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Employment Law Newsletter – June 2021
Cases:
- Contracts: Prior period of illegal performance did not prevent subsequent enforcement of contract
- Discrimination: Gender critical belief was a “philosophical belief” under the Equality Act 2020
- Discrimination: Absence of interim relief remedy for discrimination cases not incompatible with ECHR
- Vicarious Liability: Both original employer and company to whom employees loaned held vicariously liable for traders’ tortious acts
- Fiduciary Duties: No-conflict rule and fully informed consent
- COVID-19: Solicitor unfairly dismissed for refusing to agree changes to employment contract during pandemic
- COVID-19: Dismissal of employee who expressed concerns about commuting and attending the office during lockdown and asked to be furloughed was not automatically unfair
- COVID-19: Dismissal automatically unfair for raising concerns about lack of COVID-secure workplace measures
- Worker Status: Employment tribunal to decide whether postmasters are workers
Other news:
- COVID-19: Employers join pledge to promote vaccine uptake amongst staff
- Gender Inequality: Government publishes response to Women and Equalities Committee report on gendered economic impact of COVID-19
- Flexible Working: Government to commence consultation on flexible working while National Rail catches up with the times
- Parental Leave: Maternity Action publishes proposals to reform shared parental leave and John Lewis leads the way
- Diversity: Report suggests firms with targeted support for ethnic minority workers have higher revenues
- Legislation: Skills and Post-16 Education Bill introduced in Parliament
- Employment Rights: Government publishes response to consultation on single enforcement body
- ACAS Update: In response to ACAS report, government confirms no current intention to ban “fire and rehire” practices
Cases:
Contracts: Prior period of illegal performance did not prevent subsequent enforcement of contract
In Robinson v His Highness Sheikh Khalid Bin Saqr Al Qasimi [2021] EWCA Civ 862, the Court of Appeal has restated the correct approach for common law illegality as a defence to claims for unfair dismissal. This case arose out of a dispute as to who was responsible for paying tax and national insurance contributions. For seven years Ms Robinson had received an income from the Sheikh and neither party had paid the necessary taxes due. From 2014, the money was paid less deductions equal to what was due if Ms Robinson were self-employed but the parties continued to dispute the preceding seven years. This continued until 2017 when the Sheikh dismissed Ms Robinson for failing to account for her taxes (an illegal act). She brought claims for automatic unfair dismissal for making a protected disclosure, unfair dismissal and wrongful dismissal.
The law is that parties to an employment contract that is affected by illegality may be prevented from bringing claims in an employment tribunal or elsewhere. The effect of illegality on an employment contract will depend on the way in which the illegality arises. Where an employment contract is lawful when made but is illegally performed, the contract’s enforceability will depend on the knowledge and participation of the parties; this is referred to as “common law illegality”. “Statutory illegality” is where the employment contract has been expressly or impliedly prohibited by statute; it is void and unenforceable in line with the statutory prohibition, and the parties’ knowledge and intentions are not relevant.
The Court of Appeal relied upon the Supreme Court’s judgment in Patel v Mirza [2016] UKSC 42, where it held that tribunals should have regard to the three considerations set out below and whether there was a sufficient causal link between the illegal conduct and the claim being made to the tribunal. The Supreme Court held that, to determine if the defence of illegality will succeed, a court should consider the policy factors involved and the nature and circumstances of the illegality:
- The underlying purpose of the prohibition which had been breached and whether the purpose would be enhanced by denial of the claim.
- Any other relevant public policy on which the denial of the claim may have an impact.
- Whether denial of the claim would be a proportionate response to the illegality.
The mere fact that one of the parties to the contract had performed it illegally was not a sufficient test for the doctrine of illegality to apply.
Discrimination: Gender critical belief was a “philosophical belief” under the Equality Act 2020
In Forstater v CGD Europe and others [2021] UKEAT/0105/20, the EAT has overturned an employment tribunal’s decision that a gender critical belief (including a belief that sex is immutable and should not be conflated with gender identity, and that trans women are men) was not a philosophical belief under the Equality Act 2010. The tribunal had held that the claimant’s belief failed the fifth criterion in Grainger v Nicholson [2010] IRLR 4 (EAT) that the belief must be “worthy of respect in a democratic society, be not incompatible with human dignity and not conflict with the fundamental rights of others“. In the EAT’s view, taking account of the European Convention on Human Rights, a belief would have to be akin to Nazism or totalitarianism, or espouse violence and hatred in the gravest of forms, to fall foul of that part of the test. It is only in extreme cases involving the “gravest violation of other Convention rights” that a belief would fail to qualify for protection at all. The claimant’s gender critical beliefs, which were widely shared in society and did not seek to destroy the rights of trans persons, clearly did not fall into that category.
