Working Relations December 2018

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HighlightsKey developmentsKey casesFuture developmentsRecent changesEvents


Highlights

Whilst the festivities of December might already seem like a distant memory, there were some key employment law developments in the run up to Christmas. The Government published its Good Work Plan, confirming the changes it proposes to make to employment law following the Taylor Review, as well as its response to the WEC Report on Sexual Harassment in the Workplace, setting out its proposals for tackling sexual harassment at work. There were also some interesting cases relating to privilege, restrictive covenants and investigating misconduct.

Key developments

The Good Work Plan

The government has published the Good Work Plan, which follows from the Taylor Review of how our flexible labour market operates (July 2017). Much of the document is focused on the gig economy - and rather than substantial reform, there is a list of moderate proposed changes. Key changes are highlighted below:

  • reducing thresholds of support from 10% to 2% of employees for a request to set up information and consultation arrangements
  • a right for those on flexible (often zero hours) contracts to request a more fixed, stable arrangement after 26 weeks’ service
  • extending the period that breaks continuity of service from one to four weeks.
  • increasing the reference period for calculating holiday pay from 12 to 52 weeks, and
  • specifically on “workers”:
    • for those engaged through an agency, repealing what became known as the Swedish derogation - whereby paying workers a low sum between assignments avoided the need to equalise pay (with equivalent employees)
    • measures to improve clarity on the employment status test
    • extending the right that employees have to receive a written statement of terms to workers
    • expanding the list of what goes in those statements of terms (for both employees and workers), and
    • there are currently still indications of intention to legislate to clarify employment status, but the Plan does not include any specific timeframes or draft legislation.

The Government has since laid the first related statutory instruments, with the first changes coming into effect in April 2019 but most expected in April 2020.

See our elexica article for more information.

Naming and shaming scheme for unpaid tribunal awards launched

BEIS has announced the introduction of a naming and shaming scheme for employers that fail to pay tribunal awards within a reasonable time, which also follows a recommendation made in the Taylor Review. The Government has published guidance on how the scheme will work. The names of employers together with details of the award will be published in quarterly press releases on the gov.uk website. The scheme will run alongside the existing tribunal penalty scheme.

New Practice Direction for EAT

The Employment Appeal Tribunal has issued Practice Direction (Employment Appeal Tribunal - Procedure) 2018. The new Practice Direction (PD) supersedes all previous EAT Practice Directions (the last of which was 2013). It sets out the procedure for dealing with appeals in the EAT (unless otherwise provided in the EAT Rules 1993). Most of the changes to the new PD are minor corrections, but the key changes to be aware of are:

  • the time for the Respondent to lodge its Answer has been extended from 14 to 28 days
  • all references to fees have been deleted
  • the PD sets out the procedure for leapfrog appeals to the Supreme Court, and
  • all skeleton arguments must be lodged 14 days before the hearing.
Government responds to WEC report on sexual harassment in the workplace

The Government has published its Response to the July 2018 Report of the Women & Equalities Select Committee (WEC) on Sexual Harassment in the Workplace. The response - here - comprises “a package of 12 announcements” aimed at tackling sexual harassment at work.

The key proposals are:

  • the confirmation that there will be a statutory code of practice on sexual harassment
  • the Government’s agreement that sexual harassment should be taken into account by regulators in assessing Fitness & Propriety (or equivalent), and
  • proposals for future consultation on Non-Disclosure Agreements, a potential positive statutory duty on employers to prevent harassment, and potential extension of Tribunal time limits for relevant claims to 6 months.

The Government is said to be “developing next steps on this package” - precise timing on most points remains to be confirmed.

See our elexica article for further information.

SMCR for insurers commenced

On 10 December 2018, the Senior Managers and Certification Regime (SMCR), which aims to make individuals in the financial services industry more accountable, came into force for insurers.

We have produced a SMCR solution software tool to help the insurance market comply with the SMCR regime and is available here.

Brexit: employment updates

December was another tumultuous month for Brexit developments. The ECJ ruled that the UK government had the right to unilaterally revoke its Article 50 notice to withdraw from the EU. The Prime Minister took the decision to delay the “Meaningful Vote” on her Withdrawal Agreement due to take place on 11 December 2018, which is now expected to take place in January 2019. In the meantime, the Government has ramped up its preparations for a no-deal Brexit.

In particular, the Government published a policy paper on the rights of EU citizens living in the UK in the event of a no-deal Brexit. It confirms that the UK would continue to run the EU Settlement Scheme but only for those resident in the UK before 29 March 2019, not 31 December 2020 (the end of the proposed implementation period). The Government has also published its White Paper on the UK’s future skills-based immigration system, which proposes to apply the same UK Immigration Rules to all migrants from 2021.

Further draft statutory instruments have been published making technical amendments to ensure that legislation operates effectively on exit day, including the Equality (Amendment and Revocation) (EU Exit) Regulations 2018 making amendments to the Equality Act 2010.

Key cases

Duty to investigate misconduct in open and impartial way

Philips v Pontcanna Pub Company - Employment Tribunal

The Tribunal has held that an employee was constructively unfairly dismissed after her employer failed to investigate her complaint of assault in an open and impartial way. The Claimant worked as the General Manager of a bar where the workplace culture was “young and informal”. At the work Christmas party, where staff were provided with a tab for drinks and most were intoxicated, the Claimant’s colleague assaulted her by putting his arm around her neck in a headlock causing her to collapse. This was captured on CCTV. She subsequently suffered facial paralysis, and later PTSD and anxiety.

