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Employment Law General Update – July 2022
This month’s news covers health at work with the consideration of the introduction of a maximum limit to workplace temperatures and guidance on the new fit notes. We also have an analysis of recent gender pay gap reporting, a report on the low rates of sustainable disability initiatives at FTSE 100 companies, draft regulations for banning exclusivity clauses in contracts and new ACAS guidance about workplace discrimination.
- Health at Work: MPs call for maximum limit to workplace temperatures
- Health at Work: DWP publishes fit note guidance for healthcare professionals
- Gender Pay Gap: New analysis shows more companies reporting an increase in their average gender pay gap
- Diversity: Less than 40% of FTSE 100 companies have sustainable disability initiatives
- Contracts: Draft regulations laid extending ban on exclusivity clauses in employment contracts to low-income workers
- ACAS Advice: ACAS publishes new guidance on asking and answering questions about workplace discrimination
Health at Work: MPs call for maximum limit to workplace temperatures
An early day motion (EDM) which calls on the government to introduce legislation to ensure employers maintain reasonable temperatures in the workplace has been signed by 38 MPs. The EDM calls for legislation to enforce a maximum temperature of 30 degrees Celsius, or 27 degrees Celsius for workers doing strenuous work and to require employers to introduce effective control measures, such as installing ventilation or moving staff away from windows and heat sources. The issue of maximum workplace temperatures, which arises from time to time, was previously raised as an EDM in 2013.
The Workplace (Health, Safety and Welfare) Regulations 1992 (SI 1992/3004) requires employers to ensure that temperatures in all workplaces inside buildings are reasonable. While an Approved Code of Practice sets a limit on minimum workplace temperatures of 16 degrees (or 13 degrees if the work involves severe physical effort), there is no limit on the maximum temperature. See what the Health and Safety Executive says about the law here.
Health at Work: DWP publishes fit note guidance for healthcare professionals
On 1 July 2022, the Department for Work and Pensions (DWP) published Getting the most out of the fit note: guidance for healthcare professionals. The publication follows the expansion of the category of people who can sign fit notes for the purposes of SSP and social security claims and the earlier removal of the requirement for fit notes to be signed in ink. There will be a transitional period during which both the 2017 and 2022 versions of the fit note will be legally valid while relevant IT systems are updated and stocks of paper fit notes in hospitals are replaced.
The guidance has been issued alongside the publication of non-statutory guidance on who can issue fit notes and a training package on e-learning for healthcare. The resources are intended to be used together to support eligible healthcare professionals in ensuring they have the expertise and knowledge to certify and issue fit notes. The guidance reiterates that an assessment is about whether a patient is fit for work in general and not job-specific. It also recognises that incomplete fit notes can make it difficult for employers to support a patient and cause delays to a patient’s return to work.
Information is provided on the factors that should be considered when assessing fitness for work, as well as information on how to discuss a patient’s beliefs about health and work if they are reluctant to return to work. In addition, there is information on how the free text section of the note should be completed, including the importance of giving practical advice to employers. In this section, it is noted that the only reference to a patient’s current job should be in the context of possible workplace adaptations or if the job may be affecting their health. Towards the end of the guidance, there are several case studies and an FAQ section. The FAQ section highlights that a medical professional’s advice is not binding on an employer, and it is for an employer to determine whether to accept the advice.
The guidance for employers and line managers and employees has also been updated to reflect the expanded category of people who can sign fit notes.
Gender Pay Gap: New analysis shows more companies reporting an increase in their average gender pay gap
PwC analysis of gender pay gap data has found that of the companies that disclosed their data this year 43% reported an increase in their average gender pay gap (up from 41% the year before). A decrease was reported by 53% of companies and no change was reported by the remaining 4%. 1,826 more companies reported their gender pay gap details this year.
The analysis shows that only small changes, of no more than plus or minus 5%, have been made to most companies’ pay gaps. This suggests that “significant change may take a long time” as organisations “continue to struggle with making impactful changes to the gap“.
Diversity: Less than 40% of FTSE 100 companies have sustainable disability initiatives
A recent study by Agility in Mind has found that only 37% of FTSE 100 companies have sustainable disability initiatives in place and just 4% have neurodiversity initiatives. This is despite 99% of FTSE 100 companies having inclusive mission statements. Of the 250 business leaders who were polled as part of the research, 16% described their neurodiversity initiatives as “highly effective” compared to 26% of those who described their race or gender equality initiatives in the same way.
Separately, a TUC-commissioned survey of approximately 1,000 HR managers across different workplaces has found that 21% of workplaces do not have specific support policies for LGBT staff and only 25% have a policy setting out support for trans and non-binary staff.
Contracts: Draft regulations laid extending ban on exclusivity clauses in employment contracts to low-income workers
Draft regulations have been laid before Parliament which will prohibit exclusivity clauses in the employment contracts of workers whose earnings are on, or less than, the lower earnings limit (currently £123 a week). The draft regulations follow a government consultation on extending to other low earners the ban on exclusivity clauses which was introduced in 2015 to zero-hours workers’ contracts.
