Welcome to April's In Brief employment law update.
To 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.
In this bulletin:
Please see Acas: Brexit - Information about the EU exit, 1 April 2019 to view new guidance on the potential impact of Brexit on your workplace. This explains the potential changes to employment law and provides links to the government technical guidance.
Public sector gender pay gap figures reveal growing disparity
The second round of figures, with regards to the gender pay gap, in the public sector have been published. The results show an increase on last year's median pay gap of 14%, with a median pay gap of 14.2% existing in the public sector as at 31 March 2019. However, this increased figure still remains significantly lower than the overall national average median pay gap at 18.4%. The figures also show that there are disparities in a range of sectors, in particular in the police services where the gap grew by 1.45%.
In the courts... recent case updates
Personal liability for directors for the company's breach of an employment contract
In Antuzis v DJ Houghton, the Claimants worked extremely long hours for less than the statutory minimum wage and were frequently not paid the sums due. The directors accepted that the company was not paying the minimum wage, overtime or holiday pay deserved and were found personally liable for this.
The High Court decision held that the directors were personally liable for the breaches of contract they had induced on the basis that the breaches of the company's obligation as an employer suggested a failure of each of the directors to comply with their duties to the company. However, it was recognised that a director is not generally liable for inducing a breach of contract where they are acting in good faith.
Enforceability of 'bad leaver' provisions in a company's Articles of Association
In Nosworthy v Instinctif Partners Ltd UKEAT/0100/18 the EAT upheld the provisions in the Articles of Association (a document which forms part of the company's constitution) which provided for forfeiture of deferred earn-out shares and loan notes where the Claimant resigned and was therefore categorised as a 'bad leaver'. The argument that the bad leaver provisions should be set aside as unconscionable was rejected. The EAT further found that they could not be void as a penalty clause because the provisions were in the Articles of Association and therefore there could be no breach of contract.
There was no unconscionable bargain on the basis that the Claimant was not at a serious disadvantage: there was no evidence that the Claimant had been unable to take legal advice at the point of the investment and when the Articles of Association were amended. The Claimant had warranted in the share sale agreement that she had taken professional advice and that the bad leaver provisions were reasonable. Further, the bad leaver provisions were clear as to the consequences of voluntary resignation and the Claimant had resigned with free choice when she no longer wished to continue working for the company.
Lengthy suspension did not provide grounds for a claim for whistleblowing detriment or race discrimination
The EAT found in Uwalaka v Southern Health Foundation NHS Trust that the three year suspension (caused by a state of limbo waiting for a proper investigation into the allegation of misconduct against the Claimant) did not arise from discrimination or whistleblowing.
Please note that despite the judgment, the EAT was highly critical of the way the Claimant was treated. For more information on points to consider when suspending employees please refer to our previous article.
An employee entitled to disability benefits until he 'returns to work' is entitled to them until he returns to his actual role
In ICTS v Visram, the EAT held that if an employer is contractually obliged to provide an employee with long-term disability benefits until the employee's 'return to work', this means a return to the type of work from which the employee had gone on sick leave.
In this case, the Claimant had gone on sick leave due to work-related stress and depression, and was dismissed for incapacity. He succeeded in bringing a claim for unfair dismissal, and the Employment Tribunal agreed that his losses included the loss of his contractual right to long-term disability benefits. The employer argued against this, claiming that although he could not have returned to his role, he was well enough to return to a different role within the business, so his right to disability benefits had come to an end.
The EAT held that 'return to work' meant a return to the work from which the employee had gone off work sick. It was clear that the Claimant was never going to be well enough to return to his role, so he was entitled to be compensated for the loss of this benefit until death or retirement.
A complete, non-discriminatory explanation may not stop a claim of possible discrimination.
The Court of Appeal found in Iwuchukwu v City Hospitals Sunderland NHS Foundation Trust (the "Trust") that although a complete non-discriminatory explanation was provided, it was not satisfactory to stop the claim.
The facts were that a black African consultant surgeon was dismissed by the Trust. There had been concerns about his capability, particularly following an incident where a patient of his was set on fire in the operating room. The Trust held an investigation and restrictions were consequently placed on his practice (although these were not strictly adhered to).
The surgeon raised a grievance. However, the Trust declined to consider it because it was raised outside of the one month time limit. He was then dismissed on the grounds of capability to which he brought several claims including direct discrimination and victimisation on the grounds of race.
The employment tribunal held that there was direct race discrimination and victimisation for failing to investigate the grievance.