The EAT also held that the tribunal had failed to follow the principle that courts and tribunals should not inquire into the validity of a belief and must remain neutral as between competing beliefs. Furthermore, the tribunal had been wrong to rely on the “absolutist” nature of the claimant’s belief. The firmness with which a belief is held (even if others might think it irrational or offensive) is not a reason to deny protection.
This appeal was only about the preliminary issue of whether the claimant’s belief qualified for protection. The merits of the claim (including the question of whether her treatment amounted to unlawful discrimination) remain to be determined. Mr Justice Choudhury was at pains to point out that the judgment was not to be taken as expressing any view as to the merits of the transgender debate. Nor did the judgment mean that trans individuals have no protection from discrimination or harassment, which may include misgendering.
Discrimination: Absence of interim relief remedy for discrimination cases not incompatible with ECHR
In Steer v Stormsure Ltd [2021] EWCA Civ 887, the Court of Appeal has dismissed a claim that the lack of interim relief remedy for discrimination cases is incompatible with the right to a private life under Article 8 of the European Convention on Human Rights (ECHR) read with Article 14 of the ECHR (which prohibits discrimination). The court held that the claimant did not have the necessary status for protection under Article 14. The fact that interim relief is available to a dismissed whistleblower but not to a discrimination claimant who has been dismissed does not constitute discrimination on the ground of sex, and the status of being a litigant in a particular type of case is not a protected status. Even if that was not the case, the court found that the available remedies for discrimination cases, taken as a whole, are not any less favourable than those available to a dismissed whistleblower. Even if they were less favourable, the difference in treatment as regards the availability of interim relief is objectively justified.
Vicarious Liability: Both original employer and company to whom employees loaned held vicariously liable for traders’ tortious acts
In Natwest Markets Plc and another v Bilta (UK) Ltd and others [2021] EWCA Civ 680, the Court of Appeal has held that, due to a 19 month delay in the giving of judgment at first instance, it could not be satisfied that the trial judge had reached the right conclusions. It allowed an appeal against the decision of Justice Snowden and ordered a re-trial. In this case, the claimants alleged that the defendants were liable for dishonestly assisting a large VAT fraud relating to the sale of carbon credits.
The second defendant (formerly RBS SEEL) also brought a discrete ground of appeal, arguing that the judge was wrong to find that it was vicariously liable for the wrongdoing of the individual traders, alongside the first defendant (formerly RBS). The traders were originally employed by RBS SEEL but had been loaned to RBS. The Court of Appeal dismissed this ground of appeal, on the basis that the traders were so much a part of the work, business and organisation of both companies that it was just to make both employers answer for their tortious acts and omissions in the course of their employment.
Regarding the test for “blind eye knowledge“, the Court of Appeal agreed, obiter, that it was not enough that the defendant merely suspected something to be the case, or that he negligently refrained from making further inquiries.
The re-trial is no surprise here, given the general rule that judgments should be delivered within three months of the hearing. More significant is the decision about vicarious liability, rejecting the bold argument that the shift to the organisation to whom the employee was loaned was so complete that the original employer should have no liability at all.
Fiduciary Duties: No-conflict rule and fully informed consent
In Reader v SPIE Ltd & another [2021] EWHC 1221, the High Court has considered whether an employee director of a target company had breached his fiduciary duty when negotiating an enhanced bonus for a transferring employee when moving him onto the buyer’s standard employment terms.
G had sold his company, G&L, to S. Under the Share Purchase Agreement, G would be liable if a key employee, R, did not agree to S Group’s employment terms, including its less favourable bonus scheme. R moved onto S Group’s standard terms as part of a contract negotiated by G on behalf of G&L. A side letter enhanced R’s bonus for the relevant financial year. G&L did not pay the enhancement and R started proceedings in the County Court. S claimed that G would be liable to it in respect of any award in R’s favour. S settled R’s claim, but proceedings continued between S and G. Judgment was entered for S on the basis that, as part of his fiduciary duty not to act in a position of conflict of interest, G should have done more to draw the enhanced bonus to the attention of Y, the director of G&L making the decision. G appealed.
