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News & Blog

Employment Law Newsletter – July 2017

The summer has brought us lots of sunshine, the shocking decision of the Supreme Court on the Tribunal Fee System yesterday (click here to read our blog), and the findings of the Taylor Review of Modern Working Practices which have finally been published.  The report sets out findings and recommendations for clarifying the law governing employment status and making changes to the scope of various employment protections.

The emphasis is very much on the status of employees and workers.  Further details of the recommendations made in the report are set out below.

We also include a quick roundup of all relevant cases over the last few months.  As always, if you have any queries in relation to any of the specific areas mentioned, please feel free to get in touch.

For now we hope you all enjoy the rest of the summer.

Taylor Review of Modern Working Practices

The Taylor Review was published this month.  The proposals include: -

  • Keeping the distinction between employers and workers and naming workers “dependent contractors”.
  • Definitions to be implemented for employees and workers.
  • Removing the requirement for workers to have a contract to perform work personally.
  • Treating workers as “employed” for the purposes of their tax status.
  • Extending the right to a written statement of terms to workers as well as employees.
  • Requirement for written statement to be given from the outset of employment.
  • Written statements to include a description of statutory rights.
  • A standalone compensation for failure to provide written statements.
  • Increasing the rate of national minimum wage for hours that are not guaranteed.
  • Preservation of continuity of employment, where the gap is less than 1 month rather than 1 week.
  • Increasing the reference period for calculating holiday pay in cases where pay is variable from 12 week to 52 weeks.
  • Agency workers to have a right to require a direct contract after 12 months on an assignment.
  • Zero hours contractors to have the right to request guaranteed hours after 12 months.
  • Allowing flexible working requests to cover temporary as well as permanent changes to contracts.
  • Providing SSP to all workers.
  • Individuals to have the right to return to work following long term sickness absence.
  • Whilst the above are some of the recommendations, they will not all be easy to implement.  It will be a matter of waiting to see how the proposals are received by the Government and the extent to which they are implemented.

DEVELOPMENTS IN CASE LAW

ACAS Early Conciliation

The EAT held that if ACAS issues a second early conciliation certificate in respect of the same matter, this does not extend the time for making a claim (HMRC v Garau).

HMRC argued that the second certificate was unnecessary and had no effect on the running of time for limitation purposes. They argued that the limitation period therefore expired in the normal way because the first early conciliation certificate did not affect the running of the primary limitation period, since it was issued before limitation had started to run at all.

The EAT agreed, holding that only one certificate was required and a second certificate was unnecessary and did not assist the Claimant.

Indirect Discrimination

The Supreme Court has recently held in Essop and others v Home Office (UK Border Agency) and Naeem v Secretary for Justice that in order to succeed with a claim for indirect discrimination, it is not necessary to establish the reason for the particular disadvantage to which a group is put compared to another.

The Supreme Court held that the essential element is a casual connection between the provision, criterion or practice (“PCP”) and the disadvantage suffered not only by the group but also by the individual.

There are various reasons or “context factors” why one group may find it harder to comply with the PCP than others – the factors may be genetic, social, or even another PCP. It is not necessary for the PCP to place every member of the group at a disadvantage.

This case makes it clear that an employer should consider the effect of any PCP on any particular group and how it may effect employees within that group.

Discrimination – adjustments for candidates with Aspergers Syndrome

In The Government Legal Service v Brookes, the EAT held that a job applicant with Aspergers Syndrome (AS) was discriminated against by being required to sit a psychometric test.

The EAT held that the PCP requiring applicants to pass the test put a group of people, such as Brookes, at a particular disadvantage compared with those who did not have AS. It was held that while the test served a legitimate aim, the means of achieving that aim were not proportionate. Brookes claim for indirect discrimination succeeded.

This case serves as a helpful reminder to ensure that when putting in place a provision in order to serve a legitimate aim, it should be considered whether the means of achieving the aim are proportionate and whether there are any other ways to meet the same aim.

Some other substantial reason dismissal

The EAT has held that there is not a particularly high threshold required for an employer to meet when dismissing an employee because of a ‘substantial reason’ (Ssekisonge v Barts Health NHS Trust).

The EAT rejected an argument that in a ‘no fault’ some other substantial reason dismissal there was a particularly high threshold for employers to meet in order for a dismissal to be reasonable.

The EAT noted that in such circumstances employers should not be expected to investigate too far beyond what official information they could reasonably obtain about an employee from a responsible public authority, but did note that the position on fairness might differ on different facts, e.g. a case not involving a nurse and an NHS Trust.

Calculating Strike Pay

In Hartley v King Edward VI College, the Supreme Court held that if teachers lawfully strike for one day, the employer can make a deduction of 1/365 of annual pay, unless the contract of employment provides otherwise. The decision of the Supreme Court was unanimous.

The College made a deduction of 1/260 on the basis that there were 260 working days in a year. The teachers argued that their working hours were not limited to teaching hours as they regularly carried out their duties in the evenings and at the weekends.

This decision is specific to teachers though the principle may be applied in other industries where working days are not ascertainable.

Holiday Pay

In Fulton v Bear Scotland, the EAT held that the employment tribunal was right to consider itself bound by the earlier EAT decision in Bear Scotland that a break of more than three months between non-payment or underpayment of wages breaks the series of deductions.

The EAT made the decision regarding the three month rule and passed the case back to the employment tribunal to consider the application of the law to the facts. The employment tribunal applied the EAT’s ruling and excluded claims where more than three months had passed between successive non or underpayments of holiday pay. It was appealed on the basis that the EAT’s ruling was not sufficiently material to the decision and that the application of the rule would lead to ‘unfair’ results.