The draft regulations largely mirror the rights of zero-hours workers set out in section 27A of the Employment Rights Act 1996 and the Exclusivity Terms in Zero Hours Contracts (Redress) Regulations (SI 2015/2021). They will make unenforceable any contractual term which prohibits a worker from doing work or performing services under another contract or arrangement, or which prohibits a worker from doing so without their employer’s consent. Where they breach an exclusivity clause in their contract, employees will be protected from unfair dismissal and workers will be protected from detriment. The new unfair dismissal protection will have no qualifying period. Where an employment tribunal finds that a worker has suffered a detriment, it may make a declaration and award compensation it considers just and equitable up to an amount equal to the unfair dismissal basic and compensatory award.
The draft regulations will come into force 28 days after the day on which they are made and apply to England, Scotland and Wales.
ACAS Advice: ACAS publishes new guidance on asking and answering questions about workplace discrimination
Following the repeal of the statutory questionnaire procedure in 2014, ACAS published non-statutory guidance, Asking and responding to questions of discrimination in the workplace to assist employees and employers in asking and responding to discrimination questions. That guidance was subsequently withdrawn.
ACAS has now published new information on its website on asking and answering questions about discrimination at work. The guidance sets out suggested steps for an employee who believes that they may have been discriminated against in the workplace, guidance on the information they should provide in writing to their employer and the types of questions they could ask their employer in order to help establish whether discrimination has taken place. The guidance also explains how employers should consider and respond to employees’ questions concerning workplace discrimination, and what might or might not amount to unlawful discrimination. An example statement and questions concerning potential discrimination to an employer and an example employer’s response are also provided.
Further Information:
If you would like any additional information, please contact Anne-Marie Pavitt or Sophie Banks on: hello@dixcartuk.com
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Employment Law Newsletter – January 2022
Here we look at some of the big issues to occur over the last 12 months and what to expect over the coming year.
Hot topics of 2021:
COVID-19
The COVID-19 pandemic continues to affect the employment landscape. While many had expected, or hoped, the changes brought by the pandemic would have plateaued in the latter half of 2021, many employees are only just returning to the workplace following a change in government guidance in December 2021. In some respects, the pandemic has acted as a catalyst, particularly around flexible and hybrid working, however the delays to key employment law developments expected to take place in 2021 continue into 2022. The pandemic has also formed the context of a number of cases that have come through the employment tribunal system as a result of remote working and the furlough scheme. There have also been a raft of cases involving unfair dismissals, where not knowing how to react to the difficulties brought by the virus sometimes led employers into trouble. Covid-19 also had a significant gendered economic impact on women.
Flexible Working
Of course, Covid-19 sent the world into a tailspin with employers and employees both having to work out how to be productive despite very challenging circumstances, nevertheless it has highlighted the myriad of possibilities that exist. There have been calls by many respected business groups to make flexible working the default position, leading to a government consultation on the subject, and the CIPD calling for it as a day one right.
Equal Pay and the Gender Pay Gap
Big cases for Morrisons and Asda determined that (female) retail workers could be compared with those of (male) logistics workers at national distribution centres. Meanwhile, enforcement of gender pay gap reporting was put back six months in 2021 due to the pandemic, with most eligible companies now complying with their reporting obligations. There have now been calls for reporting of the ethnic pay gap, especially since some big firms have voluntarily started publishing results which include other diversity metrics including class, sexual orientation, ethnicity and disability – way beyond the minimum obligation, and tying in nicely with the government’s ‘levelling-up’ agenda.
The Employment Bill
The bill was promised in the 2019-20 parliamentary session but did not get past a first reading. It was omitted from the Queen’s speech in 2021 with the government response being it will be addressed “when parliamentary time allows”, namely once all the extra pandemic work is out of the way. There do seem to be small workings taking place though – with the single enforcement body for employment rights starting to take shape, but again, this will involve more parliamentary time to flesh out its bones. We continued to see the evolution of cases involving workers in the gig economy. This is an area that is not going away just yet, and we hope to see more clarification in the Bill when it is ready.
The Big Issues for 2022:
Changes to traditional 9-5 office-based working
Whilst some employers are now requiring their workforces to return to pre-pandemic working locations, the pandemic shifted and centralised the issue of flexible working for employers, with many now normalising a return to offices on a hybrid basis. A government consultation on making flexible working the “default position” ran from September to December 2021 and set out five proposals including making flexible working a day one right. Note that the government’s proposals do not introduce an automatic right for employees to work flexibly. Rather, the proposals include a number of measures to broaden the scope of the right, while retaining the basic system involving a conversation between employer and employee about how to balance work requirements and individual needs, potentially changing the statutory business reasons for refusing a flexible working request. As the consultation closed on 1 December 2021, it is unlikely there will be a response from the government until the latter half of 2022.
