In brief – September monthly round up

Welcome to September'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, 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. News

In the courts... recent case updates

Illegality and employment contracts

In Okedina v Chikale, the Court of Appeal held that an employee's employment contract was not rendered unenforceable by the fact that they did not have immigration permission to remain in the UK.

Ms Chikale brought a number of claims in the employment tribunal, including unfair dismissal, wrongful dismissal and unlawful deductions from wages. The employer sought to rely on the doctrine of 'illegality', arguing that the contract of employment was unenforceable from the date Ms Chikale's visa expired. The Court of Appeal ruled that sections 15 and 21 of the Immigration, Asylum and Nationality Act 2006 were not to be construed as preventing employees from bringing contractual claims where they had breached immigration rules. Therefore, the defence of 'statutory illegality' was not applicable.

On the facts of the case, the Court of Appeal also held that 'common law illegality' had not arisen. This defence is available to employers where employees have knowingly participated in the illegal performance of their employment contract. Here, Ms Okedina applied for a visa extension on Ms Chikale's behalf and subsequently failed to inform Ms Chikale that the extension had not been granted.

The particular facts of this case were unusual; the Court of Appeal's decision does not affect an employer's ability to treat an employment contract as unenforceable where an employee is aware that they are not permitted to remain in the UK although advice should be sought if looking to rely on this principle.

Holiday pay for term-time workers

The Court of Appeal has ruled that "part-year workers" on permanent contracts who work irregular hours should not have their holiday pay entitlement calculated on a pro-rata basis to reflect the fact that they do not work throughout the year.

Harpur Trust v Brazel concerned a music teacher who only worked during term-time and whose pay was dependent on the amount of work carried out, with the employer under no obligation to provide a minimum amount of work. The employer argued that Mrs Brazel's holiday pay entitlement should be capped at 12.07% of annual earnings in order to mirror the position for full-year workers under the Working Time Regulations 1998. The Court of Appeal, however, held that Mrs Brazel's holiday pay entitlement was to be calculated on the basis of average weekly pay over a 12-week reference period, which equated to 17.5% of her annual pay.

The judgment means that there is potential exposure for employers who currently use the 12.07% approach to calculating the holiday pay entitlement of part-year workers on permanent contracts who work irregular hours.

It should be noted that the 12-week reference period for calculating statutory holiday pay for workers with variable hours is due to be extended to 52 weeks when Part 3 of the Employment Rights (Employment Particulars and Paid Annual Leave) (Amendment) Regulations 2018 comes into force on 6 April 2020.

Termination of employee shareholder agreements

In Barrasso v New Look Retailers Limited, the EAT held that a director's service agreement entered into after an employee shareholder agreement could not terminate the employee's shareholder status.

Mr Barrasso brought a claim for unfair dismissal, arguing that his employee shareholder agreement had been terminated upon the signing of the director's service agreement. However, the claim was dismissed as under the employee shareholder agreement signed prior to the director's service agreement, he gave up his statutory right to bring the claim.

On appeal, the EAT noted that whilst employee shareholder status could be terminated by entering into a new contractual agreement (or any similar agreements) which includes a clause requiring the employee to sell or return the shares, they found that there was no evidence in the director's service agreement which explicitly signified this intention. The service agreement also replicated Mr. Barrasso's rights but there was nothing to suggest that the intention of the parties were to have the contractual and statutory rights exist alongside each other. The tribunal could then construe the 'whole agreement' clause by analysing the business efficacy behind the agreement.

The decision clarifies that parties wanting to terminate employee shareholder status must do so explicitly. An employee cannot terminate this status by simply selling or returning his shares or by issuing a new employment agreement which includes a whole agreement clause.

Publishing employment judgments on the public register

In L v Q Ltd, the Court of Appeal considered whether a party can prevent an employment judgment from being placed on the public register. It also had to determine whether a claimant could order a judgment to be more extensively redacted than just anonymising the parties or individuals involved in the case.

The claimant, who brought claims of disability discrimination, harassment and victimisation, had made an application for the judgment not to be entered on the register. He also wanted details of his disability to be removed from the judgment due to concerns of a risk of further embarrassment being inflicted.

