Working Relations March 2019

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HighlightsKey developmentsKey casesFuture developmentsRecent changesEvents


Highlights

This month, we have seen two new consultations impacting employment law, relating to (i) the implementation of the off-payroll working rules to the private sector and (ii) confidentiality clauses in an employment context. There have also been a number of significant appeal decisions in relation to suspension, rest breaks and discrimination arising from disability.

Key developments

IR35 off-payroll working in the private sector consultation

On 05 March 2019, HMRC published a policy paper and consultation document on the implementation of the reforms of the off-payroll working rules to the private sector from 06 April 2020.

The Government previously announced that the rules introduced for the public sector in April 2017 will be extended to the private sector in April 2020. This will mean that businesses in the private sector will need to determine whether a worker is a deemed employee and, if so, account for tax and NICs on their payments. Small companies (as defined under s382 of the Companies Act 2006) will not be caught by the new rules. The consultation seeks to understand how best to implement the reforms in the larger and more diverse public sector.

The consultation is due to close on 28 May 2019. For further information, see our elexica article.

BEIS launches new consultation on confidentiality provisions (or NDAs)

BEIS has launched a consultation to identify what measures can be taken to prevent the misuse of confidentiality clauses in situations involving workplace harassment or discrimination, typically found in settlement agreements and employment contracts. The consultation seeks views on: 

  • whether certain categories of persons should be guaranteed as exceptions to confidentiality provisions, such as the police 
  • whether legal advice given to employees entering settlement agreements should specifically cover the meaning and effect of confidentiality clauses 
  • whether legislation should be introduced to require confidentiality clauses to follow a prescribed form of wording.

The consultation is set to close on 29 April 2019. For further information, see our elexica article.

BSB publishes 2018/2019 Annual Review

The Banking Standards Board (BSB) has published their annual review for 2018/2019. Overall, the picture is of uneven progress. Senior leaders in banks are now perceived by their colleagues to be taking more responsibility and to be more credible, which is considered a reflection of the strong regulatory focus on responsibility and leadership in recent years. The majority of employees surveyed thought that people in their firm had equal opportunities regardless of gender. However, a number of key issues emerged from the report, which are less positive. There remain concerns that, in some areas, people are less willing to speak up reflecting either a fear of consequences or a conviction that to do so would be futile. Also, a quarter of all employees surveyed said that working at their firm has had a negative impact on their health and wellbeing.

SMRC: final rules on new Directory and guidance on Statements of Responsibilities

The FCA has published a policy statement (PS 19/7), setting out the final rules on the new public directory for checking the details of key individuals working in financial services. The Directory will include information about individuals performing roles no longer available on the Financial Services Register following the introduction of SMCR. Banking firms and insurers can start submitting data on Directory Persons from September 2019 and must have done so by 09 March 2020, when it is expected to go live. All other firms can start submitting data from 09 December 2019 (following the extension of SMCR) and must have done so by 09 December 2020.

The FCA has also published its finalised guidance on Statements of Responsibilities (SoRs) and Responsibilities Maps (FG19/2). Under the SMCR, all senior managers are required to have an SoR setting out their responsibilities and “enhanced” firms must have a responsibilities map showing how their firm is managed and governed. The aim of the guidance is to give firms practical assistance and information on preparing their SoRs and responsibilities maps, and sets out examples of good and poor practice.

For firms in scope of the extension of SMCR, we have developed a toolkit with practical and user-friendly templates and guidance on how to implement and comply. Please click here to find out more. For further information, see our SMCR microsite.

Women’s progression in the workplace: actions for employers

The Government Equalities Office has published some simplified guidance on the evidence-based actions employers can take to support women to progress and help close their gender pay gap. There is an “action note”, which identifies the steps employers can take such as progression for part time workers and improving recruitment and promotion processes, as well as an “infographic” setting out the key steps in a simple pictorial format.

Annual increases in compensation rates and limits from April 2019

From April 2019, the following rates and limits will increase: 

  • compensatory award for unfair dismissal from £83,682 to £86,444
  • amount of a week’s pay (used to calculate statutory redundancy payments) from £508 to £525
  • statutory maternity, paternity, adoption and shared parental pay from £145.18 to £148.68 a week
  • statutory sick pay from £92.05 to £94.25 per week, and 
  • national living wage from £7.83 to £8.21 per hour.

Key cases

Suspension: must have reasonable and proper cause

London Borough of Lambeth v Agoreyo - Court of Appeal

Ms Agoreyo was a primary school teacher, who was suspended because of the alleged excessive force used in three incidents involving two young children with special educational needs. She claimed it was a ‘kneejerk’ suspension, resigned and brought a claim on the basis that it was a breach of the implied term of trust and confidence.