The High Court allowed G’s appeal holding, among other things, that:
- It is an inflexible rule of equity that a fiduciary must not act in a position where his interest and duty conflict, or may possibly, conflict. There are few exceptions, but one is that there can be no breach where there is fully informed consent. The burden of proving informed consent is on the fiduciary.
- The judge had erred in holding that, as part of the no-conflict<a id=”contract”></a>duty, G was obliged to explicitly invite Y’s attention to the enhanced bonus provision. No such obligation existed. Having decided that the enhanced bonus term was plainly disclosed by G, the correct conclusion was that there was no breach.
- The only thing Y needed to know from G, to make a fully informed decision, was the set of terms proposed for R (including the enhanced bonus). Y had been aware of the bonus due to R under his previous employment terms, and of G’s personal interest in getting R to accept the new terms. By authorising G to sign the documents on behalf of G&L, Y must be taken to have understood what they meant.
COVID-19: Solicitor unfairly dismissed for refusing to agree changes to employment contract during pandemic
In Khatun v Winn Solicitors Ltd ET/2501492/2020 the employment tribunal has found that a solicitor was unfairly dismissed for refusing to agree to changes to her employment contract as part of the firm’s response to the COVID-19 pandemic. The firm had required all staff to agree to a variation giving it the freedom to place them on furlough or to unilaterally reduce their pay and hours to 80%, potentially for up to nine months. The claimant, who was not among the employees earmarked for immediate furlough, was the only one to refuse. She told the firm that, if it became necessary to furlough her or to reduce her hours at some point in the future, she would consider a variation then.
The tribunal accepted that the firm had “sound, good business reasons” for the variation, and therefore had the potentially fair “some other substantial reason” for dismissing an employee who would not agree to it. However, the tribunal considered the dismissal unfair in the circumstances of this case, due to lack of consultation and failure to reasonably consider solutions other than dismissal.
The firm’s directors had decided at the outset that the new terms were non-negotiable and that anyone refusing to sign would be dismissed. The claimant’s attempts to discuss the matter had not resulted in any meaningful discussion, simply a re-stating of the firm’s position. The firm had acted too quickly in dismissing the claimant only two days after sending her the new terms. It had also failed to offer any right of appeal, which might have provided an opportunity for both sides to cool off and reach an agreement.
COVID-19: Dismissal of employee who expressed concerns about commuting and attending the office during lockdown and asked to be furloughed was not automatically unfair
In Accattatis v Fortuna Group (London) Ltd 3307587/2020 an employment tribunal has found that an employee who said he felt uncomfortable commuting and attending the office during lockdown and asked to be furloughed was not automatically unfairly dismissed under section 100(1)(e) of the Employment Rights Act 1996 (ERA 1996).
Mr Accattatis worked for Fortuna Group (London) Ltd, a company which sells and distributes PPE. During March and April 2020, Mr Accattatis repeatedly asked to work from home or be placed on furlough, explaining that he was uncomfortable using public transport and working in the office. Fortuna told Mr Accattatis that his job could not be done from home, and that furlough was not possible because the business was so busy, but that he could instead take holiday or unpaid leave. Mr Accattatis declined and asked three more times to be furloughed. After the final request on 21 April 2020, he was dismissed by email the same day.
Mr Accattatis did not have sufficient service to claim ordinary unfair dismissal. He instead alleged he had been automatically unfairly dismissed under section 100(1)(e) of the ERA 1996 for having taken steps to protect himself from danger.
The tribunal observed that the government had announced on 14 February 2020 that COVID-19 posed a serious and imminent threat to public health. This, together with Mr Accattatis’ emails expressing concern about commuting and attending the office, showed he reasonably believed there were circumstances of serious and imminent danger.