The Tribunal found that there was an inextricable link between the incident at the Christmas party and the workplace, even though it happened off duty. Despite the Claimant raising the allegation numerous times both informally and formally with the Company directors, they failed to conduct any proper investigation. When the Claimant raised a grievance, the person appointed to deal with it failed to resolve any of the disputes of fact, chose not to view the CCTV evidence, gave her decision at the hearing without proper reasons - and generally failed to show herself as working outside the influence of the Company directors. As a result, the Tribunal held that the Claimant was justified in resigning prior to any appeal hearing.

Court of Appeal confirms that Uber drivers are workers

Uber BV & ors v Aslam & ors - Court of Appeal

The Court of Appeal has upheld the decision of an employment tribunal that Uber drivers are “workers” under the Employment Rights Act 1996, the National Minimum Wage Act 1998 and the Working Time Regulations 1998. As set out in its written contracts, Uber contended that it only acts as an intermediary between passengers who engage with the drivers directly as independent contractors. However, the majority of the Court of Appeal held that it was unrealistic to regard Uber as working for the drivers, and it was actually the other way around. Drivers were deemed to be working at any time when they were in their territory, had the app switched on and were ready to accept jobs. Uber has been granted permission to appeal to the Supreme Court.

Discrimination arising from disability: advantageous treatment was not unfavourable

Williams v The Trustees of Swansea University Pension & Assurance Scheme & anor - Supreme Court

In this case, the Supreme Court considered the meaning of “unfavourable treatment” for the purposes of discrimination arising from disability under section 15 of the Equality Act 2010.

It was considered in the context of an employee who took ill-health retirement at age 38 due to disability and therefore became entitled to an enhanced pension. The pension was based on his part-time salary in the period leading up to his retirement, after his hours were reduced by way of reasonable adjustment. The Claimant argued that it should have been based on his previous full-time salary. The Court held that the relevant treatment was the award of an enhanced pension and that there was nothing intrinsically unfavourable about that, so his claim failed.

Non-compete clause in shareholders' agreement preserved despite settlement agreement

Ideal Standard International SA & anor v Herbert - Commercial Court

Mr Herbert was a senior executive for Ideal Standard. His employment contract (governed by Belgian law) did not contain any restrictive covenants, but he entered into a Shareholders Agreement with the five group companies that owned the Group’s operating companies (governed by English law). In that agreement, Mr Herbert was subject to an 18 month non-compete after termination of employment. Any waiver had to be in writing and signed by the parties, and the agreement also provided for arbitration. Following his dismissal, Mr Herbert signed a settlement agreement, which stated that the parties would have no further obligations to each other, save as set out in that agreement.

Mr Herbert then began working for a competitor and Ideal Standard sought an interim injunction to prevent him from doing so. The Court granted the injunction. It was held that the settlement agreement did not discharge the non-compete clause. There was nothing in writing under the settlement agreement to make it clear that parties had waived their rights under the Shareholders Agreement. Further, the 18-month restriction was not held to be unreasonable, despite the lack of carve-out for minor shareholdings. The court also confirmed that there was no strict difference of approach between cases involving employment contracts and other agreements.

Collective consultation: each ship of an international fleet was separate establishment

Seahorse Maritime Limited v Nautilus International - Court of Appeal

The Court of Appeal has held that the ships of an international fleet each constituted a single "establishment" for the purposes of the collective redundancy consultation provisions.

Following a redundancy exercise affecting crews based on the ships, the trade union Nautilus sought a protective award for a failure to consult collectively under s188 TULRCA 1992. The Court of Appeal held that each ship was an establishment, with assigned crews, although noted that such decisions will depend on the specific facts. Further, it held that it had no jurisdiction to hear the claims since the establishments were located abroad and there wasn’t “sufficient connection” between the establishment (i.e. the ship) and Great Britain, so the claims were dismissed.

No litigation privilege over internal emails discussing commercial settlement of dispute

WH Holding Ltd & anor v E20 Stadium LLP - Court of Appeal

The Court of Appeal has allowed an appeal in a dispute about six emails over which the Respondent (E20) had asserted litigation privilege, and has ordered their disclosure. The emails between the company’s board members were prepared to discuss a commercial proposal for settlement of a dispute. E20 claimed that the emails were created with the dominant purpose of discussing a commercial settlement when litigation was in reasonable prospect. In the first instance, the Court held that the emails were protected by litigation privilege, relying on the recent case of Director of the SFO v ENRC.

However, on appeal, the Court of Appeal held that there was no justification for extending the scope of litigation privilege to purely commercial discussions. To fall within litigation privilege, a communication must be prepared for the dominant purpose of obtaining advice or evidence in relation to the conduct of litigation, not for the dominant purpose of conducting litigation in a broader sense. It held that it was an error to determine that the ENRC case extended the scope of litigation privilege beyond advice or evidence, although it confirmed that obtaining advice or evidence to avoid or settle litigation was included. 

For a detailed analysis, see Colin Passmore’s blogpost Litigation privilege post-ENRC: part 2 in our blog Passmore on Privilege.

Future developments

  • Anticipated key changes to employment law in England and Wales are available here

Recent changes

  • An overview of the recent changes to Employment law in England and Wales is available here

Events

  • All other training materials relating to Employment, Pensions and Incentives across the European Union are available here