Employment Law Newsletter – April 2016

Welcome to our April 2016 Employment Law newsletter, keeping you up to date with changes in employment law and informing you of recent case law developments.

CASE LAW DEVELOPMENTS

Raising concerns with an employee on sick leave

In Private Medicine Intermediaries Ltd v Hodkinson the EAT considered whether writing to an employee while she was on sick leave for work-related stress, to raise concerns regarding her employment, amounted to constructive dismissal and/or disability related harassment.

In this case the EAT upheld the tribunal’s decision that where the concerns were not serious or urgent, the employer was in repudiatory breach of the implied term of mutual trust and confidence, and the employee had been constructively dismissed.

However, the EAT did not agree with the tribunal’s decision that the letter amounted to an act of disability-related harassment. The tribunal had not established facts to show that the conduct related to the employee’s disability, or that it had the purpose or effect of creating an intimidating, hostile, degrading, humiliating or offensive environment for her.

Employers should take great care in their communications with employees who are on sick leave, especially if their condition could be exacerbated by any issues or performance concerns raised. There will be cases where an employer cannot wait and needs to raise issues with an employee before their return, but you should proceed with caution and take advice before doing so to avoid the risk of a claim.

When is an Employer Vicariously Liable for the Actions of its Employees?

In Mohamud v WM Morrison Supermarkets plc the Supreme Court considered whether a supermarket should be held vicariously liable for an employee’s unprovoked violent assault on a customer.

The employee, Mr Khan, worked in one of their petrol kiosks. He was verbally abusive to a customer and then pursued him out of the kiosk where he punched and kicked him to the ground. Despite the unprovoked and violent nature of his acts, and the fact that his role did not involve a clear possibility of confrontation or violence, the Supreme Court found that there was a sufficiently close connection between the assault and the employee’s job of attending to customers, such that the employer should be held vicariously liable for the victim’s personal injury claim.

In Cox v Ministry of Justice the Supreme Court considered whether the Ministry of Justice was vicariously liable for the negligence of a prisoner who, while working in the prison kitchens, had dropped a sack of rice causing injury to an employee of the prison.

The Ministry of Justice argued that compulsory prison work did not give rise to a relationship akin to employment and that they should not be liable. In a unanimous decision, and following previous authorities in this area, the Court demonstrated that vicarious liability can extend beyond the traditional employment relationship.  In principle a relationship is capable of giving rise to vicarious liability where an individual carries on activities for the defendant’s benefit as an integral part of its business, and where the defendant, in assigning those activities to the individual, has created a risk of the tort being committed.

These cases highlight that employers can be held liable for the actions of individuals working for them even in cases where those actions are unauthorised or out of their control. Although this is not good news for employers, having a strong focus on training, with clear rules on acceptable conduct in the workplace will place you in a better position to defend claims such as this.

Childcare vouchers during maternity leave

In Peninsula Business Services Ltd v Donaldson the EAT considered whether childcare vouchers provided under a salary sacrifice scheme are part of the employee’s “remuneration”,  and therefore do not have to be provided during maternity leave.

The EAT held that they were remuneration and accordingly, it is not an unlawful detriment, nor discriminatory, for the employer to cease to provide them during a period of maternity leave, as the obligation to maintain terms and conditions during maternity leave does not extend to remuneration. However, where the vouchers are provided on top of salary, without a salary sacrifice, they are not part of the employee’s remuneration and must therefore be continued. For more information see our recent blog on this case.

The EAT expressed its conclusion somewhat tentatively, acknowledging that the issue was not clear-cut so please wait or take further advice before changing your maternity policies or practices.

Is a Refusal to Extend PHI Cover Beyond 60 Age Discrimination?

In Smith v Gartner UK Ltd the EAT considered whether an employer acted discriminatorily in ending payments under a PHI scheme when the employee reached 60 in accordance with the terms of the PHI policy.

The EAT upheld the employment tribunal’s decision to strike out the claims for unlawful deductions from wages and direct age discrimination. The EAT held the tribunal was correct to find that the contractual documentation only required the employer to provide a PHI scheme and not to make further payments to the employee if payments were not made by the insurer. The decision to not cover the employee beyond age 60 was the insurer’s, not the employer’s, and there was therefore no direct age discrimination by the employer.

Knowledge of Disability

In Gallop v Newport City Council the EAT considered whether the fact that the employee could show the employer’s Occupational Health department knew of his disability was sufficient to demonstrate that his employer had the requisite knowledge.

