Welcome to the November employment bulletin. With a significant focus on the General Election next month, our immigration expert Gemma Robinson summarises what the main parties' manifestos are in relation to the hot topics of Brexit and immigration. As well as our monthly In Brief review of the latest developments, we take a closer look at a right to work case, a decision that highlights how important having anti-harassment policies and training in place is and a proposal to require employers to provide basic references.
In this bulletin:
In the courts... recent case updates
No obligation to permit sick workers to carry over more than four weeks' annual leave
In TSN v Hyvinvointialan, the CJEU held that member states are not required to allow unused annual leave in excess of the four week minimum under the Working Time Directive ("WTD") to be carried over where a worker has been unable to use it due to illness.
The CJEU ruled on two combined Finnish cases, both concerning employees who were contractually entitled to more paid leave than the WTD minimum, but who had both been prevented from carrying over more than four weeks' holiday into the next working year. Both employees had been incapacitated by illness during a period of annual leave; they subsequently asked their respective employers if they could carry over the holiday that they were unable to enjoy, but had their requests denied.
The CJEU held that rights to paid annual leave in excess of the WTD minimum are governed by national law as opposed to the Working Time Directive. Therefore, member states and collective agreements are not precluded from providing for the granting of leave in excess of four weeks, whilst preventing the carrying over of those extra days in relation to illness.
The CJEU's ruling confirms that the EAT's decision in Sood Enterprises v Healey was correct; in that case, it was held that only four weeks of annual leave automatically carries over when an individual is on long-term sick leave. The additional 1.6 weeks' leave granted by UK law does not automatically carry over. In Great Britain, therefore, employees are not entitled to carry over more than four weeks' paid holiday unless contractually agreed. A link to a summary of the Attorney General's opinion in our June in brief is here.
Employer's offer to cover legal costs for settlement agreement advice
In Solomon v University of Hertfordshire, the EAT made an obiter comment that the employer's offer to pay £500 plus VAT was not enough to cover advice on a settlement agreement if the advice was expected to cover merits and quantum in addition to the proposed agreement's terms and effect.
The individual had rejected the settlement offer without taking legal advice. She was awarded just £1,900 by the tribunal, having been offered £50,000 to settle. The employer made an application for costs. The EAT emphasised that costs awards are only made in employment tribunals in very limited circumstances, where one party has acted 'vexatiously, abusively, disruptively or otherwise unreasonably'. Here, it could not say that the employee had acted unreasonably.
In terms of the offer to cover the employee's legal costs, the EAT held that this amount would have been reasonable if the solicitor was merely explaining the terms and effect of the agreement. However, the amount was insufficient to cover the advice that would be necessary to assess her prospects of success and the likely award if she was successful. Further, the offer was found to be conditional on her accepting the settlement.
This decision does not necessarily mean that employers need to increase the legal advice cover that they offer to employees in relation to settlement agreements. However, where an employer wishes to rely on a litigant in person's rejection of a settlement offer to ask a tribunal to make a costs award, the amount offered will need to be enough to cover reasonable legal fees in advising on whether the offer is a good one. Given that the chances of a costs award being made in an employment tribunal are remote, it is likely that many businesses will decide against paying this price.
Covert surveillance of employees under suspicion of theft did not violate Article 8 right to privacy
The European Court of Human Rights (ECHR) has held that covert monitoring of employees under suspicion of theft did not breach Article 8(1) of the European Convention on Human Rights (López Ribalda and others v Spain). A Spanish supermarket installed video monitoring technology due to high levels of theft. The employer had not informed employees of the presence of the cameras in advance, despite being required to do so under Spanish data protection legislation.
The ECHR held that the supermarket had struck a fair balance between protecting the privacy of employees and preventing theft. Breach of Spanish data protection law was not determinative of whether the interference with the Article 8 right to privacy was proportionate. It found that the employer had taken measures to prevent the footage from being circulated, and that employees in this context should only have a limited expectation of privacy. Further, the monitoring was only for a limited period and any notification to staff regarding the existence of the cameras could have prevented the thieves from being caught. The Spanish courts had therefore acted within their margin of discretion in deciding that the interference with the employees' right to privacy was proportionate.
Homophobic statements made in public about hiring LGBT people found to be discriminatory
In an Advocate General's (AG) opinion, a statement made by a senior Italian lawyer on a radio programme that he would never hire a homosexual person to work at his law firm fell into the scope of unlawful discrimination.
The CJEU has held that a senior lawyer's comments on an Italian radio show that he would never hire a homosexual person were discriminatory (NH v Associazione Avvocatura per i diritti LGBTI-Rete Lenford). There was no direct victim as the law firm were not actively recruiting at the time. The Italian Supreme Court referred the case to the CJEU to determine whether hypothetical statements can fall within the Equal Treatments Directive and whether an association had standing to bring the claim.
Whilst the law firm was not actively hiring at the time, the AG stated that the statement would generally prevent access to employment. To prove a sufficient link, the national court had to review the status and capacity of the lawyer, the context and nature of the comments, and the extent to which the statement would prevent a person from a protected characteristics group from applying.