However, it was a requirement under section 100(1)(e) for Mr Accattitis to have taken appropriate steps to protect himself from danger or to have communicated the circumstances of danger to Fortuna. Fortuna had reasonably concluded that Mr Accattatis’ job could not be done from home and that he did not qualify for furlough but had instead suggested taking holiday or unpaid leave. Mr Accattatis’ response was not only that he wanted to stay at home (which was agreed), but also to demand that he be allowed to work from home (on full pay) or be furloughed (on 80% of pay). These demands were not appropriate steps to protect himself from danger, so his claim failed.
Although not binding, this case is a reminder that the pandemic may not on its own justify a refusal to attend work under section 100(1)(e) if employers have reasonably tried to accommodate employees’ concerns and reduce transmission risk.
COVID-19: Dismissal automatically unfair for raising concerns about lack of COVID-secure workplace measures
In the case of Gibson v Lothian Leisure ET/4105009/2020, the claimant, Mr Gibson, worked as a chef in a restaurant owned by Lothian Leisure. The restaurant closed temporarily in March 2020 due to the first COVID-19 lockdown, and Mr Gibson was furloughed. Before re-opening the restaurant, the employer asked Mr Gibson to come into work. Mr Gibson was concerned about catching COVID-19 at work and passing it onto his father, who was clinically vulnerable. When Mr Gibson raised concerns about the lack of PPE or other COVID-secure workplace precautions, the employer’s response was robustly negative, and he was told to “shut up and get on with it“.
With no prior discussion, the employer dismissed Mr Gibson summarily by text message on 30 May 2020. It did not pay him any notice pay or accrued holiday pay. The message said that Lothian Leisure was changing the format of the business and would be running it with a smaller team after the lockdown.
An employment tribunal held that Mr Gibson had been unfairly dismissed under section 100(1)(e) of the Employment Rights Act 1996 (ERA 1996) because he had taken steps to protect his father in what he reasonably believed to be circumstances of serious and imminent danger. Alternatively, since the wording of the employer’s text message suggested a possible redundancy situation, Mr Gibson had been unfairly selected for redundancy under section 105(3) because he had taken those steps. The circumstances of danger were the growing prevalence of COVID-19 and the potential significant harm to Mr Gibson’s father if he contracted the virus. Mr Gibson reasonably believed that this was a serious and imminent danger, leading him to raise concerns regarding the lack of PPE. Until Mr Gibson had raised those concerns, he had been a successful and valued member of staff.
The tribunal also awarded Mr Gibson pay in lieu of notice and untaken holiday, underpaid furlough pay, and pension contributions that had been deducted but not paid into the pension scheme. It dismissed his claim under the whistleblowing provisions of the ERA 1996. His concern had only been for the health of his father and the tribunal was not satisfied that this met the public interest test under section 43B, although the point was arguable.
Worker Status: Employment tribunal to decide whether postmasters are workers
Website Personnel Today, has revealed that over 100 postmasters and sub-postmasters are bringing an employment tribunal claim against the Post Office in a bid to be classified as workers under the Employment Rights Act 1996, entitling them to benefits including holiday and sick pay. The claimants, who run Post Office franchises, will deploy arguments based on the level of control exerted by the Post Office, in a similar vein to those raised in Uber and others v Aslam and others [2021] UKSC 5.
The case will be heard at the London Central employment tribunal later this month and will have an impact on thousands of postmasters and sub-postmasters across the country.
Other News:
COVID-19: Employers join pledge to promote vaccine uptake amongst staff
Employers of over one million workers have pledged to promote a positive safety message and signpost staff to NHS providers in a bid to improve the UK’s vaccine uptake. Nine of the UK’s biggest employers, including IKEA, Asda and Nationwide, have signed the pledge which will also mean that employees will be able to get their vaccines during working hours. Interestingly, this announcement follows the publication of a poll by the British Chambers of Commerce (BCC) which found that 78% of employers had no plans to implement “vaccine certification” for employees returning to the office.
Gender Inequality: Government publishes response to Women and Equalities Committee report on gendered economic impact of COVID-19
On 14 May 2021, the government published its response to the Women and Equalities Committee report ‘Unequal Impact? Coronavirus and the gendered economic impact’. The report found that government policies had consistently overlooked women’s caring responsibilities and the employment inequalities experienced by them and made wide-ranging recommendations.
