• 26/03/2020

Round-up of UK employment law developments 2020/1

This e-bulletin includes short summaries of the following recent developments.

Our updates are also posted on our blog Employment Notes, which offers the opportunity to choose what jurisdictions you want to receive alerts for. If you would like to subscribe and/or choose which alerts you receive, please click here.

  1. April 2020 changes including parental bereavement leave, section 1 statements, employer NICs on termination, and IR35
  2. Harassment: new EHRC guidance likely to require significant updates to employer policies
  3. Whistleblowing: recent cases illustrate the limits to lawful employer action in response to allegations
  4. Shared parental pay: Supreme Court refuses permission to appeal discrimination claim
  5. Philosophical belief: guidance for employers following ruling that ethical veganism protected; tribunal rules that transgender views not protected
  6. Equal pay: rulings on time limit for claims and duration of material factor defence
  7. Unfair dismissal: rulings on dismissal to avoid reputational risk, dismissal for disclosing colleague’s pay, and claims by employees working abroad
  8. Disciplinary investigations: rulings highlight importance of updating decision-maker and ability to start disciplinary process before investigation completed if appropriate
  9. Subject access requests: stricter timescale for response
  10. New resources: COVID-19, NDAs, Brexit, social mobility
  11. April 2020 changes including parental bereavement leave, section 1 statements, employer NICs on termination, and IR35 

Employers should prepare now for the following changes coming into force in April:

  • From 6 April 2020 employees will be entitled to two weeks’ statutory parental bereavement leave following the death of a child under 18 or a stillbirth after 24 weeks of pregnancy.  There is also a right to statutory pay for those with 26 weeks’ service.  Employers will need to review their existing compassionate leave provision and update/introduce appropriate policies, as well as alerting managers to the new rights.  Further details are set out in our briefing here.
  • There are new information requirements for employers recruiting employees or ‘workers’, or changing key terms for existing employees, from 6 April 2020.  Fuller written statements of terms must be given on or before day one of work.  Employers need to update existing templates, create new versions for ‘workers’, and refresh training for HR staff and managers in preparation for the deadline.  Our detailed briefing here sets out what has changed and the practical action points for employers.
  • From 6 April 2020, the cost to employers of many termination compensation payments will increase. Employers will have to pay Class 1A employer NICs (currently at 13.8%) on termination payments above the £30,000 tax-free threshold in respect of terminations on or after 6 April 2020 (bringing NICs into line with income tax).  HMRC’s latest Employer Bulletin states that the new liability will not apply to sums paid after 5 April in respect of employment terminated before 6 April.  If this is reflected in the commencing regulations (not yet published), there could therefore be a financial benefit in ensuring imminent terminations take place prior to 6 April.  Cautious employers may wish to err on the safe side and plan for both termination and payments to be made pre-6 April.
  • Despite mounting calls for delay or reform, the Government has confirmed that the public sector off-payroll working rules (IR35) will be extended to large and medium-sized private sector companies this April.  However, following the Government’s review, a number of minor changes will be made (as detailed in its report here).  The new rules will only apply to payments made for services provided on or after 6 April 2020, and not services provided prior to that date but remunerated after it.  HMRC will apply a ‘light touch’ in the first year and only impose penalties for errors if there is deliberate non-compliance.  Information provided will not be used to open new investigations into Personal Service Companies for prior tax years unless there is reason to suspect fraud or criminal behaviour.  The legislation will also be amended to require end-users to respond to a request for information about their size from the agency or worker, and to clarify the position where there are offshore companies in the chain. Further guidance on the changes can be found here and the Employment Status Manual here has now been updated.  Our blog post on the changes is here.
  • The 12 week reference period used for calculating statutory holiday pay for workers without normal working hours (eg, zero hours workers), or whose pay varies according to the amount of work done within those hours (eg, piece workers) or with the time of work (eg, workers with varying weekly shifts or term-time only workers), will be extended to 52 weeks (or the number of weeks that a worker has been employed if less than 52) with effect from 6 April 2020. Where that period includes weeks where no remuneration was payable, earlier weeks (to make up 52 in total) should be taken into account when calculating the average pay, but ignoring any weeks earlier than 104 weeks before the calculation point. The aim is to give a more representative figure for the average pay of casual and seasonal workers.  The Government has updated its guidance on calculating holiday pay for workers without fixed hours or pay to reflect the change.  The Government has also launched a campaign to highlight to workers their right to paid holiday leave.
  • Two changes relevant to agency workers apply from 6 April 2020: (i) agencies must issue new work-seekers with a ‘key information document’ in a prescribed format and containing prescribed content (eg, the type of contract, minimum expected rate of pay, method of payment, details of benefits, deductions and paid holiday), before agreeing the terms of the contract;  (ii) currently workers who have a permanent contract with the agency are excluded from the right to equal pay with comparable direct hires from week 13 if they are paid a minimum amount between assignments and the contract satisfies certain conditions;  this “Swedish derogation” is being repealed from 6 April and agencies are required to notify the workers of this by 30 April 2020.  Businesses that hire agency workers employed under the Swedish derogation may need to review, and possibly renegotiate, their contracts with the agencies in light of any increased cost.
  • The threshold required for employees to make a request to their employer (where it has at least 50 employees) to negotiate on the introduction of information and consultation arrangements will be reduced from 10% to 2% of employees (subject to a minimum of 15 employees).
  • The annual uplifts to the caps on tribunal compensation, the flat rate of statutory family-related leave pay, statutory sick pay, and minimum wage that will apply from April have been confirmed.  See our blog post here for details. The Government has also published draft regulations, expected to come into force on 6 April 2020, to introduce more flexibility in pay arrangements for salaried hours workers in relation to the national minimum wage, and has confirmed that it will revive the naming scheme for employers who break national minimum wage law but ease the penalty regime in relation to salary sacrifice schemes.  Its response to consultation on this topic is here.
  • Finally, larger private sector employers will need to publish their third year’s gender pay gap report (for data as at 5 April 2019) by 4th April 2020.
  1. Harassment: new EHRC guidance likely to require significant updates to employer policies