The issues were whether an association for LGBT lawyers was able to bring the claim as there was no direct victim and whether a hypothetical statement could be caught under the Equal Treatment Directive. European law permits national legislation to allow associations with a legitimate interest to bring proceedings where there is no specific victim.
Should this opinion be followed by the ECJ, this may affect enforcement powers in the UK which is set out in the Equality Act 2006.
Belief in ownership of creative works not enough to constitute a philosophical belief under the Equality Act 2010
In Gray v Mulberry Company (Design) Ltd, the Court of Appeal dismissed Gray's claim that her belief which she stated as: "the statutory human or moral right to own the copyright and moral rights of her own creative works and output, except when that creative work or output is produced on behalf of an employer" constituted a philosophical belief for the purposes of the Equality Act 2010.
It was found that there was no causal link between her belief and her refusal to sign neither the employer's copyright agreement nor their decision to dismiss her. The court saw this as a dispute on the wording and interpretation of the copyright agreement where the claimant believed it failed to protect her own interests. This could therefore not be considered a philosophical belief.
The court also held that Gray failed to show a group disadvantage which is a requirement when arguing an indirect discrimination claim. Whilst the claimant's belief was widely held, she did not show that any other employee's suffered a disadvantage for sharing her belief. This differs from European law where under Article 9 of the European convention on Human Rights (ECHR) there is no requirement to prove group disadvantage.
Article 9 of the ECHR did not apply as Gray could not establish a sufficiently close connection between her belief and the belief itself due to being the only person sharing her belief who suffered a disadvantage.
Six-year limitation period does not apply in a claim for unlawful deductions from wages issued before 1 July 2015
In Bath Hill Court (Bournemouth) Management Company Ltd v Coletta the Court of appeal held that the six-year limitation period under the Limitation Act 1980 (the "LA") did not apply in a claim for ongoing unlawful deductions from wages issued before 1 July 2015.
Coletta brought the claimant as a result of underpayment of the National Minimum Wage which occurred during the entire 15 year period of employment with the respondent. As required under section 23 of the Employment Rights Act 1996 (the "ERA"), Coletta brought his claim within the three month time limit of the last series of deductions.
It was found that the six year limitation period under The LA could not apply as, under section 39 of that act, if a claim is brought under a statute that contains its own limitation period, then the six year limitation period under the LA would no longer apply.
The Court of Appeal held that the three month period under the ERA could quite plainly constitute a period of limitation and an analysis to consider whether the claim fell under the LA was not necessary.
The judgment will not be as relevant as unlawful deduction claims brought since 1 July 2015, a backstop for the period of two years has been implemented by the Deduction from Wages (Limitation) Regulations 2014. Therefore in claims for underpaid wages, bonuses, commission and holiday pay, the Employment Tribunals cannot take into account deductions where the date of payment was more than two years before the date of when the complaint was presented.
Employers not liable for its employee's racial harassment deriving from a third-party
In Bessong v Pennine Care NHS Foundation Trust, the EAT held that the NHS trust was not liable for its employee's racial harassment deriving from a patient as a result of its failure to take steps to preventing racial harassments in the workplace and dismissed the appeal.
The rules on third-party harassment were repealed in October 2013, but claimants could rely on Sheffield City Council v Norouzi under which it was arguable that an employer's action or lack of inaction to a third party's harassment could potentially amount to harassment under section 26 of the Equality Act 2010. However, the decision in Unite the Union v Nailard (2018) by the Court of Appeal further reduced that possibility which held that an employee would need to argue that the protected characteristic was the reason for the employer's failure to protect the employee from third party harassment. It would be unlikely that an employer would create a hostile and offensive environment for third party harassment to occur.
The EAT also held that there was nothing in the Race Directive (2000/43/EC), the Charter of Fundamental Rights of the European Union and the Equal Treatment Directive (2006/54/EC) which holds employers liable for third party harassment against an employee.
The claimant also applied for a leapfrog appeal to the Supreme Court but this was refused by the EAT. A recent government consultation which closed on 2 October 2019, when published, will contain the outcome on whether new third party harassment provisions should be introduced into the Equality Act 2010.
Legislation and consultations
Calculating compensation for pension loss
Revised guidance has been published on the calculation of pension loss in the employment tribunal, with some notable changes. The statutory discount rate has changed from minus 0.75% to minus 0.25%. National insurance credits are now to be taken into account in the approach to claims for compensation for loss of state pension rights. In addition, the method for grossing-up over more than one tax band has also been modified.
Whilst the guidance is not binding, the latest edition was produced by a practicing group of employment tribunal judges and was published in conjunction with Presidential Guidance issued jointly by the President of Employment Tribunals (England and Wales) and the President of Employment Tribunals (Scotland). The revised guidance can be found here.
New guidance on the use of confidentiality agreements in discrimination cases
The guidance published by the Equality and Human Rights Commission (EHRC) outlines good practice for employers and clarifies the legality and enforceability of these agreements. The EHRC emphasises the need for employers to carefully consider the wording that they use, making clear what the employer is and is not permitted to do. It must also be clear that the agreement does not prevent them from speaking about any form of discrimination. Further, confidentiality agreements will be unenforceable if workers were put under any pressure to sign it; it is best practice for employers to encourage employees to obtain independent legal advice in relation to these agreements.