The EAT held that the employment tribunal was right to consider itself bound by the earlier EAT decision in Bear Scotland.

Compulsory Union Recognition – Fragmentation of Bargaining Units

In Lidl v CAC, the Court of Appeal held that single small units of an employer’s workforce should be subject to compulsory trade union recognition given the statutory requirement to consider the desirability of avoiding small fragmented bargaining units.

Lidl argued unsuccessfully that such a small bargaining unit (1.2% of total workforce) was not compatible with effective management and it would be ‘fragmented’. The Court held that the provisions relating to fragmentation of bargaining units cover fragmentation of recognition between bargaining units of fragmented collective bargaining but not where there was a single bargaining unit in the workplace with no risk of a proliferation of bargaining units arising if recognition were given.

Whistleblowing

It has been held that, where the making of a disclosure was the principal reason for a dismissal, the decision taker’s belief about whether the disclosure was protected is not relevant (Beatt v Croydon Health Services NHS Trust).

The tribunal found that the principal reason for the dismissal was the protected disclosures. The hospital appealed, claiming that the disclosures were not protected because they were made in bad faith or were not in the interests of the public. The Court of Appeal considered that this was irrelevant as s103A ERA asks an objective question of whether the disclosures were protected to be determined by the tribunal. As the tribunal found that the disclosures were protected, the Court of Appeal upheld the finding of unfair dismissal.

It should therefore be noted that tribunals will take an objective approach as to whether or not they consider the disclosures to be protected and the decision taker’s opinion is not relevant.

Time Limits

In J v K, the EAT held that the appellant could not rely on vague medical evidence to get an extension of time to lodge a late appeal.

J argued that the time limit should be extended because of his depression. J failed to provide specific medical evidence, but rather provided non-specific information including extracts from the US Department of Veterans Affairs website.

It was held that the medical evidence must be “bespoke” and “fit the individual case” in order to take advantage of rule 39(1).

Territorial Jurisdiction

The assessment of whether an employee has a strong connection to the UK is an objective test rather than a subjective test (Green v SIG Trading Ltd).

The EAT held that the focus should be who the employee worked for, rather than his role or duties. The EAT stated that the test was an objective one and must be looked at in the wider context.

Intention to Compete

The Chancery Division has held in MPT Group v Peel that two relatively senior employees did not have to reveal their intentions that they intended to set up in competition with their employer after their restrictive covenants had expired.  When the two individuals had been questioned on this by their employer, they had lied about their intentions.  The employer therefore sought an injunction against the two employees which included a duty to answer questions truthfully.

The Judge stated that he was “reluctant to hold” that a departing employee is under a contractual obligation to set out his or her own confidential plans, when setting up in lawful competition with an existing employer.

The outcome could be different if, for example, the two employees were more senior such as to hold for example fiduciary duties etc.

Garden Leave and TUPE

A clever idea by a senior executive backfired in the case of ICAP Management Services Limited v Bury. Mr Bury had given notice to terminate his contract in order to join a competitor.  His employers placed him on garden leave.  Whilst on garden leave, his employers were subject to a share sale acquisition.  Mr Bury informed his employers that he considered that there was a TUPE transfer and stated that he objected to the transfer under the TUPE Regulations.  By objecting, this meant that his employment would be terminated at the point of transfer, releasing him to take up new employment earlier than he would have otherwise been able to do so with his new employer and in competition. His employers sought to enforce the garden leave and succeeded.  It was held that TUPE required a change of employer and as the share sale did not result in a change, there had been no TUPE transfer, to which he would have been able to object to.

His employers were therefore able to enforce the garden leave.

Direct Sex Discrimination

The Employment Tribunal has stated that not paying full salary to a father who is taking shared parental leave is direct sex discrimination, where a mother taking maternity leave during the same period would have received full pay.

Pre-pack Administration and TUPE

The CJEU has held in a Dutch case that administration (including “pre-packs”) is not primarily aimed at liquidating the undertaking.  Therefore employees would not lose the right to transfer when all or part of that undertaking is transferred.

The position would be different if the organisation was being liquidated for the benefit of creditors.  The Court also held that TUPE transfer would not occur in the event of “bankruptcy proceedings or any analogous insolvency proceedings”.

The TUPE Regulations are very specific as to whether TUPE applies or doesn’t in terms of organisations that go into administration or alternatively where there are insolvency proceedings in place.  It is always crucial to check the facts against the TUPE Regulations to ensure that you don’t fall foul of the consequences of whether a company is in administration and whether proceedings have been instituted with a view to liquidating the assets of the company.

Whistleblowing and Public Interest

In Chesterton Global Limited v Nurmohamed the Court of Appeal has held that the fact that something is in a worker’s private interest, does not prevent it from also being in the public interest.  However, the Court of Appeal was very clear that its decision had been heavily dependent on the facts and a different set of facts could result in a different judgment being given. Mr Nurmohamed was paid commission at work together with around 100 of his colleagues.  He believed that Chesterton Global Limited were exaggerating expenses in order to reduce their profits and thus reduce commission payments to him and his colleagues.  He was of the view that this was in the region of £2,000,000 – £3,000,000.  The Court in this particular case were able to say that the disclosure, although it was about commission structure affecting only a small group of salesman, was something that could be reasonably believed to be in the public interest.

Contact Us

If you require any further clarification in relation to the above developments, or if you need any further assistance then please do not hesitate to contact our team of specialist employment solicitors on 0161 832 3304.

This newsletter does not provide a full statement of the law and readers are advised to take legal advice before taking any action based on the information contained herein.

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