New technical guidance on sexual harassment and harassment at work has been published by the Equalities and Human Rights Commission. It is anticipated that at some point the guidance will become a statutory code of practice, which would mean that tribunals would be obliged to take it into account in relevant cases; before then, tribunals will not be obliged to do so but claimants are still likely to refer to it in evidence. Employers should review their equal opportunities/harassment policies and processes in light of the guidance, particularly once it is given statutory status, as significant updates are likely to be required.

The guidance sets out and discusses the law on harassment and victimisation and, in section 5, includes over 20 sides of advice to employers on taking steps to prevent and respond to harassment. These will be particularly relevant where an employer seeks to establish the defence that it has taken all reasonable steps to prevent harassment or victimisation by its workers, for which it would otherwise be vicariously liable. Key points are summarised in our blog post here.

The Government has stated that it will respond to its earlier consultation on reforms in this area (covering third party harassment, a possible new duty to prevent harassment, extending protection to volunteers and interns, and the time limit for ET claims) and set out next steps “this spring”.

  1. Whistleblowing: recent cases illustrate the limits to lawful employer action in response to allegations

A recent Court of Appeal ruling highlights the importance of accuracy if an employer is going to publicly rebut a whistleblower’s allegations. Although an employer is entitled to respond robustly, if the statements it makes are inaccurate or unjustified and damage the whistleblower’s reputation, this could amount to a detriment.

It is unlawful to submit a worker to ‘detriment’ on the ground that they have made a protected disclosure. In Jesudason v Alder Hey Children’s NHS Trust, a whistleblower had published partly misleading information to the press and to MPs (having already made protected disclosures to the employer and regulators). The employer had sought to defend its reputation by writing to MPs and others stating that the whistleblower’s allegations had been independently found to be completely without foundation. In fact some of the allegations had been upheld. Overturning the lower tribunals, the Court of Appeal held that this did amount to a ‘detriment’, notwithstanding that the employer’s purpose was ‘to put the record straight’. However, the purpose was relevant to causation – on the facts, the detriment was not because of the protected whistleblowing disclosures and therefore was not unlawful.

The case highlights the need for caution (and legal advice) when drafting communications responding to whistleblowing allegations (or indeed about other types of employee claim given the possibility of defamation claims).

Meanwhile, the High Court decision in Pertemps v Ladak is encouraging for employers in suggesting that it may be possible – in extreme circumstances – to restrain an ex-employee from persisting in making purported protected disclosures. In that case the former employee had sent a series of communications to various recipients alleging fraud against the NHS and wide-ranging wrongdoing. The Court accepted that there was an arguable case that his conduct amounted to unlawful harassment under the Protection from Harassment Act 1997 as well as breaching a settlement agreement. In these circumstances the Court was willing to continue an interim injunction preventing the ex-employee from making a further purported protected disclosure (save to the NHS Counter-Fraud Authority) without first notifying the employer’s solicitors and, if the employer objected, obtaining the court’s permission.