Some developing themes which employers may continue to face in 2022 include requests from employees to work flexibly abroad and the impact on wellbeing of continued working from home. Following research about the significant amount of hidden overtime while working from home during the pandemic, there have also been calls for the government to introduce a “right to disconnect“. This has recently been brought into effect in some European countries and is being discussed by the Scottish Government in relation to their own employees. It was also mentioned in a briefing paper on hybrid working published by the House of Commons Library in November 2021. Most recently, several big companies have announced their intention to trial four day working weeks, with senior managers under 35 being the most enthusiastic, understanding the impact on employees as well as improving retention and happiness. Perhaps this is the year that the oft quoted “good work-life balance” statement actually rings true.
Vaccinations at work
On 1 April 2022, following a consultation, regulations come into force which will make vaccination against COVID-19 a requirement for health and social care workers in a face-to-face role. It remains to be seen how employers in this sector will deal with unvaccinated employees. Employers in other sectors, who have a duty to maintain a safe workplace, have been encouraging staff to get vaccinated. In the absence of further government requirements on mandatory vaccinations, there would be risks for employers who may want to make vaccination a requirement for new or existing staff. The key legal problem will be the risk of potential unfair dismissal and potential discrimination claims if employees are dismissed for refusing to be vaccinated and the employer is unable to justify dismissal as a proportionate means of achieving a legitimate aim.
New duty to prevent sexual harassment
On 21 July 2021, the government published its response to the 2019 consultation on workplace sexual harassment. The response confirmed a new duty for employers to prevent sexual and third-party harassment, which is likely to include a defence where an employer has taken “all reasonable steps” to prevent the harassment. The government will also consider the proposal to extend the time limits for claims under the Equality Act 2010, but has not yet committed to making any changes. The duty will come into force when Parliamentary time allows.
Review of gender pay gap reporting regulations
By April 2022, the government must review the gender pay gap regulations as they are obliged to do so within five years of the regulations coming into force (regulation 16(3), Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 (SI (2017/172)). The purpose of this review will be to assess the extent to which the reporting requirement achieved the objectives of the regulations, whether the objectives remain appropriate and whether any unnecessary burden is placed on employers.
Data protection
Several data protection developments are likely to impact employment practitioners in 2022. The Department for Culture, Media and Sport (DCMS) proposed data protection reforms in its consultation which closed on 19 November 2021. The primary objective of the consultation was to seek views on the proposals to reduce the burden data protection places on businesses. In addition, the government sought views on how Article 22 of the UK GDPR should be interpreted in the context of artificial intelligence (AI) in several areas, including where it related to automated decision-making.
We are also expecting to see updated data protection and employment practices guidance in 2022 from the Information Commissioner’s Office (ICO), following a call for views which ran until 28 October 2021. The new guidance will finally replace the ICO’s employment practices code, supplementary guidance and the quick guide, which have not been updated since the Data Protection Act 2018 came into force. The new guidance will cover topics including recruitment and selection, employment records, monitoring of workers, and information about workers’ health.
Human Rights Act 1998
In 2020, the government announced the launch of an independent review of the Human Rights Act 1998 (HRA 1998), while emphasising its ongoing commitment to the European Convention on Human Rights. The Independent Human Rights Act Review (IHRAR), conducted by an independent panel chaired by Sir Peter Gross, a former Court of Appeal judge, reported back to the government on 29 October 2021. On 14 December 2021, the Ministry of Justice published Human Rights Act Reform: A Modern Bill Of Rights, a consultation on replacing the HRA 1998 with a Bill of Rights. The full report conducted by the IHRAR Panel was also published on 14 December 2021. Whether the right to a jury trial should be recognised in the Bill of Rights and the introduction of a permission stage for human rights claims where claimants must establish they have suffered “significant disadvantage” or that the claim is of “overriding public importance” are key proposals included in the consultation document.
Many of the proposals are regarded as highly controversial. However, it should be recognised that the proposals are simply being consulted on at this stage and therefore whether they ultimately become law remains to be seen following the close of the consultation in March 2022.
Potential developments to look out for:
Single enforcement body for the labour market
In the Good Work Plan, the government announced an intention to bring forward proposals for a new single labour market enforcement agency. On 8 June 2021, BEIS published the government consultation response on the proposal, and confirmed they would consolidate three of the current enforcement bodies into a single agency with increased powers. On 22 November 2021, Margaret Beels OBE was appointed as the new Director of Labour Market Enforcement, and she plans to set the strategic direction for the three existing labour market enforcement bodies that will be amalgamated into the single body; the Employment Agency Standards Inspectorate, the Gangmasters and Labour Abuse Authority and HMRC’s National Minimum Wage Team. The formation of the new agency requires primary legislation and this will be brought forward when Parliamentary time allows. The joined-up approach is intended to help improve enforcement through better co-ordination and pooling intelligence.