The government’s response, however, rejects many of the recommendations, including a review of the adequacy of Statutory Sick Pay, amendments to Form HR1 to capture protected characteristic information, funding of training schemes aimed at women in certain fields and the publication of a gender equality plan for apprenticeships. However, it does state the following:
- Amendments to the Flexible Working Regulations 2014 (SI 2014/1398), removing the 26-week service requirement for making a flexible working request, will be considered. The government wants to make it easier for people to work flexibly and is committed to encouraging flexible working. It will consult on making flexible working the default position, with a consultation to be issued in due course.
- The government is committed to bringing forward an Employment Bill “when parliamentary time allows“. However, there was no mention of an Employment Bill in the Queen’s Speech of 11 May 2021. Consequently, the government will not publish the draft Employment Bill by the end of June 2021, as the report recommends.
- The government still intends to extend the redundancy protection period afforded to mothers on maternity leave. This protection will apply to pregnant women and for six months after a mother has returned to work, and will cover those taking adoption and shared parental leave. The measures will be brought forward “as soon as Parliamentary time allows“. No specific timeframe is provided. Notably, the measures were mentioned in the 2019 Queen’s Speech following a BEIS consultation in January 2019. The government is also considering proposals to require large employers to publish their parental leave and pay policies, with its formal response to a consultation from July 2019 awaited.
Finally, while calls for disability pay gap reporting are rejected, the government states that it is continuing to analyse relevant data and will respond to the ethnicity pay gap consultation in due course.
Flexible Working: Government to commence consultation on flexible working while National Rail catches up with the times
The Guardian reports that the government has confirmed it plans to commence a consultation which would consider whether flexible working would become the default option unless there are good reasons not to (a proposal originally set out in the Conservative Party’s 2019 election manifesto and subsequently included in the Employment Bill outlined in the Queen’s Speech). According to The Guardian, a government spokesperson has stated that this would not go as far as giving staff a legal right to work from home.
The government has stated on numerous occasions that it intended to consult on flexible working, including in its recent response to the Women and Equalities Committee report on gendered economic impact of COVID-19. A government advisory group, made up of business associations, charities and trade unions from ACAS to the CBI, has also recently recommended that flexible working should be the default position.
Following hot on the heels of this, National Rail recently announced a new ‘Flexi Season ticket’ which offers 8 days of peak time travel Monday to Fridayin a 28 day period, any time between two stations. The tickets will be on-sale from 21 June 2021, for use from 28 June 2021.
Parental Leave: Maternity Action publishes proposals to reform shared parental leave and John Lewis leads the way
Maternity Action has published a report recommending reform of shared parental leave (SPL). The report follows the campaign it started in April 2021 with other groups including the TUC and the Fawcett Society, and the government’s failure to include the long-awaited Employment Bill in the Queen’s Speech which could have included proposals for SPL reform (see our May newsletter).
Maternity Action considers that the current scheme is not fit for purpose. Data provided by business minister Paul Scully, in response to a parliamentary question in February 2021, indicated that take-up among eligible fathers was just 3.6% in 2019/20, well below the government’s 25% target, and only 2% of all new fathers took SPL in 2019. The pandemic has only increased the problem, with the Women and Equalities Committee February 2021 report on the gendered impact of COVID-19 finding that the gender childcare gap increased during the pandemic (see above).
The report proposes that a new system should be introduced that provides individual, non-transferable, rights for each parent, as sharing or transferring of leave between parents has not worked, being too complex and poorly understood by parents and employers. A “6+6+6” model is proposed, replacing both the existing statutory maternity leave and SPL schemes. The first six months of leave being reserved for the mother, and then six months of non-transferable parental leave for each parent. This could be taken concurrently or consecutively, all in one go, or in smaller blocks of weeks or months, up to 18 months after the birth.
The report also recommends that:
- Maternity, paternity and parental leave and pay should be day one rights for all working parents, regardless of employment status.
- The right to return to the same job after any period of leave should be strengthened.
- Statutory leave pay should be increased to at least the national minimum wage level, and should in time be increased to the real living wage level and then wage-replacement levels.
In autumn 2021, John Lewis will introduce what is thought to be the UK’s first equalised parental pay policy, offering 26 weeks’ paid leave to all employees who have been at the company for a year when they have a baby. This will constitute 14 weeks of full pay and 12 weeks of 50% contractual pay. Employees who lose pregnancies will also receive greater support; being granted two weeks of paid leave alongside emotional support provisions including free counselling and mental health services.
