In brief – February monthly round up

Welcome to February'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:

  1. In the courts... recent case updates
  2. Legislation updates
  3. New Guidance and Consultations
  4. News

In the courts...recent case updates

Court of Appeal progresses Asda equal pay claims

The UK's largest ever private sector equal pay claim, involving predominantly female retail workers in Asda stores seeking to compare themselves against Asda's predominantly male warehouse workforce, has been given the green light for proceeding with the substantive equal pay claim of work of equal value. The Court of Appeal upheld the employment tribunal and employment appeal tribunal's decision that the group of supermarket retail employees can compare themselves with a group of distribution depot employees.

Drawing adverse inferences in discrimination cases

The Court of Appeal in Efobi v Royal Mail Group Ltd has found that an Employment Tribunal should not draw adverse inferences from an employer's failure to put forward evidence about comparators unless the Claimant has discharged their burden to show a prima facie case of discrimination.

The Claimant, a black Nigerian with post-graduate qualifications in Information Systems and Forensic Computing, was employed as a postman but aspired to move into a management or IT role. He unsuccessfully applied for a number of posts and raised a complaint for direct race discrimination against the Royal Mail as a result.

In defending the claim, Royal Mail did not put forward any evidence about the identity or qualifications of the successful candidates, nor did the Claimant seek discovery of such evidence. The Court of Appeal held that the burden was on the Claimant to prove his case at the first stage, and that in this instance he had not provided the tribunal with sufficient information to allow it to identify the characteristics of the proposed comparator and that, in the circumstances, no adverse inference should be drawn from Royal Mail's reticence to provide details in respect of the same.

Direct discrimination in firefighters' and judges' pension schemes

In Lord Chancellor and another v McCloud and others; Secretary of State for the Home Department and others v Sargeant and others [2018] EWCA Civ 2844 the Court of Appeal has considered the discriminatory effect of the government replacing occupational pension schemes with less generous schemes whilst permitting workers who, on 1 April 2012, were within ten years of normal pension age to remain in the original schemes. The intention was for these workers to see no change in when they could retire or decrease the amount of pension they would receive at their normal pension age.

It was acknowledged that younger judges and firefighters had been directly discriminated against because of their age. Evidence suggested that those firefighters who were outside the protection band would have to save £19,000 to purchase an annuity to cover the difference in the benefits as a result of the change. The main issue was whether this discrimination was objectively justified; direct age discrimination can be justified by social policy or public interest objectives but not for purely individual reasons, such as reducing costs or improving competitiveness.

Whilst the government is to be afforded some discretion on these issues, the Court of Appeal held that the government had failed to show a legitimate aim. The government chose to give transitional protection to those workers who needed it least and failed to give a rational explanation for that choice.As a result of this case, the government will need to compensate younger members for the less favourable treatment they have received since the transitional provisions came into force, as well as working out how to address the pension scheme changes going forwards so that the discriminatory elements are removed for all members. Similar claims could arise around the government’s changes to other public sector schemes if protections have been put in place in a similar manner.

Linklaters obtains an injunction over its confidential information

A former senior executive at Linklaters LLP has agreed not to disclose confidential documents that he claimed reveal the law firm's "ongoing struggle with women in the workplace" and demonstrate his concerns over the firm's culture.

Prior to this agreement, Linklaters had been granted an interim injunction in the High Court to restrain the former executive from publicising such documentation. Linklaters sought the injunction to protect the identities of the complainants and staff members concerned. In granting the injunction, the High Court accepted that the information fell within the contractual duty of confidence, was not in the public domain and that the interests of third parties outweighed the public interest in the publication of this material.

The former executive is not prevented from discussing his impressions of the firm's culture in general terms and this story stands as a reminder of the continued focus on #metoo issues.

Apportionment of liability under Agency Workers Regulations

In London Underground Ltd v Amissah and ors, the Court of Appeal has considered the apportionment of liability provisions under the Agency Worker Regulations 2010 (AWR). A claim was brought against both London Underground and Trainpeople (an employment business) for breach of the AWR; Trainpeople had supplied London Underground with a number of agency workers who were not paid a comparable wage to London Underground staff (as is required by the AWR following 12 weeks' service). London Underground had transferred the amount of the underpayment to Trainpeople previously, but Trainpeople had dishonestly withheld the money from the relevant workers.

Each Respondent was held 50% responsible for the breach by the tribunal, however Trainpeople had gone into administration prior to the hearing and the tribunal did not consider it just and equitable to require London Underground to pay compensation to the Claimants on the basis that it would then have 'paid twice'. The Claimants appealed to the Court of Appeal.

The Court of Appeal found that as London Underground had chosen to deal with the agency, it was for London Underground to bear the burden of the agency's dishonesty; the Claimants should not be deprived of their right to compensation when there had been no dishonesty on their part. The Court commented that, whilst in principle a tribunal could order a Respondent to pay less compensation than it was actually held liable for, that would only be in exceptional circumstances, and where the claimant involved was blameworthy.