Confidentiality and non-disclosure agreements
In July 2019, the government published its proposals to prevent the misuse of confidentiality clauses or non-disclosure agreements (NDAs) in the settlement of workplace harassment or discrimination complaints. The government reiterated that confidentiality clauses can serve a legitimate purpose in both employment contracts and settlement agreements but confirmed its intention to bring forward new legislation “when Parliamentary time allows“.
This measure has been significantly delayed due to the pandemic, but it is anticipated that the legislation (likely to be included in the long-awaited Employment Bill) will curb the use of NDA provisions in employment contracts and settlement agreements alongside a requirement for independent legal advice to be provided to individuals asked to sign an NDA. New enforcement measures will be introduced for NDAs in employment contracts and settlement agreements that do not comply with legal requirements.
In practice Employment lawyers have been ahead of the government on this matter. Since the emergence of the #MeToo movement settlement agreement have routinely included carve outs from the confidentiality provisions to allow ex-employees to report crimes, as well as seeking support from professionals providing medical, therapeutic, counselling and support services. As ever though without statutory backing the inclusion of such carve outs remains dependent on the negotiating powers of the parties involved.
Tipping, gratuities, cover and service charges
Another measure to be included in the Employment Bill, once progressed, is legislation that will see tips retained by hospitality staff in their entirety, except deductions required by tax law. Employers will also be required to distribute tips in a fair and transparent way, according to a published policy. A new Code of Practice on Tipping, to which employers will be required to have regard, is expected to replace the existing voluntary code of practice.
Neonatal leave and pay
On 16 March 2020, the government responded to a consultation on neonatal care leave, proposing the introduction of statutory neonatal leave and pay for up to 12 weeks for parents of babies requiring neonatal care. The government will legislate to implement the new entitlements in the forthcoming Employment Bill.
Extending redundancy protection for women and new parents
On 21 June 2021, the Pregnancy and Maternity (Redundancy Protection) Bill was reintroduced to Parliament for a second time. The second reading of this Private Members’ Bill is scheduled for 18 March 2022. If passed, the Bill will prohibit redundancy during pregnancy and maternity leave and for six months after the end of the pregnancy or maternity leave, except in specified circumstances. This follows the government’s statement on 22 July 2019 that it would expand redundancy protection in response to a BEIS consultation on the matter. The government has since reiterated their intention to extend the period of redundancy protection for pregnant women and new parents would progress as part of the Employment Bill “when Parliamentary time allows“. It remains unclear whether the extended redundancy protection will be implemented through the Private Members’ Bill or the Employment Bill.
Leave for unpaid carers
On 23 September 2021 the government published a response to its consultation on carer’s leave. In the response, the government committed to introducing a right for unpaid carers to take up to a week of unpaid leave per year. There is no scheduled timetable for the introduction of this right; it will progress when Parliamentary time allows.
Ethnicity pay gap reporting
In 2018, the government launched a series of measures to tackle barriers facing ethnic minorities in the workplace, including a consultation on the introduction of mandatory ethnicity pay reporting, based on the model of mandatory gender pay gap reporting. While the government is still considering mandatory ethnic pay reporting, and has failed to respond to its consultation (which closed in January 2019), there has been a wider move towards voluntary collection of diversity data to help companies identify and address existing barriers to access or promotion.
Disability workforce reporting
The government is consulting on disability workforce reporting for large employers with 250 or more employees and is expected to publish their response on 17 June 2022, as part of the National Disability Strategy. Through the consultation the government hope to glean information on current reporting practices, arguments for and against implementing a mandatory approach and how such a mandatory approach may be implemented. The consultation also requests views on alternative approaches to enhance transparency and increase inclusivity for disabled people in the workforce. The consultation will accept submissions until 25 March 2022.
Whistleblowing review and new EU Directive
BEIS announced a review of whistleblowing legislation, following the publication of data showing that one in four COVID-19 whistleblowers who contacted the whistleblowing advice service, Protect, were dismissed between September 2020 and March 2021. The scope of the review has not yet been confirmed and whether it is to fall within the remit of the single body to enforce workers’ rights. Although the UK will not be required to implement the new EU Whistleblowing Directive (2019/1937/EU), the Directive may still influence whistleblowing practice, especially for pan-European organisations operating in multiple locations. Since 17 December 2021, EU member states have been obliged to bring into force the laws necessary to establish internal reporting channels. (For private sector entities with between 50 and 249 workers, the implementation deadline is extended to December 2023.) The Directive also requires measures to be implemented to protect a whistleblower’s identity, acknowledge disclosures within seven days and provide a response within a reasonable period.
Post-termination non-compete clauses
On 4 December 2020, BEIS opened a consultation on measures to reform post-termination non-compete clauses in employment contracts. The consultation, which closed on 26 February 2021, sought views on proposals to require employers to continue paying compensation to employees for the duration of a post-termination non-compete clause, requiring employers to confirm in writing to employees the exact terms of a non-compete clause before their employment commences, introducing a statutory limit on the length of non-compete clauses, or banning the use of post-termination non-compete clauses altogether. The government is yet to report the results of the consultation.
