Working Relations April 2018

Highlights

  • Sexual harassment in the workplace remains firmly in the spotlight, as the EHRC makes recommendations to Government to tighten the law and restrict the use of non-disclosure agreements.
  • Employers with over 250 employees have been publishing their gender pay gap data in view of the 04 April 2018 deadline. The EHRC has published its policy on enforcing the regulations and there has been a widespread focus on initiatives to address gender imbalance.
  • The Government published its response to the Taylor Review of Modern Working Practices and launched four consultations to consider the proposals to be taken forward. 
     

Action points

  • Employers should revisit confidentiality clauses in settlement agreements, and ensure there are no provisions precluding employees from making disclosures which are protected or reportable to regulators or law enforcement agencies.
  • Settlement agreements may also be amended to refer specifically to payment for “post-employment notice pay” where payments are made in respect of notice period and there is no PILON clause in the employment contract .

Key dates to remember

01 April National minimum wage and statutory maternity, adoption, paternity and shared parental pay to increase.
04 April Deadline for employers with over 250 or more employees to report their gender pay gap data.
06 April New rules on taxation of termination payments to apply.
06 April Compensation limits to increase. Further details available
25 May EU data protection package comes into force and will apply in all Member States. Conference call available here
June/July  European Trade Secrets Directive must be brought into force in Member States.  
Summer 2018  Final rules re Extension of Senior Managers & Certification Regime expected to be published in Policy Statement. Our microsite on the new regime is available here
  Other future developments elexica summary available

Training

Webinars

Upcoming events

Upcoming calls and seminars which might be of interest include:

Details of webinars, conferences and telephone conference calls covering developments in employment law are available here.

General developments

Publications
Transforming culture in Financial Services

On 12 March 2018, the FCA published a discussion paper on “Transforming Culture in Financial Services”, intended to provide a basis for stimulating further debate on transforming culture within the sector. The following week, Chief Executive of the FCA, Andrew Bailey emphasised in a speech at the FCA conference that firm culture continues to be an important priority for the FCA, and that the objective is to pre-empt misconduct rather than to clear up the mess when it happens. Mr Bailey referenced the extension of the Senior Managers and Certification Regime (SMCR) and the importance of effective management to drive good culture. Please see here for further information.

We have developed an SMCR Extension Toolkit in response to client demand for cost-effective, practical and user-friendly templates and guidance on how to comply with the extension of the SMCR to all FCA regulated firms. Further information on our toolkit is available here.

The EHRC makes new recommendations on sexual harassment and NDAs

In a new report Turning the tables: Ending sexual harassment at work, the EHRC has recommended that the government make changes to the law in order to end sexual harassment at work. The recommendations include reintroducing statutory questionnaires, interim relief protection (preserving employment) and banning non-disclosure agreements (NDAs).

Specifically, the report recommends that legislation is introduced to render void contractual clauses prohibiting disclosure of future acts of harassment - it is not suggesting that all NDAs preventing disclosure of past harassment are void. The report also sets out a number of sensible provisions for good practice in relation to confidentiality clauses in settlement agreements - although more controversially that confidentiality clauses should only be used at the employees' request, save in "exceptional circumstances".

SRA issues warning notice on use of non-disclosure agreements

The Solicitors Regulation Authority (SRA) has also issued a warning notice on 12 March 2018, containing guidance reminding practitioners not to use non-disclosure agreements inappropriately, for example, agreements that give the impression that protected disclosures are prohibited.

Enforcing gender pay gap reporting: closing the gap

In March, the Equality and Human Rights Commission (EHRC) published its policy “Closing the Gap: Enforcing the Gender Pay Gap Regulations”, setting out what it will do to encourage employers to meet the gender pay gap regulations and its approach to enforcing them. The policy confirms that the first port of call will be to seek informal resolution with employers in breach. If this proves unsuccessful, the EHRC will use their wider enforcement powers to seek a formal written agreement, or if necessary, issue an unlawful act notice which can be enforced through a court order and could lead to an unlimited civil court fine at level 5.

Further information is available on our microsite here.

