Round-up of UK employment law developments 2019/1 – Lexology

This e-bulletin includes short summaries of the following recent developments. Please contact us if you would like more information.

1. Government’s “Good Work Plan” proposes employment law reforms following the Taylor Review

2. Sexual harassment: Government confirms development of statutory code of practice and consultation on non-disclosure agreements

3. Pregnancy and maternity discrimination: proposals to extend redundancy protection

4. Gender pay gap reporting: guidance for employers as second deadline approaches

5. Equal pay claims: Court of Appeal confirms broad approach to permissible comparators and procedural requirements

6. Brexit: impact of deal or no-deal on employees and employers

7. Working time: ECJ cases raise doubts over the inclusion of regular voluntary overtime in holiday pay calculations and over record-keeping requirements

8. Disability discrimination: rulings on unfavourable treatment and PHI benefits

9. Round-up of other cases: worker status in the gig economy, territorial scope of collective redundancy rights, defamation can be a whistleblowing disclosure

10. New publications: guidance on April 2019 changes to payslips; revised code on preventing illegal working; framework for disability/wellbeing reporting; consultation on minimum wage rules; age discrimination guide; blog post on litigation privilege

1. Government’s “Good Work Plan” proposes employment law reforms following the Taylor Review

The Government has published its “vision for the future of the UK labour market”, the Good Work Plan, which builds on its earlier response to the Taylor Review (see our summary here).

The Government states that it has accepted the vast majority of the recommendations from the Taylor Review and proposes legislative changes “to ensure that workers can access fair and decent work, that both employers and workers have the clarity they need to understand their employment relationships, and that the enforcement system is fair and fit for purpose”. Regulations published subsequently provide timelines for a few of the proposals:

  • From April 2019, the maximum level of penalty that the Employment Tribunal can impose in instances of aggravating conduct by employers is to increase from £5,000 to £20,000.
  • From April 2020, the Government plans to:
    • extend to workers the right to be given a written statement of rights on the first day of work (rather than within two months) and to extend the information required for workers and employees (eg, to cover eligibility for sick leave and pay and details of other types of paid leave);
    • repeal the “Swedish Derogation” (which currently allows agency workers to be paid less than if they were directly hired provided they have a contract of employment with the agency and are paid between assignments);
    • require agency workers to be given key information including the type of contract and various pay details;
    • extend the holiday pay reference period from 12 to 52 weeks for those with variable remuneration;
    • reduce the threshold for employees to request the establishment of an information and consultation procedure (or ‘domestic works council’) from 10% to 2% of employees (subject to the minimum of 15 employees).
  • Other proposals (without a timeframe as yet) include to:
    • extend the time required to break a period of continuous service from one week to four weeks;
    • improve the clarity of employment status tests and align them as much as possible with the tax tests;
    • give all workers a right to request a more stable contract – i.e. a more fixed working pattern – after 26 weeks on a non-fixed pattern.

For further details see our blog post here.

2. Sexual harassment: Government confirms development of statutory code of practice and consultation on non-disclosure agreements

The Government has published its response to the Women and Equalities Select Committee report published in July last year (see our blog post here) on sexual harassment at work. It has noted the lack of data and research on this issue, as highlighted by the Committee, and therefore, for the most part, its response is to consult and collect more data in order to identify the most effective interventions. However, it has agreed with the Committee that a new statutory Code of Practice should be introduced, to be developed by the Equalities and Human Rights Commission, although no timeline has been given for this. The aim of the Code will be to make clear to employers what actions an employer must take to fulfil their legal responsibilities to take “all reasonable steps” to prevent harassment.

The Government also plans to consult on better regulation of non-disclosure agreements, including the Committee’s recommendation of a standard approved confidentiality clause and on enforcement measures. For further detail on the response, see our blog post here.

3. Pregnancy and maternity discrimination: proposals to extend redundancy protection

The Government has published a consultation until 5 April 2019 on proposals to extend the current period of protection for women on maternity leave during which they are given priority over any suitable alternative vacancies should their role be made redundant. (An employer’s failure to offer any such available vacancies renders the consequent redundancy dismissal automatically unfair.)

The main proposal is to extend this right of priority over vacancies to apply from the point at which the employee notifies her employer of her pregnancy in writing, through to six months after a new mother returns to work. The consultation seeks views on how this should work where an employee takes some other form of leave immediately after her maternity leave (such as annual leave or a career break) and also whether the protection should be extended to those returning from adoption leave, shared parental leave and longer periods of parental leave.

4. Gender pay gap reporting: guidance for employers as second deadline approaches

As the second deadline for reports approaches, the Equalities and Human Rights Commission has published a report urging employers to accompany their figures with narrative reports and action plans with concrete, time-bound target-driven activities to reduce the gap. The report highlights ideas for action and recommends employers to refer to the Government Equalities Office evidence-based guide on practical steps to close the gender pay gap (discussed in our blog post here).

The Government has also published its formal response to the House of Commons BEIS Committee’s report (see our blog post here) on gender pay gap reporting, clearly signalling that it is not planning any immediate changes to the regime and will await the statutory review scheduled for 5 years post-implementation.