Extending ban on exclusivity clauses
Another consultation was launched by BEIS on 4 December 2020, on measures to extend the ban on exclusivity clauses in employment contracts to cover those earning under the Lower Earnings Limit, currently £120 a week. This would prevent employers from contractually restricting low earning employees from working for other employers. This consultation, which was launched in response to the impact of the COVID-19 pandemic on low earners, closed on 26 February 2021 but there is not currently a timetable for the next developments.
Working conditions in digital labour platforms
The European Commission has adopted a package of measures to improve working conditions in digital labour platform work and support their sustainable growth in the EU. The measures include a Directive, to which the UK will not be bound but which may prove to be influential.
Key cases:
On 20 January, the Court of Appeal heard the appeal in Kocur & Others v Angard Staffing Solutions Ltd, part of the latest instalment in long-running litigation involving agency workers supplied to Royal Mail. In the decision under appeal, the EAT concluded that the right of agency workers under regulation 13 of the Agency Workers Regulations 2010 (SI 2010/93) to be informed by their hirer of any relevant vacant posts with the hirer does not encompass a right to be entitled to apply, and be considered, for vacancies on the same terms as employees recruited directly by the hirer. The EAT also held, among other things, that there was no breach of the principle of equal treatment in agency workers’ shift lengths being 12 minutes longer than those of direct recruits, nor in direct recruits being given first refusal in relation to overtime. The judgment is awaited.
On 9 November 2021, the Supreme Court heard the case of Harpur Trust v Brazel. Judgment is awaited on whether “part-year workers” (those working only part of the year, such as during school terms) should have their annual leave entitlement capped at 12.07% of annualised hours. Once the case reached the Court of Appeal, Unison was given permission to intervene as an issue of general importance was raised regarding the calculation of holiday pay. The case was widely reported at the latter stages and may lead to further claims being brought by part-time employees. Therefore, the Supreme Court judgment is highly anticipated in the hope it will provide further clarity.
In Smith v Pimlico Plumbers Ltd, the EAT found that the ECJ’s ruling in King v Sash Window Workshop Ltd (Case C-214/16) EU:C:2017:914 should not be interpreted as meaning that a worker is entitled to carry over untaken annual leave where the worker was permitted to take leave that was unpaid. Although King established that a worker is entitled to carry over annual leave that is not taken because the employer refuses to pay for it (thereby discouraging the worker from taking leave), the principle does not apply to leave that was actually taken. The worker in this case, a plumbing and heating engineer, was therefore unable to rely on King when asserting his right to be paid for holiday he had taken at the time when his employer did not accept that he was a worker within the meaning of the Working Time Regulations 1998 (SI 1998/1833) (WTR 1998). The main issue is likely to be whether unpaid leave can properly be regarded as leave for the purposes of the WTR 1998. The Court of Appeal heard the case on 7 and 8 December 2021 and judgment is awaited.
In Baker and others v Royal Mail, 120 postmasters and sub-postmasters brought an employment tribunal claim against the Post Office. The claimants run Post Office franchises but seek recognition as workers because of the degree of control the Post Office has over the work they do. The same argument was used successfully in the landmark Uber BV and others vs Aslam and others on which the Supreme Court ruled in February 2021. A judgment is yet to be delivered in this case and could have implications beyond the specific claimants as there are thousands of sub-postmasters across the UK.
The EAT is expected to deliver judgment in Mackereth v Department for Work and Pensions and another which concerns the refusal of a Christian doctor, engaged to carry out health assessments for the Department of Work and Pensions, to address transgender patients by their chosen pronoun. The EAT will consider an employment tribunal’s finding that while the doctor’s Christianity is protected under the Equality Act 2010, his particular beliefs, that God only created males and females, that a person cannot choose their gender and his conscientious objection to transgenderism, are not protected as they amount to views incompatible with human dignity and therefore conflict with the fundamental rights of others. The EAT heard the case on 18 and 19 October 2021 and judgment is awaited.
Lastly, Chell v Tarmac Cement and Lime Ltd was heard by the Court of Appeal in November 2021 and we are awaiting the outcome. The initial decision by the County Court, upheld by the High Court, found that an employer was not negligent or vicariously liable for a contractor’s personal injury suffered in its workplace because of an employee’s practical joke. The County Court held that devising and implementing a health and safety policy which factored in horseplay, or practical jokes, was expecting too much of an employer.
Further Information:
If you would like any additional information, please contact Anne-Marie Pavitt or Sophie Banks on: hello@dixcartuk.com.