The Court of Appeal confirmed that, save for cases involving national security, employment judgments must be published on the register. Further, it was held that the claimant could not order further redactions that went beyond merely anonymising parties or individuals. The Court of Appeal held that such redactions would undermine the principle of open justice by preventing readers from understanding judicial reasoning. For more information on the issues to be aware of around cases being available on the public register please see our previous article here.

Risks of collateral waiver through partial disclosure of privileged advice

In Kasongo v Humanscale UK Ltd, the EAT held that Humanscale waived privilege on advice regarding a dismissal and could not cherry-pick parts of the advice it disclosed.

Ms. Kasongo brought claims of automatically unfair dismissal and discrimination on the ground of pregnancy and maternity. She alleged that she informed her employer that she was pregnant but Humanscale denied knowledge of this and instead claimed that Ms Kasongo was dismissed due to poor performance, attendance and work attitude.

Humanscale disclosed a draft dismissal letter drafted by its lawyers with the lawyer's comments redacted which Ms Kasongo managed to read. The employment tribunal decided that the wording would be covered under privilege as it was not intended to be read by Ms Kasongo and there would be no issue regarding selectively disclosing privileged information.

On appeal, Humanscale argued a clear distinction and difference between the advice on the dismissal letter and two other pieces of legal advice submitted by them. The EAT disagreed and considered the distinction to be artificial. The dismissal letter, alongside the other two documents, was part of the same continuum of Ms Kasongo's dismissal advice.

This case highlights the risks of collateral waiver if a party waives privilege in some documents by applying the established principles on the waiver of legal professional privilege. If you would like training for your team on protecting privilege please contact your usual Foot Anstey employment contact or Rebecca Harries-Williams.

Vegetarianism not a belief under Equality Act 2010

In Conisbee v Crossley Farms Ltd the employment tribunal considered whether vegetarianism could be considered a belief when bringing a claim of discrimination on the grounds of religion or belief under the Equality Act 2010.

During the preliminary hearing, an employment tribunal held that vegetarianism did not qualify for protection after applying the tests in Grainger Plc v Nicholson. Whilst Mr Conisbee's belief was genuine and worthy of respect in a democratic society, it failed under the legal requirements for protection. Mr Conisbee's belief did not concern a substantial aspect of human life and behaviour. Vegetarianism was considered to be a lifestyle choice with the belief that the benefits of vegetarianism are a public good for the world. Nor did vegetarianism attain certain levels of cogency, seriousness, cohesion and importance when compared to religious beliefs. People can become vegetarians for a range of different reasons such as lifestyle, health and concern about the treatment of animals.

The tribunal also considered, obiter, veganism, where the reasons to be a vegan was very much the same amongst a variety of people leading to a clear cogency and cohesion in veganism. The decision reached in this case is not binding on other tribunals, although it highlights the approach on claims based on vegetarianism as a belief.

Employment tribunal pleadings

The EAT has confirmed that, in order to successfully defend a constructive unfair dismissal case, an employer must prove that there was a potentially fair reason for the dismissal.

In Upton-Hansen Architects ("UHA") v Gyftaki, UHA responded to Ms Gyftaki's claim for unfair dismissal by merely stating: "Save as expressly admitted, all the Claimant's claims are denied in their entirety". Given that the burden of proving a potentially fair reason for the dismissal is on the employer, a generic denial will be insufficient to successfully defend the claim. An employer's pleading needs to address the issue of fairness, detailing the employer's fair reason for the dismissal.

'Reasonable belief in public interest' test for whistleblowing cases

The EAT held that the correct test for determining whether a worker has made a protected disclosure is to ask whether the worker reasonably believed the disclosure to be in the public interest. In Okwu v Rise Community Action, Ms Okwu wrote a letter to her employer with a number of concerns. Ms Okwu's work involved providing support to victims of domestic violence and female genital mutilation. Ms Okwu's concerns included a lack of secure file storage and the fact that she shared a mobile phone for dealing with clients. Ms Okwu argued that this breached the Data Protection Act 1998.

