Employment Bulletin 

DALLIMORE HelenTo help you keep quickly up to date with employment law, we summarise the key developments arising from cases, guidance, legislation and consultations for this month.

If you would like to discuss any of the points raised, please get in touch with Helen Dallimore, Senior Associate, or with your usual contact in the Foot Anstey employment team.

 

In the courts...recent case updates

Court held that employee ill-health application delay was a result of unwieldy procedures as opposed to discrimination

In Dunn v Secretary of State for Justice and anor, the Claimant's case was that the Defendant failed to react adequately to an occupational health recommendation to undertake a stress risk assessment and weekly reviews. The Claimant also argued that his employer failed to put support mechanisms in place and that his early retirement application was unreasonably delayed. The Claimant argued that this was disability discrimination and harassment arising out of the way he was treated by his employer in relation to his depressive illness. Whilst the Employment Appeal Tribunal (EAT) accepted that the process was operated unreasonably and perhaps even unfairly; there were a number of reasons that explained at least some delay, none of which involved unlawful discrimination of any kind. The Court of Appeal upheld this decision.

The Court considered, in the alternative, that the Claimant had applied for ill-health retirement in consequence of his disability and was involved in ‘unfavourable treatment’ because of the inherent inadequacies of the MoJ’s ‘arcane and unwieldy’ system for handling such applications.

Although the Claimant was not successful, the Court recommended that the ill-health retirement process be reconsidered, reinforcing the importance to employers of assessing and planning appropriately for employees' early retirement.

Determining bad faith in victimisation claim turns on the employee's honesty

In Saad v Southampton University Hospitals NHS Trust, the Employment Appeal Tribunal (EAT) clarified that honesty, rather than motive, is the criterion for establishing whether an employee has acted in bad faith. If an employee honestly believed that his allegation or evidence was true then his act will be protected. This applies even if the employee had an ulterior motive for his actions.

Bad faith is often used as a trump card in rebutting victimisation complaints, because if a Claimant has made an allegation or given evidence in bad faith, their actions are not a protected act under the Equality Act and their claim for victimisation will fail. In this case, an employee was found to have subjectively believed in the allegations of racial or religious discrimination. The fact that he had an ulterior motive in raising his grievance (which was to deflect from his performance issues) was largely irrelevant. This acts as a reminder to employers to be mindful of not treating those who have made potentially protected disclosures less favourably and they should not focus too much on the motives for the disclosure.

Outdated contractual travel allowance removed following a TUPE transfer was not void

The Employment Appeal Tribunal (EAT) held in the case of Tabberer and others v Mears Ltd and others that the withdrawal of a contractual entitlement to a travel allowance following a TUPE transfer was not void.

The Claimants were a group of electricians who worked on the maintenance of social housing and were originally employed by Birmingham City Council. They were entitled to be paid Electricians' Travel Time Allowance (ETTA) to compensate them for the loss of a productivity bonus caused by the need to travel to different depots. The ETTA had been in existence since 1958 but as the depots closed and working practices changed it became irrelevant. When the employees transferred to Mears in 2008, Mears ceased the payments on the basis that the eligibility criteria for the allowance were no longer made out. The employees argued that this variation of their terms of employment was void under regulation 4(4) of TUPE and brought claims for unlawful deductions from wages.

The Tribunal found that the reason for the employer's decision to end the contractual entitlement to ETTA was the belief that it was outdated, not a reason which arose because of the transfer. This case is a rare example of a permitted change to terms and conditions following a TUPE transfer decided under the pre-2014 version of the TUPE regulations.

Employee who gave notice anticipating internal transfer had not resigned from employment

In East Kent Hospitals University NHS Foundation Trust v Levy the Employment Appeal Tribunal (EAT) upheld a Tribunal decision that an employee's written notice related to an anticipated internal change of jobs and was not notice of resignation from employment.

The Claimant was an assistant administrator at an NHS Trust. She gave notice to her manager that she was transferring to a role in the radiology department. However, the offer of the role in the radiology department was withdrawn. The Claimant therefore decided to stay in her original post. The Trust claimed they were not obliged to accept a retraction of her resignation. The Claimant brought a claim for unfair dismissal but the Trust argued that she had resigned. The EAT held that the Claimant's notice had not been clear and unambiguous, and the context in which the words in the notice were used meant there were "special circumstances", which required the words to be construed objectively.

This case is a useful reminder that employers must remain objective when considering the validity of an employee's resignation.

Legal Professional Privilege is not an absolute right

The recent Employment Appeal Tribunal (EAT) Case of X v Y Ltd is a stark reminder on the limits of Legal Professional Privilege (LPP). LPP enables lawyers to have full and frank discussions with their clients without fear that these communications will be disclosed to a tribunal or third party. However, LPP is not an absolute right, especially where such legal advice borders on "iniquity" i.e. where advice is contrary to public policy or is regarded as a civil wrong.