In the first instance, the County Court held that the school had reasonable and proper cause to suspend her. The decision was overturned by the High Court, which considered that suspension was not necessary and therefore a breach of trust and confidence. However, the Court of Appeal agreed with the County Court, which held that the correct legal test was not whether it was necessary to suspend - which was setting the bar too high - but whether the school had reasonable and proper cause.

Bad leaver provisions: no penalty or unlawful deduction from wages

Nosworthy v Instinctif Partners Ltd - Employment Appeal Tribunal

Miss Nosworthy was given a small 2% shareholding in her employer when it was sold to Instinctif Partners. Under the SPA and Articles of Association, the shares of a ‘bad leaver’ (which included someone who voluntarily resigned) were re-acquired. When Miss Nosworthy resigned, she was treated as a bad leaver and had to transfer her shares in exchange for their acquisition cost of £143.

She brought claims in the Employment Tribunal on the basis that the SPA was a “contract connected with employment”, arguing that the bad leaver provisions constituted (i) a penalty and/or (ii) an unlawful deduction from wages, and (ii) were “unconscionable” and should be set aside. Agreeing with the Tribunal, the EAT held that the test was not met to set aside the agreement as unconscionable. The transfer did not amount to a penalty because it was not a sum to be paid on breach of contract: the provisions came into play because of the Articles of Association, not any breach of contract. There was no unlawful deduction from wages because the shares were not transferred in her capacity as a worker, but as a seller of shares.

Working Time: compensation for lack of rest breaks can include personal injury

Grange v Abellio London Ltd - Employment Appeal Tribunal

Mr Grange was employed as a bus driver and subsequently an “SQS” monitoring the arrival and departure times of a bus service and regulating them. Initially, his working day was 8.5 hours, but due to the responsive nature of the SQS role, his working day changed to 8 hours with the idea that he would work without a break and finish earlier.

After his grievance was rejected, Mr Grange brought a claim in the Tribunal under the Working Time Regulations 1998 that his employer had refused to permit him to exercise his entitlement to a rest break, causing him discomfort and distress. Overturning the decision of the Tribunal, the EAT held that an employer has a duty to afford a worker the right to a rest break, regardless of whether it has been requested.

When remitted to Tribunal, the Tribunal considered that it could make an award for personal injury. Although there was no medical evidence, it was satisfied that the lack of rest breaks was more than a minor inconvenience and considered that a just and equitable award would be £750. On appeal, the award was upheld by the EAT: it was not an award for injury to feelings but related to his physical discomfort, and in the context of this claim there was sufficient evidence on which to base the award. This case opens the door for Claimants to seek compensation for personal injury where they have been denied rest breaks.

Discrimination arising from disability: no unfavourable treatment based on mistaken belief

iForce v Wood - Employment Appeal Tribunal

Ms Wood was a packer in a warehouse, packing items at a fixed workbench. She suffered from a disability, osteoarthritis, which was exacerbated by damp and cold. Her employer changed its working practices, requiring her to move between benches and ‘follow the work’. Ms Wood refused to work at the end benches near the doors because she believed it would be colder and damper there. As a result, she was issued with a written warning for refusing to obey instructions.

Ms Wood successfully brought a claim in the Tribunal for discrimination arising from disability on the basis that the warning amounted to unfavourable treatment and that this arose in consequence of her disability because she believed it would adversely affect her condition. However, on appeal, the EAT overturned the decision. Her employer had conducted investigations, which determined that there was no material difference in the conditions throughout the warehouse. The EAT held that for such a claim to succeed, whilst the connection may involve several links as opposed to an immediate nexus between the ‘something’ and the disability, there must be some connection. In this case, there was no basis to find a connection between her disability and her mistaken belief that led her to refuse to obey the instruction.

Ill-health early retirement: cannot rely on disability discrimination by association

Mr H (PO-20991)

Mr H applied for ill-health early retirement benefits because he was suffering from chronic stress, depression and anxiety caused by caring for his disabled son. His employer obtained a medical opinion, which determined that whilst he was unable to carry out his current job duties, he considered he would be able to undertake gainful employment within the next three years. He was therefore awarded ‘tier three’ benefits. He appealed the decision and, taking into consideration his caring responsibilities for his son, he was awarded ‘tier two’ benefits on the assumption he would be able to undertake gainful employment in the 19 years until he reached normal pension age.

However, Mr H claimed that his employer’s decision amounted to indirect discrimination by association on grounds of disability, on the basis that he had caring responsibilities for his disabled son. The Deputy Pensions Ombudsman did not uphold his complaint. There was no right in UK law to be protected from indirect discrimination by association on grounds of disability. It was Mr H’s own medical condition that was relevant to the assessment of his capability to undertake employment, not the disability of an associated third party. Further, there was no duty to make reasonable adjustments on the grounds of disability by association.

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.

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.