Fawcett Society proposals to improve sex discrimination protection and gender equality

The Fawcett society has published a “Sex Discrimination Law Review”, which examines whether sex discrimination law in the UK is “fit for purpose” and makes numerous recommendations. The full review can be found here.

Government commits to signing Tech Talent Charter to boost gender diversity in tech roles

The government has announced that it will sign up to the Tech Talent Charter, an initiative which aims to tackle gender imbalance in the technology sector. The Charter commits signatories to include women on interview shortlists wherever possible and to collect and submit anonymised data for an annual diversity report.

Employment Tribunal update

Since the abolition of tribunal fees in July 2017, there has been a 90% increase in claims, according to the employment tribunal statistics published by the Ministry of Justice in March 2018 for the period from October to December 2017 compared to the same quarter in 2016. Similarly, ACAS has published statistics that show that early conciliation notifications are up by 500 per week since the fees ruling. We are also seeing significant delays to ET listings, which in some cases have been up to 18 months.

Annual increases in compensation rates and limits

From April 2018, the following rates and limits will increase:

  • national living wage to £7.83 per hour
  • compensatory award for unfair dismissal to £83,682
  • amount of a week’s pay (used to calculate statutory redundancy payments) to £508
  • statutory maternity, paternity, adoption and shared parental pay to £145.18 a week, and
  • statutory sick pay to £92.05.

Further information is available here.

Presidents of the Employment Tribunals issue new guidance on uprated Vento bands

New guidance will apply in respect of Vento bands (for awards for injury to feelings in discrimination cases) for claims presented on or after 06 April 2018: a lower band of £900 to £8,600; a middle band of £8,600 to £25,700; and an upper band of £25,700 to £42,900, with the most exceptional cases capable of exceeding £42,900.

Increase in mandatory pension contributions from 06 April 2016

From 06 April 2018, UK employers are required to increase their minimum pension contributions for qualifying workers in defined contribution pension schemes. These minimum employer contributions increase again from 06 April 2019. Further information is available here.

Government launches consultation on parental bereavement leave

The Government has launched a new consultation seeking views on parental bereavement leave and pay, which focuses on the definition of a bereaved parent, how and when to take the leave, and notice and evidence requirements. The consultation will close on 08 June 2018.

Statutory developments

New Termination Payment Rules

Changes to the tax treatment of termination payments will apply where termination occurs on or after 06 April 2018, most notably that all payments in lieu of notice (PILONS) (contractual or non-contractual) will be subject to tax and NICs as earnings. All other post-employment payments which would have been treated as general earnings if the employee had worked their notice period will also be subject to tax and NICs. Settlement agreements may be amended to specifically refer to “post-employment notice pay” where payment is being made in respect of notice period and there is no “payment in lieu of notice” clause in the contract of employment.

The exemption for income tax and employer NICs for termination payments up to the current threshold of £30,000 will be retained, but all termination payments above £30,000 will be subject to employer NICs with effect from 06 April 2019.

Government response to Taylor Review of Modern Working Practices

On 07 February 2018, the Government published its response to the Taylor Review of Modern Working Practices, confirming which aspects will be taken forward. The government's proposals are extensive, and it is clear from the proposals that changes will follow, including day-one rights for vulnerable workers, the right to request a “more stable” contract (direct employment for agency workers and fixed hours for others whose hours might vary), the right to return to work after long term sick leave, setting out the key principles for determining employment status in legislation, extending the period in which continuity of service is preserved to one month, and stronger enforcement measures. The proposals around transparency, if taken forward, would require workers to be issued with statements setting out their terms and wage/payslips.

The Government has launched four separate consultations to consider the proposals in more detail, which cover the enforcement of employment rights, agency workers, measures to increase transparency in the UK labour market and employment status. The consultations will close in early summer 2018.

Further information is available here.

Amendments to payslip regulations

Following the Government’s commitment in its response the Taylor review, the Employment Rights Act 1996 (Itemised Pay Statement) (Amendment) Order 2018 will require employers to itemise payslips to show the number of hours paid for, where a worker is paid on an hourly rate basis.