  1. Shared parental pay: Supreme Court refuses permission to appeal discrimination claim

Last summer the Court of Appeal ruled that an employer’s failure to enhance shared parental pay in the same way as enhanced maternity pay was not unlawful direct or indirect sex discrimination or unequal pay (see our blog post here). The Court considered that a woman on maternity leave was not in comparable circumstances to someone on shared parental leave, as the purpose of maternity leave was to provide special protection for the health and wellbeing of mothers in connection with pregnancy, childbirth and breastfeeding, whereas the purpose of shared parental leave is to facilitate childcare.

The Supreme Court has now refused permission to appeal the case, leaving the Court of Appeal’s judgment as the definitive position for the time being. Employers who choose only to enhance maternity pay will welcome this decision. However, the case concerned the first 14 weeks of enhanced pay, and there remains the possibility of arguing that the nature of maternity leave changes after the first 14 or 26 weeks. We also understand that the Employment Appeal Tribunal is to hear an appeal from another tribunal’s decision that Powys County Council’s failure to enhance shared parental pay was not discriminatory even though it enhanced adoption pay.

Employers may also want to consider that the limited statutory pay for shared parental leave has contributed to its low take-up, and unequal sharing of childcare responsibilities has in turn been seen as contributing to the gender pay gap. These issues are clearly on the Government’s agenda following last year’s consultation on possible reform to family-friendly leave, but it is yet to announce any changes.

  1. Philosophical belief: guidance for employers following ruling that ethical veganism protected; tribunal rules that transgender views not protected

A number of recent cases (see our last ebulletin) have grappled with the question of what amounts to a protected philosophical belief for the purposes of discrimination law, reflecting a growing trend of claimants seeking to push the boundaries (in some cases because of a lack of eligibility to claim unfair dismissal). Previous case law has established that, to be protected, a belief must be (i) genuinely held, (ii) not merely an opinion or viewpoint based on the present state of information, (iii) as to a weighty and substantial aspect of human life and behaviour, (iv) attain a certain level of cogency, seriousness, cohesion and importance, and (v) worthy of respect in a democratic society, not incompatible with human dignity and not conflict with the fundamental rights of others.

At a preliminary hearing the tribunal in Casamitjana v League Against Cruel Sports has ruled that the claimant’s ethical veganism was a protected belief under the Equality Act 2010. The decision sets out in detail the significant and perhaps relatively unusual extent to which the claimant adjusted his lifestyle to reflect his beliefs, affecting his social life, work choice, travel, payment method, and consumption of food, clothing and medicines. In light of this, it was not surprising that the tribunal found it easy to conclude that the claimant’s belief satisfied the above tests. The ruling does not mean that every individual adopting some vegan practices inevitably will be able to satisfy the requirements; each case will be judged on its own facts. The case has since settled without a tribunal ruling on liability.

Following this case, the Vegan Society has published guidance for employers on the types of accommodations that vegans may need in the workplace. This suggests that employers should consider:

  • sending out a ‘dietary requirements’ sheet for catered events, ensuring vegans can request appropriate food
  • designating food storage areas for vegans, for example a shelf in the fridge above non-vegan foods
  • providing milk alternatives for tea and coffee making
  • ensuring vegans have access to vegan-friendly clothing, such as synthetic safety boots
  • exempting vegans from attending corporate events such as horse racing or barbeques
  • exempting vegans from participating in signing off the purchase of non-vegan products
  • supporting vegan employees to discuss their pension investment.

Employers should also take appropriate steps to deal with any harassment or ‘banter’ on the basis of such beliefs and provide training for staff.

In contrast, an employment tribunal has ruled that a claimant’s ‘absolutist’ belief that being female is an immutable biological fact and that a transwoman is not in reality a woman, even if the individual has changed their legal sex under the Gender Reassignment Act, was not a protected philosophical belief (Forstater v CGD Europe). At a preliminary hearing, the tribunal found that the belief satisfied the tests at (i) to (iv) above but it failed the test of being worthy of respect in a democratic society. This was because it was a core component of the claimant’s belief that she would continue to express her views and refer to a person by the sex she considered appropriate, notwithstanding the pain and offensive environment caused.

Arguably the ruling blurs the distinction between holding a belief, which might be protected, and its manifestation, which might not depending on the circumstances. The ruling is being appealed.