John Lewis’ new policies come as part of efforts to redefine its responsibilities towards equality, one of its founding principles.
Diversity: Report suggests firms with targeted support for ethnic minority workers have higher revenues
People Management reports that Henley Business School has published a report revealing that businesses with targeted measures to support their ethnic minority workers have an average revenue of £5.6 billion; 58% higher than the £3.6 billion made by firms that do not.
The report, which analysed the earnings of 100 firms in the FTSE 350, also found that the market capitalisation for companies who have targeted measures was an average of £4.3 billion higher than companies that have failed to introduce any. In the introduction to the report, lead researcher Dr Naeema Pasha suggests that the research demonstrates that adopting an inclusive culture can help organisations improve wellbeing, engagement, sustainability and innovation, leading to better outcomes for all employees.
Legislation: Skills and Post-16 Education Bill introduced in Parliament
On 18 May 2021, the Skills and Post-16 Education Bill 2021-22 (the Bill) was introduced in Parliament. It contains measures aimed at creating more routes into skilled employment and ensuring that the training on offer meets the needs of local areas.
The Bill provides the legislative underpinning for the reforms set out in the ‘Skills for Jobs White Paper’. It is intended to improve the functioning of the post-16 education system and support the introduction of the Lifetime Skills Guarantee, aimed at transforming the training and skills system to ensure more people gain skills to progress their employment prospects.
The following measures introduced by the Bill are likely to be of interest to employers:
- A power for the Secretary of State for Education to designate employer representative bodies to lead the development of local skills improvement plans.
- A duty for education and training providers to co-operate with employer representative bodies to develop and review local skills improvement plans, and to have regard to them when making decisions on the provision of post-16 education and training.
- Additional functions for the Institute for Apprenticeships and Technical Education in relation to new categories of technical qualifications that relate to employer-led standards and occupations.
The Bill is scheduled to have its second reading on 15 June 2021.
Employment Rights: Government publishes response to consultation on single enforcement body
On 8 June 2021, the Department for Business, Energy and Industrial Strategy (BEIS) published the government’s response on the proposal to create a single enforcement body for employment rights. The proposal was made in the government’s Good Work Plan policy paper published in December 2018 and consulted upon in the latter half of 2019.
As a result of the consultation responses received, the government proposes to create a single enforcement body which will bring three existing bodies into one organisation with a significant remit to enforce employment rights and improve employers’ compliance. The body will have an extensive remit to protect workers in relation to national minimum wage, labour exploitation and modern slavery, holiday pay for vulnerable workers and statutory sick pay. The government will legislate to implement the single enforcement body “when parliamentary time allows”.
ACAS Update: In response to ACAS report, government confirms no current intention to ban “fire and rehire” practices
On 8 June 2021, ACAS published its report into so-called “fire and rehire” practices. The report was commissioned by BEIS and delivered to minsters in February 2021.
Intended as a fact-finding exercise, rather than to recommend reforms to the practice, the report notes a wide range of opinions amongst participants over the use by employers of fire and rehire. Although use of the practice has increased during the COVID-19 pandemic, participants did not agree over whether this was because employers were using the pandemic opportunistically as a “smokescreen” to diminish employees’ rights or whether it was merely a response to the scale of the challenges faced by businesses during this time.
There was a similar divergence of views amongst participants over whether reform to the practice was needed and, if so, what these reforms should be. Some participants in the report felt that fire and rehire is never reasonable and should be outlawed by legislation. Others felt that the practice can be reasonable if used as a genuine and unavoidable last resort. Concerns were also expressed that any reform could lead to less flexibility for employers, resulting in more businesses failing, and consequently to more redundancies.
Responding to the report in the House of Commons, Paul Scully MP, Parliamentary Under-Secretary of State for BEIS, confirmed that the government does not propose to devise “heavy-handed legislation” to ban fire and rehire at this stage. Instead, Mr Scully confirmed that the government has instructed ACAS to prepare clearer guidance on when fire and rehire should be used and good practice for employers. However, Mr Scully said the government will continue to work with ACAS on this issue, and confirmed that “nothing is off the table“.
Further Information:
If you would like any additional information, please contact Anne-Marie Pavitt or Sophie Banks on: hello@dixcartuk.com.