European Commission issues guidance on forthcoming GDPR and new online tool for SMEs

In January 2018, the European Commission published guidance to help facilitate a direct and smooth application of the new data protection rules across the EU as of 25 May. The commission also launched a new online tool dedicated to SMEs.

Recent cases

Person subjecting whistle-blower to detriment must be personally motivated by protected disclosure

Malik v Cenkos Securities Plc - Employment Appeal Tribunal

Malik was employed by Cenkos, a regulated independent securities firm, as a Senior Research Analyst. Issues were raised regarding the Claimant’s conduct and he also made a number of disclosures (some of which were held to be protected). As a result, the Head of Compliance instigated a disciplinary investigation and Malik was suspended. He subsequently resigned and issued proceedings in the tribunal, alleging that there was a conspiracy to get rid of him.

It was alleged that the tribunal had failed to consider whether his claim for whistleblowing detriment involved a “chain of command”. Malik also relied upon exceptions raised in the recent case of Royal Mail v Jhuti [2017] that in some circumstances it might be appropriate to attribute another person’s knowledge to the decision-maker. However, the EAT dismissed the appeal and confirmed that for a whistleblowing claim to succeed, the person who subjects the whistleblower to a detriment must have personal knowledge of and be motivated by the protected disclosure(s). This is a further reason for firms to ensure that they have systems in place to keep details of whistleblowers, and the issues which they raise confidential, where possible.

Territorial jurisdiction: whistleblower could bring detriment claim against overseas colleagues as well as employer

Bamieh v EULEX (Kosovo) & ors - Employment Appeal Tribunal

The EAT has held that an employment tribunal had territorial jurisdiction to hear whistleblowing claims brought by an employee of the Foreign and Commonwealth Office against two FCO colleagues in relation to detriments alleged to have been committed while all three were on secondment in Kosovo. The EAT held that the test in Lawson v Serco, which is used to determine whether an overseas employee can sue their employer in a British employment tribunal, also applies to claims for whistleblowing detriment against co-workers.

Perceived disability discrimination claim upheld

Chief Constable of Norfolk v Coffey - Employment Appeal Tribunal

Mrs Coffey was a police constable in Wiltshire. She suffered from hearing loss which placed her outside national standards for the police, but she had passed a practical functionality test enabling her to work as a constable. Mrs Coffey applied to transfer to the Norfolk Constabulary. She underwent a hearing test, which recorded the same level of hearing loss, but her application was rejected on the basis that her hearing did not meet the national standards. No practical functionality test was carried out.

The tribunal held that the Acting Chief Inspector for Norfolk perceived that Mrs Coffey had an actual or a potential disability which could lead to the Norfolk Constabulary having to make adjustments to her role, either now or in the future, which amounted to direct discrimination. The EAT agreed with the tribunal, stating that whether the putative discriminator perceives a person to be disabled depends on whether they perceived that person to have an impairment with the features set out in the EqA 2010, which comprise progressive conditions. This is the first case to directly address perceived disability discrimination under the Equality Act 2010.

Expectation to work long hours held to be PCP

United First Partners Research v Carreras - Court of Appeal

Mr Carreras was employed as an analyst for United First Partners Research, a brokerage firm. He regularly worked long hours until he had a cycling accident and suffered physical symptoms amounting to a disability under the Equality Act 2010. After that, he finished work earlier, around 6.30 - 7.00pm, but felt under pressure to work longer hours. Following a dispute about his hours, Mr Carreras resigned and brought claims for unfair constructive dismissal and failure to make reasonable adjustments, relying on the provision, criterion or practice (PCP) that his employer required him to work late.

The tribunal held that he was “expected” to work late but that there was no “requirement” for him to do so. However, the Court of Appeal agreed with the EAT that the tribunal had adopted too narrow an approach to its interpretation of the term "required". Mr Carreras felt under pressure to work late because of an expectation and assumption that he would and "required" could encompass this. An expectation to work long hours could therefore amount to a PCP. The concept of a PCP may be interpreted widely, so employers need to be conscious of workplace cultures in which employees feel pressured to work in a particular way.