5. Equal pay claims: Court of Appeal confirms broad approach to permissible comparators and procedural requirements

The Court of Appeal has given two rulings in the long-running equal value claim against Asda, in both cases ruling on preliminary points in favour of the store workers claiming equal pay with distribution depot workers. The claims will now proceed to determine whether the roles are of equal value and, if so, whether the employer has a ‘genuine material factor’ defence (ie, a reason for the pay difference which is not tainted by sex discrimination).

The Court has ruled that claimants can submit multiple claims on a single ET1 form provided their roles are similar (they need not be identical) and the claims are based on the same set of facts; however, it is not necessary for all the claimants on one form to have the same comparators. Men bringing ‘piggyback’ claims based on female claimants winning their claim are not ‘based on the same set of facts’ and so must be issued on a separate ET1 claim form. Where claims are wrongly issued on the same form, this is an irregularity which the tribunal has a discretion to waive. The ruling means that employers are unlikely to succeed in striking out a claim that has improperly grouped claimants together, with tribunals more likely to order that claims be re-issued and perhaps only considering strike-out if this order is ignored.

The second ruling established that claimants can compare themselves with a comparator working in a different establishment of the employer, provided the respective terms and conditions of the relevant categories of employees (ie, the claimant’s category and, separately, the comparator’s category) would not differ significantly depending on which establishment they worked at. It is irrelevant if, in reality, one category of job does not exist at the other establishment. Because depot workers would be on broadly common terms wherever they worked, and so would store workers, the test was satisfied. The judgment means that in the majority of cases claimants will be able to compare themselves with any employee of their employer, wherever they work; the exception will be where employment terms are site-specific perhaps because of collective bargaining relevant only to that site (such that a relevant employee doing the same job at different sites would be on different terms).

Given this ruling based on domestic law, it was not necessary to consider whether EU law (which permits comparison where the claimant’s and comparator’s terms are set by a ‘single source’, ie the same employer) could have direct effect and be relied on in equal value claims against private employers. The Court indicated that, had it been necessary to decide the point, it would have referred it to the European Court of Justice. (Asda Stores v Brierley)

6. Brexit: impact of deal or no-deal on employees and employers

December saw a flurry of publications providing a slightly clearer picture of the employment and migration consequences of a Brexit deal or no-deal. The text of the draft Withdrawal Agreement  setting out Theresa May’s proposed arrangements for the UK’s withdrawal from the EU on 29 March 2019 and the draft Political Declaration on the future relationship between the EU and the UK were published (and then rejected by the House of Commons); the European Commission published a Q&A on citizens’ rights under the Withdrawal Agreement and a proposed Regulation on visa-free travel; and the UK Government published a policy paper on citizens’ rights in a no-deal scenario and its much-delayed Immigration White Paper. Our blog post here sets out what this means for employers.

There were two further developments in January: the Government announced that it is scrapping the £65 fee for eligible EU citizens to apply for settled status, and it has also published further guidance  for EEA and Swiss citizens arriving in the UK after 29 March 2019 in the event of a “no deal” Brexit, confirming that those who wish to remain for longer than 3 months will need to apply for European Temporary Leave to Remain which will be valid for 3 years only. See our Brexit Legal Guide section on migration  for further information.

7. Working Time: ECJ cases raise doubts over the inclusion of regular voluntary overtime in holiday pay calculations and over record-keeping requirements

Comments made in an ECJ judgment on a German working time case have raised doubts as to the correctness of the UK Employment Appeal Tribunal’s rulings that pay during the 4 weeks EU-derived statutory holiday must include an amount for voluntary overtime (if sufficiently regular and paid over a sufficient period). In Hein v Albert Holzkamm, the ECJ noted that remuneration for overtime of an “exceptional and unforeseeable nature” need not be included when calculating holiday pay, but that overtime pay should be included where a worker’s contract obliges them to work overtime “on a broadly regular and predictable basis and the corresponding pay constitutes a significant element of the total remuneration”. Domestic legislation does not need to be interpreted as giving the right that pay received for overtime work be taken into account unless these conditions are satisfied.

However, tribunals will continue to be bound by the EAT rulings pending this issue being revisited at appellate level. The Court of Appeal may have the opportunity to do so in the forthcoming appeal in the case of Flowers v East of England Ambulance Trust scheduled for May 2019.

A Court of Appeal ruling following the ECJ’s apparent approach on holiday pay would be welcome to employers. In contrast, an ECJ ruling following the recent Advocate-General opinion in CCOO v Deutsche Bank could prove a significant headache for employers. Advocate-General Pitruzzella has given the opinion that, under the EU Charter of Fundamental Rights and the EU Working Time Directive, employers are required to set up a system for recording the number of hours worked by individual workers each day in order to ensure compliance with Directive obligations, such as maximum working day and week, rest breaks, daily and weekly rest periods etc. UK regulations only require ‘adequate records’ to show whether the weekly working time limits (save for those who have opted out) and the night work limits are being complied with. An ECJ decision agreeing with the Advocate General would lead to the conclusion that the UK Regulations do not properly implement the Directive.

