely vulnerable people are advised not to volunteer outside their home.

• Warns that no one should be compelled by their organisation or group to volunteer outside their home. Volunteering is a personal choice.
• Says that, while volunteering, people can meet in groups of any size from different households, indoors or outdoors, but must follow social distancing guidance and observe the three key behaviours (hand washing, wearing face coverings and giving space).
• Reminds employees furloughed through the Coronavirus Job Retention Scheme that they can, during the hours they are on furlough, volunteer for another employer or organisation, but that they are not permitted to volunteer for their own employer or an organisation linked to, or associated with, it. These rules have not changed, despite calls from the sector for the employees furloughed by charities to be allowed to perform voluntary work for them.
• Reminds those using volunteers of their duty of care to ensure, as far as reasonably practicable, that volunteers are not exposed to risks to their health and safety.

Separate guidance has been issued on volunteering in Wales, Scotland and Northern Ireland.

COVID-19: Advice for employers on how to manage employees suffering from ‘Long Covid’

With thousands of people still unwell months after contracting coronavirus, People Management asked HR experts, wellbeing specialists and employment lawyers how organisations can support employees suffering from the condition now termed ‘Long Covid’. The main advice is that the situation should be discussed openly with employees, who should be treated on a case-by-case basis as with any other medical condition, and use occupational health as a guide to accommodate adjustments. However, it is too soon to be labelling coronavirus as a disability.

COVID-19: ONS finds employers prioritise highest paid furloughed workers for pay top up

The Office for National Statistics (ONS) has revealed that employers prioritised paying full pay to top earners during the COVID-19 pandemic in contrast with the UK’s lowest paid workers who were five times more likely to be furloughed with reduced pay.

The data collected covered a range of demographic indicators; almost a quarter of 18 to 21 year olds were furloughed on reduced wages compared with only 9% of 40 to 59 year olds and 39% of hospitality workers were furloughed on reduced pay compared with 3% in professional jobs. It also found that there were 2,043,000 jobs where employees aged 16 or over were paid below the legal minimum in April 2020, more than four times the 409,000 jobs a year earlier.

Gender Pay Gap: ONS data reveals gender pay gap reduction to 7.4%

Figures published by the Office of National Statistics (ONS) have revealed that the UK’s gender pay gap, calculated using the median hourly earnings of full-time employees, has fallen to 7.4% from 9% in 2019. This means that, as of April 2020, female workers earned 92.6% of male employees’ hourly pay. This reduction was reflected across age groups, with the gender pay gap for full-time workers under-40 particularly low at “close to zero”. Interestingly, the most significant reduction in the gender pay gap occurred among managers, directors and senior officials, falling from 16.3% in 2019 to 9.9% in 2020. The ONS highlighted the fact that “this occupation group has the highest median pay of any occupation … and therefore has a strong impact on the gender pay gap” overall.

The Government Equalities Office and the Equalities and Human Rights Commission suspended gender pay gap reporting regulations back in March 2020 as a result of disruption caused by the COVID-19 pandemic. Although this data takes furloughed workers’ pay into account, the ONS warned that the impact of the pandemic may not be fully reflected.

Data Protection: ICO fines Marriott International £18.4m and British Airways £20m

The Information Commissioner’s Office (ICO) has issued a monetary penalty notice fining Marriott International Inc (Marriott) £18.4 million for breaching its data security obligations under the General Data Protection Regulation (GDPR), leaving about 339 million guest records worldwide exposed to a cyber-attack on Starwood Hotels and Resorts Worldwide Inc’s (Starwood) reservation database in 2014. Marriott acquired Starwood in 2016, but the exposure of customer data was only discovered in 2018, at which time Marriott notified the ICO and updated its systems.

The ICO traced the cyber-attack back to 2014, but the penalty only relates to the breach from 25 May 2018, when the GDPR became applicable. As the breach occurred before the UK left the EU, the ICO investigated this on behalf of all of the EU authorities as a lead supervisory authority under the GDPR.

The amount imposed is a significant reduction on the £99,200,96 million the ICO announced it intended to fine Marriott in July 2019. As part of the regulatory process, the ICO considered representations from Marriott, the steps Marriott took to mitigate the effects of the incident and the economic impact of COVID-19 on their business before setting a final penalty.

This fine illustrates the importance of carrying out thorough due diligence when making a corporate acquisition and, as part of this, to assess how personal data is protected. It follows hot on the heels of the ICO fining British Airways £20 million earlier this month for failing to protect the personal and financial details of more than 400,000 of its customers in a cyber-breach, the largest fine imposed to date for a breach of the GDPR. An ICO investigation found the airline was processing a significant amount of personal data without adequate security measures in place. This failure broke data protection law and, subsequently, BA was the subject of a cyber-attack during 2018, which it did not detect for more than two months. ICO investigators found BA ought to have identified weaknesses in its security and resolved them with security measures that were available at the time.

On 18 August 2020, Martin Bryant filed a representative class action in the High Court (Bryant v Marriott International Inc and others, case number QB-2020-002882). The claim for compensation is being brought on an opt-out basis by automatically including guests who made a reservation at one of the former Starwood hotels before 10 September 2018.

Further Information:

If you would like any additional information, please contact Anne-Marie Pavitt or Sophie Banks on: hello@dixcartuk.com.