Confidentiality clauses will need to contain carve-outs for certain disclosures, such as communications with police, lawyers, regulators and medical professionals. There should also be carve-outs for immediate family and, where and to the extent necessary, future employers.
The EHRC recommends a central record of confidentiality agreements for large employers who will need to potential systemic discrimination issues. Even where a settlement agreement has been used to settle a claim of discrimination, the employer should still investigate the allegations and take any reasonable steps to address the issue in order satisfy the "reasonable steps" defence in future claims.
Every Mind Matters campaign
In an initiative aiming to improve employee mental health, Public Health England has partnered with the NHS to launch the Every Mind Matters campaign. A variety of large businesses, such as Nationwide and ASDA, are supporting the initiative which will provide advice to employees in order to help them to manage and maintain their mental health. The campaign is intended to reach 500,000 employees and partners.
2019 Annual UK Report on Modern Slavery
The report, which is published by the UK government, provides data on modern slavery in the UK and the measures that are being taken to combat the problem. It highlighted the following:
- There was a 49% increase in offences of modern slavery from 2017 to 2018; 5,059 offences were recorded in 2017.
- The number of slavery and trafficking offences prosecuted in the magistrates' court under the Modern Slavery Act 2015 reduced from 444 to 377 between 2017 and 2018. 106 of the offences prosecuted in 2018 resulted in convictions.
- The total value of asset recovery offences associated with modern slavery was lower in 2018/19 than in 2017/18; the figure reduced from £7,966,458.80 to £4,656,179.69.
- The report also looked at the UK's future approach to modern slavery, confirming an intention to provide a central reporting service for statements. Further, both the government and individual departments will need to publish their own modern slavery statements.
Once details of enhanced employer obligations in terms of supply chain transparency are confirmed, business will need to audit their supply chains and review the way in which they are managed in order to comply.
Gender pay gap
The Office for National Statistics has released its latest figures on the gender pay gap. Gender pay disparity among full-time employees rose slightly from 8.6% to 8.9% between 2018 and 2019. Notably, the gender pay gap for full-time employees aged between 18 and 39 is negligible and the gap among 40 to 49 year-olds has decreased since 1997. For over 50s, however, the gap is currently 15% and is not declining significantly.
Andy Haldane, a senior Bank of England official, has said that small businesses should be required to publish gender pay gap reports in an effort to address systemic causes of the issue. He suggested that the number of employees that a company must have before being obliged to report their gender pay gap should be dropped from 250 to 30. At present, just 40% of private sector businesses are within the scope of legislation that imposes an obligation to report on gender pay disparities.
Delays to Minimum Wage Announcement
Due to the November 2019 budget being cancelled, the Low Pay Commission (LPC) does not have a forum to announce minimum wage rates that are to take effect in April 2020. Usually, the LPC presents its recommendations by the end of October, with the Government then setting out its response with any changes in the budget in November.
Employers with a pay review date at the beginning of next year may have to review without knowing what the minimum wage rate will be, which could lead to noncompliance with national minimum wage regulations.
Acas provides guidance on menopausal workers
New guidance has been published by Acas to help employers and managers support staff who are affected by the symptoms of menopause at work. It is estimated that one in 20 women could go through an early menopause and around two million women aged over 50 have difficulties a work due to the symptoms.
The new advice provides tips on good practice and how to raise concerns, which include:
- creating and implementing a menopause policy;
- providing awareness training for managers to sensitively deal with any concerns;
- creating an open and trusted culture within the team;
- providing flexible working where possible;
- providing equipment such as desk fans; and
- keeping track of employment laws that can relate to menopause issues at work.
For further information on menopause in the workplace, please click here to read Richard Neary's article on "The Menopause and Protection in the Workplace".
Legal challenge launched against Home Office over discrimination on electronic visa applicants
A legal challenge has been brought against the Home Office to outline the algorithm used to analyse visa applications by Foxglove (an advocacy group promoting justice in the technology industry) and the Join Council for the Welfare of Immigrants (JCWI).
The algorithm categorises applications into three separate categories, namely, a fast lane, a slow lane and a digital pat-down lane.
Foxglove and JCWI believe that the algorithm discriminates on the grounds of characteristics such as nationality and age, as opposed to assessing applications fairly and equally. The algorithm could therefore affect the chances of an applicant getting a visa and also increase the length of time for the application to be processed. It is argued that applicants from predominately rich, white countries receive the "green" category and are likely to be fast-tracked through the system, while poorer people from minority ethnic backgrounds are subject to increased scrutiny and checks.
It is currently impossible to know exactly who is affected; therefore this challenge aims to clarify how the algorithm works and how such artificial intelligence can affect immigration policy. The Home office states that the algorithm improves efficiency to allocate applications and is in compliance with the Equality Act 2010. It further states that it is not software, but humans that have the final say on the outcome of the visa applications.