This case concerned an employer who sought legal advice on how to remove an employee who had raised allegations of disability discrimination. The advice given was that the employee could be removed via a redundancy exercise which would preclude him from making complaints and asking for reasonable adjustments to be made. The relevant employee overheard discussions and received an email around this advice. When he sought to rely on this advice in subsequent tribunal proceedings, his employer argued that the legal advice was privileged and could not be relied on. However, the Tribunal held that privilege had been lost as the advice bordered on "iniquity" because the email containing that advice was being used to cloak what would otherwise be a discriminatory dismissal as a dismissal for redundancy.

The case serves as a warning on the parameters of privilege to both lawyers and clients, especially when clients are looking for increasingly creative solutions to existing legal problems.

Time limit for presenting tribunal claim expiring on a Saturday or Sunday is not extended to next working day

In the case of Miah v Axis Security Services Ltd the EAT confirmed that there is no automatic extension of time where the time limit for presenting an employment tribunal claim expires on a non-working day such as a Saturday or Sunday. In this case, the claim form had been posted on a Friday. The time limit expired on Sunday, and the form was date-stamped by the tribunal on the Monday. The EAT held that the claim was out of time.

Time limit for appealing starts running even when judgment sent to wrong person

In Rana v Ealing London Borough Council and anor; Bonnie v Department for Work and Pensions, the Court of Appeal has held that the 42-day time limit for appealing to the EAT, which under rule 3(3) of the Employment Appeal Tribunal Rules 1993 SI 1993/2854 runs from the date that the employment tribunal's written reasons are 'sent to the parties', starts running even when the reasons are sent to the wrong person. The Court considered that there was an obvious practical advantage in having a single, contemporaneously recorded date for both parties from which time runs but stated that the EAT should exercise discretion to extend time for appealing where this created unfairness for a party.

Legislation

Parental Bereavement Leave and Pay

The Parental Bereavement (Leave and Pay) Bill received Royal Assent on 13 September 2018, becoming the Parental Bereavement (Leave and Pay) Act 2018. The new Act is the first law of its kind in the UK and is expected to come into force in 2020.

The Act will give all employed parents a statutory right to 2 weeks' leave if they lose a child under 18 or suffer a stillbirth from 24 weeks of pregnancy. Statutory bereavement pay can also be claimed for this period, subject to employees meeting the eligibility criteria. This is a significant change to the current law under which employed parents have a day-one right to take a reasonable amount of unpaid work.

Further regulations are anticipated to flesh out the detail of the provisions under the Act, such as how parental leave must be taken. In the interim, it is important to be aware of the proposed changes to begin preparations.

New Guidance and Consultations

CBI guidance: Health and wellbeing

The Confederation of British Industry (CBI) has published guidance for employers and employees in order to better prioritise health and wellbeing, following their survey which found that:

  • 63% of businesses see workplace health and wellbeing as an important business issue;
  • yet 71% of firms say they find it hard to take ‘practical action’.

The CBI sets out three steps which employers can learn from:

  • Prioritising health and wellbeing from the top;
  • Targeting action towards early interventions; and
  • Embedding good health and wellbeing.

For more details please click here.

New ACAS guidance on references

The guidance published states that employers are not usually obliged to provide references. Only certain industries such as those regulated by the Financial Conduct Authority are required to do so.

In practice, many employers voluntarily provide references. The guidance reiterates that those employers that do provide references should ensure that they are fair and accurate and requests must be handled consistently.

References should include basic facts about the applicant, answer any questions that the potential employer has asked and provide detail about the applicant's character, skills and abilities. Subjective opinions and comments must be avoided unless they are supported by facts. For further information please consult the full ACAS guidance here.

BEIS Committee provide guidance on gender pay gap reporting

On 2 August 2018, the House of Commons' Business, Energy and Industrial Strategy (BEIS) Committee published a report on gender pay gap reporting. The report is the first output of the Committee's inquiry into aspects of executive pay and the gender pay gap in the private sector, and makes a number of recommendations for strengthening gender pay gap reporting and for closing the gap, including:

  • Extending reporting obligations to companies with 50 or more employees from 2020 (currently the reporting obligations apply to organisations with 250 or more employees);
  • Additional requirement for an explanation for pay disparity accompanied by an action plan (currently optional, not mandatory);
  • Inclusion of partner remuneration in the figures;
  • Revised guidance for dealing with ambiguous areas, for example on how bonus figures should be calculated; and
  • Giving the Equalities and Human Rights Commission specific enforcement powers to levy fines for non-compliance.

In addition, the Government Equalities Office (GEO) has published guidance on implementing and tackling change on gender pay in its "What Works" note, which contains evidence-based recommendations on closing the gender pay gap. The GEO has also revealed that all 10,000 employers in scope of the reporting obligations have now published their data, which can be accessed via a search engine facility here.