  1. Equal pay: rulings on time limit for claims and duration of material factor defence
  • Equal pay claims must be brought within 6 months of the end of employment or, if the employee has worked on a series of different contracts, from the end of the “stable working relationship”. The EAT in Barnard v Hampshire Fire and Rescue Authority ruled that a promotion to a new managerial role did not break the stable working relationship, given that there was a natural and incremental progression within the same department entirely consistent with the continuity of the relationship. The employee was therefore not out of time to bring equal pay claims in respect of her earlier roles prior to her promotion.
  • The EAT in Co-operative Group Ltd v Walker has confirmed that an employer’s valid material factor defence to an equal pay claim continued to apply until the employer made a further pay-related decision, or omitted to do so having become aware of a pay disparity.  The employer had carried out a job evaluation study identifying a pay disparity in the claimant’s salary, but had successfully established a material factor defence explaining the pay one year earlier. The tribunal considered that this meant the defence had ceased to be relevant at some point part way through the year, but the EAT ruled that the employer’s defence continued to operate until a further decision or omission to decide pay could be identified. On the facts there had been no pay round in the intervening period, and the claimant had not made any request for her pay to be reviewed.  An appeal is due to be heard by the Court of Appeal in July 2020.
  1. Unfair dismissal: rulings on dismissal to avoid reputational risk, dismissal for disclosing colleague’s pay, and claims by employees working abroad
  • The EAT has emphasised that it would not be fair for an employer to dismiss an employee for reputational reasons just because the employee has been charged with a criminal offence for conduct outside work. There would need to be some relationship between the matters alleged and the potential for damage to reputation. It would also need to be reasonable to reject alternatives such as suspension on full pay pending resolution of the criminal case; in determining reasonableness, the size of the employer and whether a trial date has been set would be relevant. In Lafferty v Nuffield Health, the employer’s dismissal of an employee charged with assault with intent to rape (unconnected with work) was held to be fair, despite the employee’s 20 years’ unblemished service. However, it was relevant that his role as hospital theatre porter transporting anaesthetised patients could have given him an opportunity to commit a similar act to that charged, and that the employer was in the charitable sector which was under particular scrutiny at the time following exposure of sexual offences at other organisations. It was therefore reasonable for the employer to genuinely believe there was a significant reputational risk if the employee were convicted, given that having allowed the employee to work between charge and conviction would mean that additional patients would arguably have been exposed to risk. Suspension on full pay was not reasonable given the employer’s charitable status and the lack of a trial date. However, the EAT did query whether a large employer would genuinely be ‘financially troubled’ by suspending on full pay, meaning that dismissal by such employers might well not be fair. In contrast, the tribunal in Bosher v EUI Limited ruled that it was unfair to dismiss an insurance claims validation co-ordinator because of risk of reputational damage, on his being charged with possessing indecent images involving children. The tribunal made clear that a fear of reputational harm “cannot be presumed on the basis of a presumed extreme or scaremongering reaction in the press or public”. The tribunal considered that the public should be credited with understanding that a prosecution is not the same as being found guilty, and that there was a difference between criminal activity and the viewing of legal pornography which might be viewed as “unsavoury or inappropriate” but was not criminal. At the time of dismissal it was not yet clear whether there would be a public hearing, and the employer should have considered alternatives to dismissal such as redeployment, reducing responsibilities, or suspension pending developments in the criminal proceedings.
  • Employers wanting employees to keep salary information confidential should ensure that this is included expressly within a contractual confidentiality obligation and that disciplinary policies make clear that external (or internal, if appropriate) disclosure without the employer’s permission is misconduct. The EAT in Jagex Ltd v McCambridge confirmed that such a duty will not necessarily be implied. It was unfair to dismiss an employee for discussing an executive’s salary with colleagues after finding the information on a communal printer. Given that the terms of a contractual confidentiality clause did not cover salary details, his actions did not amount to gross misconduct. Employers choosing to impose a pay secrecy term should bear in mind that this will be unenforceable in relation to pay disclosures made for the purpose of finding out whether there is unlawful pay discrimination.
  • The general rule is that employment disputes should be resolved in the jurisdiction where they arise, but an unfair dismissal claim may be brought in the UK if the claim has a sufficiently strong connection with the UK. The Employment Appeal Tribunal has confirmed that the existence of an exclusive English jurisdiction clause in an employment contract was a relevant factor in determining whether the UK had jurisdiction to hear a whistleblowing unfair dismissal claim (as it creates an expectation that the employer will honour the term and that expectation is a connection with UK and UK law), provided there were other connections independently connecting the claim to the UK and the employer is either based in the UK or part of a multinational group with a UK-headquartered parent (Hexagon Sociedad Anonima v Hepburn).
  1. Disciplinary investigations: rulings highlight importance of updating decision-maker and ability to start disciplinary process before investigation completed if appropriate
  • Employers should take steps to ensure that personnel who investigate potential misconduct are aware of the need to provide accurate information to the decision-maker (and the employee) and, importantly, to update this information if necessary prior to the disciplinary decision.  In Uddin v London Borough of Ealing, the investigating officer had included in his recommendation in favour of disciplinary action the fact that a police complaint had been made about the employee’s conduct, but had then failed to notify the decision-maker when the complaint was withdrawn prior to the disciplinary hearing. The decision-maker gave evidence that she took account of the police complaint when making her decision and, had she known it was withdrawn, would have wanted to understand why. The EAT confirmed that a failure to share a material factor with the decision-maker could be relevant to ordinary fairness and rendered the dismissal in this case unfair.
  • The Court of Appeal in Sattar v Citibank NA has confirmed that a dismissal will not be unfair simply because a decision to start disciplinary action is made before the investigation is complete. The Court stated that it may be necessary to suspend an employee as soon as investigations have discovered serious matters which are likely to be the subject of disciplinary action, even though the full investigation has not been completed. Continuing the investigation does not render the process unreasonable provided that the employee is given a full and fair opportunity (which could be at the disciplinary hearing) to engage with any new charges or new material which might emerge as a consequence. Equally, the lack of formal hearing for the employee at the early investigatory stage did not render the process unfair on the facts, given that there were no significant disputed facts.
  1. Subject access requests: stricter timescale for response