Employers must keep records of actual hours worked

In Federacion de Servicios de Comisiones Obreras (CCOO) v Deutsche Bank SAE, the CJEU has suggested an employer must keep records of actual hours worked by full-time employees who had not expressly agreed (whether individually or collectively) to work overtime, in order to fulfil its obligations under the Working Time Directive.

Deutsche Bank had been using an absences calendar to record the hours not being worked by employees (for example, due to annual leave or sickness). The CCOO, a trade union, brought an action against Deutsche Bank, claiming that its failure to record actual hours worked by employees was a breach of the Working Time Directive.

Advocate General Pitruzzella of the CJEU agreed that in order to comply with company duties under the Working Time Directive, national law must oblige employers to record the actual time worked by employees.

Legislation updates

Immigration requirements for EU citizens post-Brexit

As part of the government's preparation for Brexit, it has introduced the Immigration and Social Security Co-ordination (EU Withdrawal) Bill. This bill ends the free movement for EU citizens meaning that EEA and Swiss nationals will be subject to UK immigration control and require permission to enter and remain in the UK.

In the event of a no-deal Brexit, the government is putting in place transitional immigration measures for EU citizens pending the implementation of the new skills-based immigration system on 1 January 2021. For further detail on these arrangements, please see our article here.

Statutory pay increases from April 2019

The draft Social Security Benefits Up-rating Order 2019 has been published marking an increase in payments in the 2019-20 tax year. Key increases to be aware of are:

  • As of 6 April 2019, statutory sick pay will increase from £92.05 per week to £94.25.
  • From 7 April 2019, statutory maternity pay, paternity pay, shared parental pay and adoption pay will be increased from £145.18 per week to £148.68.

Government guidance updates

Government response to the Business, Energy and Industrial Strategy (BEIS) Committee report on gender pay gap reporting

The initial report was the first output of BEIS's inquiry into the gender pay gap in the private sector. The report called for more to be done, more quickly, to close the gender pay gap.

The response indicates that:

  • The government will not be extending the gender pay gap reporting obligations to companies with 50 or more employees but will seek to encourage smaller companies to evaluate their gender pay gaps.
  • The government is keen for all employers to produce and publish an action plan in future reporting years however this will not be mandatory.
  • Partner remuneration will remain optional in the reporting regime.
  • A more nuanced approach to reporting, for example by requiring companies to show part-time and full-time statistics, will not be implemented.
  • The government is considering how mandatory ethnicity pay reporting will work, although no definite timescale is given for the introduction of this.
  • The current guidance published jointly by Acas and the Government Equalities Office will not be revised.

Therefore, although the government has acknowledged some of BEIS's comments, a major overhaul of the regime appears unlikely for the time being on the basis that employers are still getting used to the reporting requirements; substantial changes to the regime are only likely to materialise after the statutory review which must take place before April 2022.

What is interesting to note is that, according to analysis carried out by the BBC, four in ten private companies have reported a wider pay gap in 2018 than the previous year. See here for further details.

Senior Managers & Certification Regime (SMCR) consultation

The Financial Conduct Authority (FCA) has launched a consultation on proposed amendments to the SMCR regime which applies to employers regulated by the FCA. The FCA proposes to exclude heads of legal from the regime and persons who perform a purely administrative role that means that they "manage" or "arrange" investment activities. It also proposes to extend the application of the non-disclosure obligation to non-approved executive directors.

The consultation closes on 23 April 2019 and we will report on any outcomes later in the year.

New guidance on Age Discrimination

Acas has published new guidance on Age Discrimination including a helpful 'top ten obligations' and 'myths v facts' summary. The guidance is aimed at helping employers to eradicate bias against older and younger workers as the age of the working population becomes increasingly diverse. The guidance can be found here.

Updated guidance on preventing illegal working

The Home Office has updated its Code of Practice on Preventing Illegal Working. This sets out the prescribed checks that employers should conduct to avoid a civil penalty in the event of illegal working.

It replaces the previous Code issued in May 2014, and reflects the Immigration (Restriction on Employment) (Code of Practice and Miscellaneous Amendments) Order 2018, which provides that employers may establish a statutory excuse against liability for an illegal working civil penalty by conducting an online right to work check using the Home Office Online Right to Work Checking Service.

For assistance on immigration matters please contact Karen Bates, Partner in our employment team.


Private sector in need of a pay boost?

The latest CIPD Labour Market Outlook has been published and highlights that recruitment and retention remain critical issues in both the private and public sectors; employment is at its highest rate since records began (75.8%) and it is clear from the report that there are more job openings chasing fewer people. An increasing proportion of vacancies are hard-to-fill (up 7% to 71% since this time last year) and, in addition, 32% of employers have stated that it has become harder to retain employees. In response to these difficulties, employers – and the private sector in particular – are turning to salary increases. The report confirms that the proportion of employers within the private sector raising starting salaries for recruitment purposes has increased from 56% to 66% from this time last year and the expected median pay in the private sector is set to rise to 2.5% for the first time in 6 years. Moreover, almost half of employers who are considering a pay review over the course of the year, are anticipating an increase to basic pay.

The report further highlights the widening pay gap between the public and private sectors, with public sector pay expectations having slowed and reduced from a high of 2% last quarter, to 1.1%.