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Employment Law Newsletter – September 2019
Cases:
- Unfair Dismissal: Employee Shareholder Status not altered by subsequent service agreement
- Holiday pay: Part-year workers not subject to pro rata reduction
- Worker status: Out of hours GP is a worker despite using limited company
- Disability Discrimination: Tribunal must address all four limbs of the definition of disability
- Harassment: Conduct that creates an offensive or humiliating environment
- Legal Advice Privilege: Waiving privilege does not mean you can cherry-pick what you disclose
Other news:
- Information Commissioner’s Office: Brexit hub
- Data Protection: Subject Access Requests and Individual Rights – timescales changed
- Modern Slavery: Updated guidance, referral and assessment forms available from Home Office
- Non-Disclosure Agreements: Law Society publishes new guidance
- Upskilling: Give me the chance to save my job
Unfair Dismissal: Employee Shareholder Status not altered by subsequent service agreement
In Barrasso v New Look Retailers Limited UKEAT/0079/19 the EAT had to consider how ‘employee shareholder status’ is terminated, as it is not provided for under the Employment Rights Act 1996 (‘ERA’). The concept of ‘employee shareholder status’ was introduced in 2013. It applies to those who are employed by a company in which they are issued £2,000 worth of fully paid up shares, having first agreed to be an employee shareholder and received information about the status, its rights and independent legal advice. Having the status means they retain some key employment rights but give up others (in return for the shares), such as the right to claim unfair dismissal or receive a statutory redundancy payment. S.205A of the ERA prescribes how one achieves this status but it silent on how it is terminated.
Mr Barrasso was employed as UK Managing Director by New Look until it was sold to another company and he was offered 7,000 shares in the parent company if he signed an Employee Shareholder Agreement (and met the criteria under the ERA), which he did. He was reassured by side letter (signed as a deed between the parties) that he would receive contractual benefits equal to the statutory employment rights he was giving up. He subsequently signed a new director’s service agreement (to standardise terms for all the directors) as a deed. This agreement contained a ‘complete agreement clause’ which purported to preserve the effect of the side letter (not mentioning the Employee shareholder agreement), whilst superseding all other agreements.
Believing that his employee shareholder status had been terminated by the service agreement when Mr Barrasso’s employment was terminated he brought a claim for unfair dismissal. The tribunal dismissed his claim on the basis that the service agreement made no reference to the employee shareholder status – therefore did not supersede it – and the side letter meant the statutory rights had been removed in favour of his contractual rights. He appealed to the EAT, who agreed with the tribunal’s findings. They also looked at how the status could have been terminated practically-speaking, given that the ERA is silent on this, citing examples such as: a new contradictory contract, or an agreement to sell back the shares. It was clear to the EAT however, that the intention of the parties was not to alter Mr Basrrasso’s employee shareholder status by signing his service agreement.
Holiday pay: Part-year workers not subject to pro rata reduction
The Court of Appeal has overturned the decision of an employment tribunal (Harpur Trust v Brazel [2019] EWCA Civ 1402), finding that it should not have read words into reg.16 of the Working Time Regulations 1998. The tribunal had been wrong to read it as if it meant the annual leave entitlement of ‘part-year workers’ (people who work only part of the year) on permanent contracts should be capped at 12.07% of the annualised hours. The Court accepted that ECJ rulings may allow employers to use the Working Time Directive to pro rate the annual leave entitlements of part-year workers to that of full-year workers, but member states may implement better arrangements. There is no requirement in the Working Time Regulations to pro rate holiday pay for part-time employees to ensure that full-time employees were not treated less favourably, it is simply a protection for part-time workers to not to be treated less favourably than full-time workers.
There is a lesson here: employers who employ the 12.07% approach to pay holiday to staff on zero hours permanent contracts should consider their potential exposure and their options. The calculation exercise required by regulation 16 of the WTR 1998, which involves identifying a week’s pay and multiplying it by 5.6 weeks, is straightforward and should be followed, even if it results in part-year workers receiving a higher proportion of their annual earnings as holiday pay (in this case, 17.5%). How the 5.6 weeks’ holiday entitlement itself should be calculated for part-year workers remains unclear, however. As a direct result of this case, BEIS has removed its holiday pay calculator from its holiday pay guidance for workers without fixed hours or pay. BEIS are currently reviewing this.
Worker status: Out of hours GP is a worker despite using limited company
In Community Based Care Health Ltd v Narayan UKEAT/0162/18, Community Based Care Health Ltd (‘CBCH’) provided out of hours GPs to the NHS (each of whom had to be fully qualified and competent), and Dr Narayan provided her services as a GP through CBCH for a number of years. She worked a regular shift pattern but did not need CBCH’s permission to take leave or work elsewhere so there was no mutuality of obligation. She did provide her own equipment and indemnity insurance, and had to work personally for the company and could not send a preferred substitute instead. CBCH audited the services of the GPs it provided to comply with its NHS contracts. Dr Narayan began to use a limited company of her own to receive her payments but never informed CBCH of this fact, merely updated her bank details.
Following an issue with some telephone advice Dr Narayan had provided and a claim that she had unjustifiably swapped duties on short notice, CBCH decided it was no longer going to offer her work. Dr Narayan brought claims of unfair dismissal, race and sex discrimination, breach of contract and unpaid holiday pay. CBCH claimed she was self-employed and neither an employee nor a “worker”. The tribunal disagreed.