The Information Commissioner’s Office has amended its General Data Protection Regulation: Right of access guidance to apply a stricter timescale for employers (and other data controllers) to comply with a data subject access request (DSAR). Previously, if a controller asked the data subject for further information/clarification of the request, the start of the one-month time period for compliance was paused until that information was received. The guidance has now been amended to state that the clock will no longer be paused in this situation – the one-month timescale will start to run from the date of receipt of the DSAR or, if later, upon receipt of proof of identification. Controllers may be able to extend the time limit by two months if the request is complex or the individual has made a number of requests.

If the data subject delays in providing the information requested, this could significantly reduce the time available to collate a response. Employers will need processes in place to ensure they can respond quickly and efficiently.

The ICO consulted on its more detailed draft Right of access guidance until 12 February 2020 and the final version is awaited. The draft adopted the same approach as the amended guidance discussed above.

  1. New resources: COVID-19, NDAs, Brexit, social mobility
  • All employers will clearly be concerned about the impact on their staff and business of the COVID-19 outbreak. Employers will be formulating contingency plans to facilitate remote working where possible and to deal with possible resourcing and supply chain issues. Communication with staff on travel and absence policies along with advice on hygiene and support will be key.  Staying up to date on the current situation will be critical.  The Government resources include a daily updated advice page and a list of all its relevant publications, including specific guidance for employers which covers the practical steps to take where individuals have returned to the workplace from other affected countries or have tested positive for the virus. Acas has also published and updated its guidance covering health and safety precautions, entitlement to sick pay, dealing with sick or concerned staff, and workplace closure. The World Health Organisation also has guidance for employers.  See our blog post here for further information, and our hub on navigating the COVID-19 outbreak here.
  • Acas has published new guidance on the use of Non-disclosure Agreements (NDAs) in the workplace, reiterating that they should not be used to stop individuals reporting discrimination or harassment or to cover up inappropriate behaviour.  Employers are encouraged not to use NDAs routinely but to consider on a case-by-case basis whether they are really needed.
  • Following the UK ceasing to be an EU Member State on 31 January 2020, the UK is now in a transition period until the end of 2020 during which EU law continues to apply in and to the UK and freedom of movement continues.  EU, EEA EFTA and Swiss citizens resident in the UK by 31 December 2020 will be able to claim settled status (provided they apply by 30 June 2021). The Government has now published details of the immigration points system it intends to apply to both EU and non-EU citizens entering the UK on or after 1 January 2021. The new points system is based on employer sponsorship and the Home Office has advised employers without a sponsor licence, who are thinking of employing migrants entering from 1 January 2021, to apply for a sponsor licence as soon as possible. The Home Office has also published information for employers covering right to work checks, a summary of the new points system, and an employer toolkit on how best to support EU citizens who are applying to stay in the UK after the end of the transition period.  Updated employment and migration sections of our Brexit Guide with further details will be available shortly.

The Social Mobility Commission has released a guide to help employers boost diversity in the workplace.

 

Source: Lexology