The ET initially found that there was not sufficient public interest in the disclosure given that her letter raised personal contractual concerns about a lack of pension or written statement of terms. The tribunal decided that the data protection concerns had been raised in defence of the poor performance issued raised by her employer. However, the EAT declared that it was not necessary for the public interest in the data protection concerns to have been the sole motivation for raising these issues. The fact that Ms Okwu had a reasonable belief that these issues were in the public interest was enough for her to be protected under whistleblower legislation.

Unlawful detriment: threatening dismissal for refusal to work without a break

In Pazur v Lexington Catering Services Ltd, an employee refused to return to a client site after having been denied a rest break by that client on a previous occasion on an eight-hour shift. The EAT held that the employer's threat to dismiss him amounted to a breach of his right under the Employment Rights Act not to be subjected to detriment because of a refusal to comply with a requirement that contravened the Working Time Regulations 1998.

The Employment Tribunal had previously decided that the employee had not provided sufficient evidence of his reasons for refusing to return to the client. However, the EAT overturned this finding, holding that the employee's refusal had to be interpreted as a refusal to comply with a requirement that breached the Working Time Regulations, and that the employer's threat of dismissal was materially influenced by this refusal.

The EAT also rejected the Employment Tribunal's reasoning on the employee's automatically unfair dismissal claim which, similarly, was that the employee gave insufficient evidence of his reasons for refusing to return to the client. However, the EAT did not substitute a decision because, on this issue, the test was whether the employee's refusal was the principal reason for the dismissal. The EAT thought that there was a possibility that the tribunal could have found that an earlier refusal to return to a different client for an unrelated reason could have played a part in the dismissal.


Brexit update on free movement

The Home Secretary, Priti Patel, caused panic and consternation with her previous announcement that free movement would end immediately overnight on 31 October 2019, should the UK leave the EU without a deal. Whilst it currently appears as if a no-deal Brexit is now legally prohibited (at least for the time being), there is continuing uncertainty surrounding what exactly will happen on 31 October 2019, particularly since the recent Supreme Court decision.  There have been an increasing number of calls from EU citizens living in Britain for the government to provide more clarity on their status in the event of a no-deal exit.

The government has now responded to these calls confirming that for a transitional period (between 31 October and 31 December 2020), EU citizens will be able to live, work and study in the UK, as they do now, relying on their passport or national identity card. For those who wish to stay beyond December 2020, an immigration application will need to be made – either in the form of a settled status application (for those living in the UK prior to exit day) or the voluntary temporary immigration status known as European Temporary Leave to Remain ("Euro TLR") (for those who arrive after exit day). The Euro TLR status will enable the applicant leave to remain in the UK for a period of 36 months from the date of grant (potentially enabling individuals to therefore remain in the UK up to December 2023). The Euro TLR scheme will be available to all those who move to the UK during the transitional period and will enable them to secure a legal status before the new points-based immigration system is introduced in January 2021. The period spent under the Euro TLR scheme will then count towards the necessary qualifying period for settlement.

The government has confirmed that employers, landlords and other third parties will not be required to distinguish between EU citizens who moved to the UK before or after Brexit until the new, points-based immigration system is introduced from January 2021, such that passports and/or national ID cards will remain sufficient for right to work checks up to and including 31 December 2020. Following this date, evidence of pre-settled/settled status, Euro TLR or a visa under the new immigration system will be required for all employees commencing their employment after 1 January 2021.

As regards the new immigration system, the Home Secretary has commissioned the Migration Advisory Committee (MAC) with the aim of enhancing the UK's future immigration system by learning from international comparators such as Australia. This follows on from the commissioning of the MAC by the previous Home Secretary in June 2019 in relation to the role of salary thresholds within the future immigration system. The MAC will now consider how salary thresholds could be complemented by "points" awarded to prospective migrants in respect of attributes such as qualifications, work experience, occupation and language proficiency. The MAC will also consider the relative weight that should be given to these attributes within the future immigration system. The Home Secretary has said that the revised commission reflects the Government's vision of a fair immigration system, ensuring that people arriving have skills that are aligned with the UK's requirements.

Whether Brexit will or will not occur on 31 October 2019 remains to be seen and the above therefore may be subject to further change depending on the future political landscape.