The judge found that Dr Narayan was a worker under s.230(3)(b) of the Employment Rights Act 1996, despite the fact that she had used a limited company to receive payments for over a year without CBCH’s knowledge. CBCH had tried to argue that this had led it to unwittingly become one Dr Narayan’s company’s clients under the ‘undisclosed principal’ doctrine (i.e. if A makes a contract with Z in A’s own name, it is open to B at a later date to assert that the contract was made by A on B’s behalf and that B is the contracting party. This means that the resulting contract is between B and Z.) CBCH claimed that therefore it was contracting with Dr Narayan’s company, and not her. This was dismissed from the appeal because it had not been argued at first hand, but in any event the fact that the contract required a competent and suitably qualified doctor precluded a company from being the contracting party. Further, the judge found that the decision in Suhail v Herts Urgent Care UKEAT/0416/11 was not a good precedent he was bound to follow in this case, distinguishing it on the basis that Dr Suhail positively marketed his services to other clients. Dr Narayan, on the other hand, worked for one provider for a number of years on a regular shift pattern. The judge also found the evidence suggested Dr Narayan had been integrated into CBCH’s business. The EAT upheld the tribunal judge’s decisions and found no error of law.
Disability Discrimination: Tribunal must address all four limbs of the definition of disability
In Parnaby v Leicester City Council UKEAT/0025/19/BA Mr Parnaby suffered depression brought about by work-related stress and was dismissed because of his long-term sickness absence due to work related stress (a capability issue). Mr Parnaby claimed this dismissal was in fact disability discrimination and/or potentially unfair. The tribunal found him not to be a disabled person for the purposes of the Equality Act 2010 (“the Act”) though it did accept that he suffered an impairment that had a substantial adverse effect on his ability to carry out normal day to day activities but held this was not long-term. In particular, the tribunal noted that Mr Parnaby had suffered work related stress for six months, but that it had ceased following his dismissal, therefore the effect was not ‘long-term’ (i.e. 12 months or more) for the purposes of paragraph 2 Schedule 1 of the Act. Mr Parnaby appealed.
The EAT allowed the appeal. It held that the tribunal had erred in not addressed all four limbs of the definition of disability contained in the Act. Mr Parnaby had suffered depression brought about by work-related stress which affected his ability to carry out his day-to-day activities – his impairment. The act of discrimination claimed was the dismissal. At that time, his impairment had not lasted for 12 months (s.2(1)(a) of Sch1 to the Act) and was therefore not ‘long-term’. However, the tribunal considered that by removing the source of his impairment (his job) then the likely future impairment and its impacts would cease. The EAT held that the tribunal should have looked at whether it was likely to last twelve months or might recur in the future (i.e. could well happen = more probable than not). It was not for the tribunal to make assumptions about the time-limited nature of his impairment. On this basis the claim was remitted back to tribunal to be reheard.
Harassment: Conduct that creates an offensive or humiliating environment
In Raj v Capita Business Services Limited & Ward EAT0074/19/LA the EAT considered the first tribunal’s dismissal of Mr Raj’s claims of unwanted conduct either of a sexual nature or unwanted conduct relating to his sex, pursuant to s.26 of the Equality Act 2010 (the “Act”). The issue was that the claimant had felt uncomfortable when his female manager massaged his shoulders in their open plan office. Whilst the tribunal found this to be unwanted conduct which created an offensive environment for him, it found that on balance, the evidence provided brought them to the conclusion that whilst the conduct was unwise and uncomfortable but not related to gender, but more likely due to misguided encouragement. This part of the claim failed.
On appeal, the EAT considered the two-stage burden of proof test set out by s.136 of the Act and explained in Igen v Wong [2005] ICR 931. The first stage is that the claimant prove facts from which the tribunal could decide, in the absence of any other explanation, that the respondent committed an unlawful act of discrimination. The second part is only applicable if the first stage is met, and then puts the burden of proof onto the respondent who must prove he/she did not commit that unlawful act. The EAT agreed with the tribunal’s finding that in this case, the claimant fulfilled stage one – it was agreed that there was conduct that was unwanted, thereby producing “an intimidating, hostile, degrading, humiliating, or offensive environment for him”. However, the remaining issue for stage two was whether this conduct related to the claimant’s gender. The tribunal found the evidence to show a prima facie case that this conduct related to his gender to be very limited. The appeal was on the basis that the tribunal had erred in law by not approaching the test properly but the EAT did not agree; the burden of proof had not shifted to the respondent and, in any event, the explanation given by the respondent had been accepted.