Age discrimination in share schemes

Air Products Plc v Cockram - Court of Appeal

This case considered an age discrimination claim relating to a retirement provision in the rules of an LTIP. Under the rules, employees retiring on or after age 55 were permitted to exercise options but employees retiring before 55 lost any unvested options. The Court of Appeal agreed with the tribunal that this rule pursued a legitimate aim of incentivising retention up to the age of 55 and disincentivising it thereafter. The tribunal had been entitled to find that the employer’s aim was a legitimate social policy of intergenerational fairness.

No service provision change where services fragmented

London Care Ltd v Henry & ors; Carewatch Care Services Ltd v Henry & ors - EAT

Ms Henry was a carer employed by Sevacare. Sevacare provided carers to individuals at home under a contract with Haringey Council. Sevacare terminated its contract, and the services in Haringey were transferred to several new care providers. Care packages were allocated to the new providers based on postcodes and the new providers’ capacity.

The tribunal held that there was a service provision change under the TUPE regulations. However, the EAT overturned the decision and remitted the claim to a different tribunal. The EAT found that the tribunal had failed to identify the nature of the relevant activities and concluded that the activities were fundamentally the same post-transfer before considering the effect of fragmentation.

Court's power to make orders where misappropriation of confidential information

Corbiere Ltd & ors v Xu and Secretary of State for the Home Department (Intervener) - High Court

In this case arising out of the misappropriation of confidential information by a former employee, the Court ordered the employee to disclose the location of the confidential information that he had copied, and the names of third parties who had it in their possession. He was also ordered not to leave the jurisdiction, and to surrender his passport until he had complied with the disclosure order. This case demonstrates the court's powers to make ancillary orders in this type of case, although it will be crucial to carefully balance the applicant’s interests against the risk of harm to the respondent.

Waiver of litigation privilege in investigatory report

FM Capital Partners Ltd v Marino & ors - High Court

The High Court has held that the defendant's disclosure of an investigatory report commissioned by the claimant, which had been provided to the defendant in connection with disciplinary proceedings, constituted a waiver of privilege in that document against the other defendants who were named in the civil action. The case re-emphasises the importance of taking care in how employers use privileged documents, such as regulatory investigation reports, in the context of a disciplinary process.

Jurisdiction agreement not binding where pre-dates employment dispute

Yukos International UK BV and others v Merinson - Commercial

The parties had entered into a settlement agreement in 2015 after Merinson asserted that he had been unlawfully dismissed. The settlement agreement provided for certain payments to Merinson and mutual discharge of all existing and future claims in the context of their former legal relationship, and it was subject to Dutch law and jurisdiction. In May 2017, while Merinson was domiciled in the UK, Yukos issued proceedings in the English High Court, claiming for damages for alleged breaches of duty under his contract of employment, alleging that Merinson had taken backhanders from financial institutions.

Merinson challenged the jurisdiction of the English court. However, the High Court dismissed his challenge and held that the Dutch jurisdiction agreement did not override the provisions relating to employment contracts in the Recast Brussels Regulation in this case because the present dispute had not “arisen” at the date of the Dutch jurisdiction.

Covert surveillance at work held to breach Article 8 right to privacy

Lopez Ribalda & Ors v Spain - European Court of Human Rights (ECHR)

Lopez and four others worked as cashiers at a supermarket chain. Due to discrepancies in stock, the supermarket installed surveillance cameras aimed at possible customer and staff thefts. Those aimed at recording possible staff thefts were concealed. After the cameras were installed, five employees were caught stealing and were dismissed. The Spanish employment tribunal held that the video footage had been lawfully obtained.

However, the ECHR held that the Spanish courts had failed to strike a fair balance and that the covert surveillance was in breach of their right to privacy. The case can be distinguished from the similar supermarket theft case of Kopke v Germany where the surveillance was more targeted and time-limited. This reinforces the ICO guidance in the UK that it will be rare for covert monitoring of employees to be justified, other than in exceptional circumstances, for example as part of a specific investigation into suspected criminal activity and where there is no less intrusive way of tackling the issue.

Other cases

This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.