On appeal the Employment Appeal Tribunal allowed the Trust's appeal and accepted that the Trust's behaviour was unrelated to race.
However, the Court of Appeal upheld the Claimant's appeal. The Claimant had been excluded without proper review and the Trust's explanation was rejected partly because the first grievance had been raised before the capability process began.
It should be noted that each case will turn on its facts.
Unfavourable treatment cannot arise where the employee's belief is mistaken
In iForce v Wood an employee refused to work at a different workstation near the loading doors because she believed it would be colder and damper, thus exacerbating her osteoarthritis. This was an erroneous belief and the employer's investigations showed that there was no material difference in temperature and humidity throughout the warehouse. The employer considered the employee's refusal unreasonable and therefore issued the employee with a written warning.
The EAT held that the employee's mistaken belief did not establish unfavourable treatment arising from a disability under S.15 of the Equality Act 2010 on the basis that whilst a broad approach applies when establishing whether there is a causal connection under S.15, there was no connection between the refusal to work at benches near the loading doors and the employee's disability in this case.
Employers are (generally) not required to postpone disciplinary hearings pending the outcome of police investigations
In North West Anglia NHS Foundation Trust v Gregg, the Court of Appeal held that employers are (generally) not required to postpone disciplinary hearings pending the outcome of a police investigation into the employee.
In this case, the Claimant was a doctor facing a police investigation after two patient deaths. His employer then suspended him, originally on full pay. However, in accordance with its disciplinary procedure, the employer then sought to stop his pay. The Claimant brought proceedings in the High Court, arguing that if the employer continued to the next stage of its disciplinary procedure by stopping pay before the criminal proceedings had come to an end, it would be breaching the implied duty of trust and confidence owed to the Claimant. The High Court agreed with the Claimant, granting an injunction to prevent the employer moving forward with its disciplinary procedure before the end of the criminal proceedings.
On appeal, the Court of Appeal disagreed with the High Court, stating that the implied duty of trust and confidence is only breached if the employer does something calculated to destroy or seriously damage the relationship and there was no reasonable and proper cause for that conduct. In this case, the employer was simply following its contractually binding disciplinary procedure, so it was not acting without reasonable and proper cause. The injunction was therefore overturned and the employer was allowed to continue with its disciplinary procedure.
It is not fair to dismiss a director on the basis that they had been found to not be a credible witness at an employment tribunal.
The facts of the case in Radia v Jeffries International, at the Employment Appeal Tribunal ("EAT") were that the Claimant, a managing director of a FCA regulated financial services company, had been dismissed following his evidence lacking credibility without holding an investigation meeting.
The Claimant had brought two tribunal claims against his employer. It was in the first claim that his evidence, in multiple areas, was found to not be credible and evasive.
On judgment from the tribunal, the employer suspended the Claimant pending the disciplinary. However, they did not hold an investigation meeting. At the disciplinary the employer relied solely upon the findings from the tribunal and the Claimant's responses whereas the Claimant disputed the tribunal's findings against him.
The initial finding from the EAT was that the dismissal was fair. However, the EAT considered whether the decision was within the range of reasonable responses. Two stages of investigation for the disciplinary process are not mandatory under statute or the ACAS Code. In this claim, the tribunal had not made sufficient findings to justify that there would have been no difference by having an appeal. Therefore, the dismissal was found to be unfair.
Increase to injury to feelings awards
Since 6 April 2019, the limits for an injury to feelings award following a successful discrimination or whistleblowing claim have increased to the following:
- Lower band: £900 - £8,800.
- Middle band: £8,800 - £26,300.
- Upper band: £26,300 - £44,000.
Regulations made to introduce Good Work Plan changes
Regulations have been made to implement the government's Good Work Plan, which include the following provisions:
- From 6 April 2019: financial penalties for employers found in aggravated breach of workers' rights increase from £5,000 to £20,000.
- From 6 April 2020: all workers have the right to be provided with a written statement of employment particulars from their first day of employment.
- From 6 April 2020: the threshold required for a request to set up information and consultation arrangements will reduce from 10% to 2% of employees (subject to the existing minimum of 15 employees).
- From 6 April 2020: temporary work agencies must provide agency workers whose existing contracts contain a Swedish derogation provision with a written statement advising that, with effect from 6 April 2020, those provisions no longer apply. Agency workers asserting rights under the new Regulations will be protected from detriment and unfair dismissal.