During his employment Mr Gallop complained of work-related stress and over the course of a few years was signed off sick. He was referred to his employer’s occupational health advisors on a number of occasions who said that he was suffering from a stress-related illness but did not consider that he had a “depressive illness” or that he was disabled. After a return to work Mr Gallop was suspended and dismissed following bullying allegations.

Mr Gallop succeeded with his unfair dismissal claim but the tribunal originally dismissed his discrimination claims on the basis that his employer did not know of his disability. The Court of Appeal overturned this decision saying that the Council had been wrong to blindly accept OH’s opinion without asking further questions or applying its own mind to the test of disability.

On remittal the tribunal again dismissed the discrimination claims and on appeal the EAT upheld the tribunal’s decision. They said that the dismissal was not direct disability discrimination as the decision-maker did not know that he was disabled. The knowledge of the employer’s Occupational Health department in relation to the employee’s disability could not be imputed to the decision-maker in the disciplinary process. It maintained that the tribunal should focus on the thought processes and motivation of the decision-maker. Knowledge of disability could not be implied to the decision-maker; the tribunal must determine whether they personally knew of, and were influenced by, the disability.

Although this gives comfort to employers in relying on the opinions of their Occupational Health departments there is still some doubt here as to what amounts to clear knowledge. Employers should not take their opinions as gospel and should proceed with caution taking further advice or getting second opinions where disability could be relevant.

LEGISLATIVE DEVELOPMENTS

Increase in Tribunal Compensation Limits

Tribunal compensation limits will increase on 6 April 2016.

The maximum compensatory award for unfair dismissal will rise from £78,335 to £78,962. The maximum amount of a week’s pay, used to calculate statutory redundancy payments and various awards including the basic and additional awards for unfair dismissal, also rises from £475 to £479.

New Financial Penalty Scheme for Unpaid Tribunal Awards

As from 6th April 2016 there will be a new scheme for penalising employers who fail to pay tribunal awards or settlement sums under a COT3.

If an employer fails to pay after a warning notice they will be issued with a penalty notice which will require them to pay a penalty of up to 50% of the original award, subject to a cap of £5,000. Critics of the scheme are sceptical as to whether this will make any real difference as the level of the fine may simply lead to offenders settling the penalty but leaving the original award unpaid.

National Living Wage

On 1 April 2016, the new National Living Wage will come into force applying to workers aged 25 and over at a rate of £7.20 an hour. The other rates of National Minimum Wage are due to increase on 1st October 2016.

Gender Pay Gap

The Women and Equalities Select Committee has published a report on the gender pay gap. The report identifies the causes of the gender pay gap and makes a number of recommendations for employers and the government.

These recommendations include:

  • A new right for fathers to three months of paid non-transferrable paternal leave.
  • All jobs should be made available on a flexible basis, by default.
  • A new right for employees to take six weeks carers’ leave to deal with short-term care issues.

The report also makes recommendations regarding the draft Equality Act 2010 (Gender Pay Gap Information) Regulations 2016, including that gender pay gap data be broken down by age and part-time status. With the Gender Pay Gap Regulations on the horizon this is a hot topic and it will be interesting to see whether further regulations along the lines of the recommendations will follow. Watch this space…

New Guidance on Avoiding Unlawful Discrimination in Advertisements

The Equality and Human Rights Commission has published guidance for advertisers and publishers on lawful advertising after receiving over 100 complaints that advertisements were discriminatory.

Examples included discrimination on the grounds of age (a recruitment agency stated that over 45s need not apply), disability (a hotel said that it would not offer accommodation to disabled people), sex, ethnicity and sexual orientation. The guidance supplies examples of what is and is not lawful advertising under the Act, and provides a checklist for good practice in advertising. The guidance reminds readers that liability under the Act can arise not just for the organisation placing a discriminatory advertisement, but also for those who produce or display the advertisement, whether in print or online form.

If you are involved in placing recruitment adverts it would be worthwhile considering this guidance in more detail.

Enforcement Action for Failure to Pay Minimum Wage

The owner of a nursery in Manchester has been disqualified from being a director of a limited company for six years for failing to pay 12 members of staff the minimum wage at her nursery.

The wage underpayments reached a total of £11,789, and the company was issued with a £5,000 penalty, the maximum fine at the time, which remained outstanding at the date of liquidation.

On 5 February 2016, BIS published a list of more than 90 companies who have failed to pay workers the national minimum wage as part of their plan to name and shame offenders.

With this current crack-down on offenders it is vital that all employers ensure that they are compliant.

Contact Us

If you need any further assistance on any employment matter 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 specific legal advice before taking any action based on the information contained therein.

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