Corporate governance: BEIS response to consultation on corporate governance and insolvency

On 26 August 2018, the House of Commons' Business, Energy and Industrial Strategy (BEIS) Committee published the Government's response to its consultation on proposals to improve the corporate governance of firms that are in or approaching insolvency. This follows a number of high profile cases where directors' actions pre-insolvency have fallen under the Select Committee spot light. Amongst other recommendations, the Government plans to take forward the following specific actions, subject to further consultation where necessary:

  • Strengthen transparency requirements around group structures which could include introducing a requirement for corporate groups;
  • Strengthen shareholder stewardship. In conjunction with the investment community the Government plans to identify means to incorporate stewardship within the mandates of asset managers;
  • Strengthen the framework on dividend payments. It has asked the Investment Association to report on the prevalence of companies avoiding an annual shareholder vote on dividends by only declaring interim dividends. The Government confirmed it will take steps to ensure shareholders have an annual say on dividends if the practice is widespread and pressure is sufficient;
  • Take forward measures to ensure greater accountability of directors in group companies when selling subsidiaries in distress;
  • Legislate to enhance existing recovery powers of insolvency practitioners in relation to value extraction schemes designed to remove value from a firm at the expense of creditors when a firm is in financial distress; and 
  • Extend the Insolvency Service's powers to investigate directors of dissolved companies where they are suspected of acting in breach of their legal obligations.

There were a number of responses to the original consultation request, several pointing out that we already have legislation to protect against a number of these points, and it will be interesting to see how these measures will be taken forward; we are informed that there will be more detail in the autumn. It is therefore important that you keep up to date with changes in this area and ensure that your corporate governance is sufficient. Organisations already operating with a high degree of corporate governance should find that steps they are already taking are appropriate both now and in the future.

News

HMRC now enforcing TUPE transferors' national minimum wage liabilities against transferees

HMRC has changed its approach to charging penalties when enforcing National Minimum Wage (NMW) where employees have transferred under TUPE provisions. All NMW liabilities, including the full penalty amount, will now be enforced against the transferee. This change took effect from 2 July 2018.

HMRC previously charged the transferor for all or part of the penalties where they were triggered by arrears that accrued before employees transferred under TUPE.

In light of the change, employers engaging in a TUPE transfer should ensure they examine their potential liability in this area and take legal advice.

Tax cut for self-employed workers scrapped

A planned tax cut for 2.7m self-employed workers has been scrapped by the UK government. It was originally due to scrap Class 2 National Insurance contributions in April but the move had been delayed by a year and has now been shelved.

The Government cited concerns that low-earning self-employed people would pay more to access the state pension and it would make the tax system more complex. Treasury Minister Robert Jenrick stated that the change had been intended to simplify the tax system for the self-employed; however it had become clear that a significant number of self-employed people with the lowest profits would have had to pay more. The changes were anticipated to save millions of workers in the region of £150 per year, with the Federation of Small Businesses now saying that the u-turn would net the Treasury in excess of £350m annually in the three years to 2021.

The shadow chancellor Mr McDonnell referred to this as "yet another betrayal of the self-employed". The full article is available here.

Migration Advisory Committee publishes report on EEA migration and its impact

On 18 September 2018, the Migration Advisory Committee (MAC) published its final report on current patterns of European Economic Area (EEA) migration into the UK and the impact of EEA migrants on the economy and society of the UK. The Cabinet has already adopted MAC's recommendation that there should be no preferential treatment for EU migrants seeking work in the UK after Brexit. MAC's other recommendations include:

  • Making it easier for higher-skilled workers to migrate to the UK than lower-skilled workers;
  • Abolishing the current cap on sponsored work “visas” under Tier 2 (General); and
  • Maintaining the minimum salary thresholds for jobs to qualify for sponsorship under Tier 2.

The Confederation of British Industry (CBI) has been engaging with multiple Government departments, across all levels, to influence this discussion. Key messages which the CBI has been making include:

  • Migration should be part of trade negotiations, starting with the EU;
  • Any new system must be easily accessible to all firms, not just big businesses;
  • Firms require access to all levels of skill, not only ‘the brightest and best’. The £30,000 salary threshold is a major barrier preventing firms from accessing both mid and lower-skilled roles; and
  • Any new system must work from ‘Day 1', even if this means an extension of the current immigration arrangements beyond December 2020 whilst the necessary changes are made to make businesses ready for a single global system.

MAC's full report can be accessed here.

Employment Tribunal quarterly statistics for April to June 2018

The Ministry of Justice has published the Employment Tribunal quarterly statistics for the period April to June 2018. The statistics reveal:

  • Single claim receipts increased by 165% compared with the same quarter last year;
  • Receipts in multiple claims increased by 344% (due to a large airline claim);
  • The number of claimants with no representative increased from 9% in 2016/17 to 17% in 2017/18;
  • Disability discrimination cases had the largest average award (£30,700); and
  • The average award for unfair dismissal was £15,007.

For more details, click here.