8. Disability discrimination: rulings on unfavourable treatment and PHI benefits

  • The Supreme Court has upheld a Court of Appeal decision that treatment of a disabled employee which is advantageous (permitting ill health early retirement) cannot be viewed as unlawful ‘unfavourable treatment’ due to disability simply because it could have been more advantageous. In this case the pension was based on the part-time hours the employee had changed to pre-retirement, as a reasonable adjustment for his disability, rather than full-time hours. However, had he been able to work full-time, he would not have been entitled to retire early at all. (Williams v The Trustees of Swansea University Pension & Assurance Scheme)
     
  • The case of Awan v ICTS UK serves as a reminder to employers providing PHI benefits to ensure the obligation to pay out is subject to the terms of the insurance policy and conditional on the insurer paying out under the policy. There were no such provisions in the contract in this case and therefore the new employer following a TUPE transfer was liable to continue the payments where the transferor’s insurer refused to do so (and unfortunately the new employer had not obtained warranties or indemnities from the transferor to cover this). 
    The employer’s consequent decision to dismiss was in breach of contract: applying previous case law, the EAT implied a term that the express right to terminate on notice could not be exercised on grounds of incapacity where it would frustrate an existing entitlement to PHI payments. The case was remitted to determine whether dismissal was also unfair and disability discrimination. Employers may wish to include an express clause in their employment contracts permitting dismissal for incapacity notwithstanding the effect on PHI benefits, although this somewhat destroys the purpose of the benefit and its efficacy has not yet been tested in the courts.

9. Round-up of other cases: worker status in the gig economy, territorial scope of collective redundancy rights, defamation can be a whistleblowing disclosure

  • The Court of Appeal has upheld the EAT’s ruling in Uber BV v Aslam that Uber drivers were workers on the basis that the written documentation seeking to establish them as independent contractors did not reflect reality; the drivers were held to be working while they had the Uber app switched on and were within their territory and ready and willing to accept trips. However, Underhill LJ gave a strong dissenting judgment that, in his view, the documentation was consistent with how the parties worked in practice and the fact that it was one-sided due to the unequal bargaining strength of the parties could not justify setting it aside. He also considered that the drivers should only be treated as workers (if at all) from the moment they accept a particular trip. Uber has appealed to the Supreme Court.
     
  • The High Court has ruled that the right to collective bargaining under the Trade Union and Labour Relations (Consolidation) Act 1992 only applies to ‘workers’.  The European Convention of Human Rights Article 11 right to collective bargaining was similarly restricted to those in an employment relationship and therefore could not be used to extend domestic collective bargaining rights to Deliveroo riders held not to be ‘workers’ (due to the lack of an obligation of personal service). The IWGB union has stated that it intends to appeal. (R (on the application of the Independent Workers Union of Great Britain) v Central Arbitration Committee)
     
  • The Court of Appeal has ruled on the territorial scope of the duty to inform and consult on collective redundancies at an establishment. The duty applies where the relevant establishment has a sufficiently close connection with Great Britain, and not simply where the employees have sufficient connection. In this case the Court considered that the ships of a fleet operating mostly outside UK territorial waters were each a single establishment (such that the duty would apply only if 20 redundancies were proposed on one ship) and the fact that some administrative functions were performed in Surrey was insufficient connection for the duty to apply. (Seahorse Maritime Limited v Nautilus International)
     
  • The EAT in Ibrahim v HCA International has confirmed that an employee’s disclosure complaining of false rumours circulating about him was an allegation of failure to comply with a legal obligation (ie, defamation). It was therefore capable of amounting to a qualifying disclosure for the purposes of whistleblowing protection, notwithstanding the employee’s failure to use precise legal terminology, given the substance of his complaint was clear. However, on the facts the claim failed as the employee did not have a subjective belief that his disclosure was in the public interest.

10. New publications

  • The rules regarding payslips are due to change on 6 April 2019. Itemised payslips will have to be given to ‘workers’ as well as employees, and include hours details for the hourly paid. BEIS has published guidance here.
     
  • The Home Office has published a revised Code of Practice on preventing illegal working, which reflects the ability for employers to check certain employees’ right to work records solely by online check from 28 January 2019 (see here).
     
  • The Government has published a framework for large employers to report voluntarily on disability, mental health and wellbeing in their workplace. It suggests that employers publish a narrative explaining their activities in relation to the recruitment and retention of disabled people and to support health and wellbeing. Where possible it also recommends that employers report the percentage of individuals who consider themselves to be disabled or have a long term physical or mental health condition and the output of staff surveys measuring wellbeing. 
     
  • The Government has published a consultation until 1 March 2019 on possible minor amendments to national minimum wage legislation in relation to salaried hours work and salary sacrifice (see here).
     
  • Acas has published a guide highlighting key areas where age discrimination may happen.
     
  • The HSF litigation blog discusses a recent Court of Appeal ruling that litigation privilege applies only to documents created for the dominant purpose of obtaining advice or information/evidence in relation to litigation, and not the conduct of litigation more broadly. As a result, the privilege did not apply to emails between a company’s board members which had been prepared to discuss a commercial proposal for the settlement of a dispute.

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