Legal Advice Privilege: Waiving privilege does not mean you can cherry-pick what you disclose
This is a warning case to employers involved in litigation. In Kasongo v Humanscale UK Ltd UKEAT/0129/19 the claimant brought claims of unfair dismissal and discrimination related to pregnancy and maternity. Part of the employer’s strategy was to waive its legal advice privilege (i.e. communications between a client and their solicitor which are confidential and come into existence for the purpose or giving or receiving advice about what should prudently or sensibly be done in the relevant legal context) because certain documents arguably demonstrated that it did not know about the claimant’s pregnancy at the time it was considering dismissing her. The documents comprised a draft dismissal letter prepared by the solicitors from which the solicitors notes and comments had been redacted (it was agreed that the letter itself was not legally privileged, but the redacted parts were) and two earlier documents. The issue was whether the disclosure of the two earlier documents meant that the redacted parts were no longer protected by privilege, and therefore if the tribunal had erred in its decision as to which documents were protected by legal advice privilege.
The EAT held that the tribunal had erred in failing to address or rule on one of the three documents. All three documents were part of the same transaction of providing legal advice about the dismissal of the claimant and, given the nature and purpose of the disclosure, the EAT held that fairness required that the redacted part of the letter concerning the reason for the claimant’s dismissal also be disclosed. The reason being that it would be unfair to allow the respondent who had waived privilege in relation to the other two documents not to reveal those redacted parts of the dismissal letter which related to the reason for dismissal. Cherry-picking the parts one discloses is therefore impermissible. The appeal was allowed and the EAT ordered that the redactions be removed and the full letter be included in the trial bundle for evidence at the hearing.
Other news:
Information Commissioner’s Office: Brexit hub
The ICO has put together a ‘Brexit hub’ containing checklists, FAQs and guidance to help organisations of every size in case prepare for a no-deal Brexit. A good place to stay up to date with how your business manages its data protection duties. You can also sign up to their service to receive regular emails which will let you know about any updates to the guidance.
Data Protection: Subject Access Requests and Individual Rights – timescales changed
In August, the Court of Justice of the European Union ruled on a Dutch case which considered timescales under Regulation No 1182/71. Following this ruling, the Information Commissioner’s Office has updated their guidance on timescales for responding to subject access requests (SAR), and other individual rights requests.
The effect of the ruling is that the timescale has now changed to reflect the day of receipt as ‘day one’, as opposed to the day after receipt. For example, a SAR received on 3 September should be responded to by 3 October.
Modern Slavery: Updated guidance, referral and assessment forms available from Home Office
Following recent reforms made to the National Referral Mechanism (NRM) (a government framework for identifying and referring potential victims of modern slavery and ensuring they receive the appropriate support), the Home Office issued new Modern slavery victims: referral and assessment forms. The forms allow staff at designated First Responders Organisations to refer potential victims of modern slavery or human trafficking to the NRM.
The recent reforms to the NRM include:
- The Home Office created a single, expert unit to handle all cases referred to it to handle decision making about whether somebody is a victim of modern slavery. This replaces (and is completely separate from) the case management units in the National Crime Agency and UK Visas and Immigration.
- All negative Conclusive Grounds decisions will now be reviewed by an independent panel of experts, to increase the scrutiny such cases receive.
- The NRM process will be supported by a new digital system, enabling easier referrals, data capture and analysis, aimed at improving prevention and law enforcement.
For more details on which organisations form part of the First Responders list, see the government website.
Non-Disclosure Agreements: Law Society publishes new guidance
Following our reporting of the Women and Equalities Committee’s review of the use of Non-Disclosure Agreements in discrimination cases, the Law Society has now published a brief guidance leaflet called ‘Non-disclosure agreements: what you need to know as a worker’. This is just as helpful to employers as it summarises both the things employers cannot stop workers from doing and explains the restrictions commonly imposed on workers prior to signing the NDA.
This has been published as part of the Law Society’s new legal education initiative to assist the public understand their rights.
Upskilling: Give me the chance to save my job
PwC has recently published a new study called ‘Upskilling Hopes and Fears’, based on a survey of 22,000 people globally, of whom 2,004 were UK adults in the age range 18-65 (retirees were not included). Their findings show that 73% of workers would welcome the opportunity to expand their knowledge of new workplace technology while 54% of those questioned said they would be happy to learn new skills or completely retrain in order to improve their future employability. But many UK workers say their employers are not offering opportunities to upskill. People fear automation in a growing digital world will lead to fewer jobs and this lack of investment in the workforce is breeding mistrust of employers among workers.
The research also highlights disparities in upskilling opportunities by gender, education, and age:
- Over half (54%) of men surveyed say their employer is giving them the chance to learn new skills, as opposed to only 45% of women. Over half of women (55%) say they are offered no opportunities at all.
- 56% of university graduates say they are offered them, whereas only 41% of those educated to school leaver level say the same.
- 64% of workers aged 18-34 say they are offered opportunities, compared with 48% of 35-54 year olds and 41% of ages 55 and over.
These results highlight the need for organisations to look seriously at offering upskilling opportunities for staff – particularly in the UK where three-quarters (73%) of workers would take the opportunity to better understand or use technology if they were given the option by their employer.
Further Information:
If you would like any additional information, please contact Anne-Marie Pavitt or Sophie Banks on: advice@dixcartlegal.com.
