Working Relations May 2019

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HighlightsKey developmentsKey casesFuture developmentsRecent changesEvents


Highlights

There are two cases this month which have dominated the (employment law) headlines - first, the joint Court of Appeal decision in Hextall and Ali which determined that the practice of enhancing maternity pay and not shared parental pay is not discriminatory; and second, the CJEU ruling that that employers must set up a system for measuring actual working time for individual workers on a daily basis.

Key developments

WESC response to consultation on extending redundancy protection for women and new parents

On 01 May 2019, the Women and Equalities Select Committee (WESC) published its response to the Government’s consultation on extending redundancy protection for women and new parents (which closed on 05 April 2019).

In short, the response states that the WESC:

  • supports an extension to protection against redundancy during pregnancy and maternity leave, and for a period of 6 months following return to work
  • recommends such protection be extended to those on shared parental leave and adoption leave
  • repeats the recommendation previously made by the WESC that large companies should be required to report on retention rates for women 12 months after returning from maternity leave and 12 months after lodging a request for flexible working, and
  • supports a further consultation into extending the time limit for pregnancy/maternity discrimination claims from 3 to 6 months.

We await the Government’s response.

FCA publishes “5 Conduct Questions” Report

The FCA has published its 2018/19 report on the progress made and challenges faced by leading UK wholesale banking firms in addressing the “5 Conduct Questions”, which were introduced in 2015 as a supervisory programme for wholesale banks. However, with the implementation of SMCR and regulatory focus on conduct and culture, the content of the report is relevant “to all firms in the financial sector, wholesale or otherwise”.

In particular, the FCA reiterates that non-financial misconduct, such as personal misconduct, bullying or sexual misconduct is “as important an aspect of conduct as financial misconduct” but one where “there remains much to do”. Competition-related conduct is also identified as a continuing “weak point for many”. The report also highlights the importance of a long-term strategy to promote good conduct and culture, where staff are positively encouraged to be alert to risks and speak up.

Conduct and culture risk - and firms’ ability to demonstrate how they are managing both - is set to remain an ongoing regulatory focus. We are working with firms across the market on how to map, measure and address conduct and culture risk. Please liaise with your usual Simmons & Simmons contact to discuss further.

Letter from BEIS urging implementation of Good Work Plan

The BEIS and Work and Pensions Commons Select Committees have sent a joint letter to the Government, reiterating the “urgent need” for legislation clarifying employment status and to extend and enhance rights as set out in its Good Work Plan of December 2018. In light of substantial delays since the Government accepted Matthew Taylor’s recommendations, the Committees request an update on the timing and breadth of such legislation.

Off-payroll working rules (IR35): Simmons & Simmons' response to consultation

As part of the Government’s recent consultation on off-payroll working in the private sector (which closed on 28 May 2019), this firm published its response which can be read here. The firm’s response focuses on two particular areas of concern in relation to the proposed changes, namely the responsibilities of parties within labour supply chains and status determination disagreements.

By way of background, the Government has confirmed that the off-payroll working 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 providing services through an intermediary (or PSC) is a deemed employee and, if so, account for tax and NICs on their payments. See our elexica article for further information.

Key cases

CJEU decision: employers must record working time

Federacion de Servicios de Comisiones Obreras (CCOO) v Deutsche Bank SAE - Court of Justice of the European Union (CJEU), 14 May 2019

The case was originally brought by a Spanish trade union in a group action against Deutsche Bank before the National High Court in Spain. The CCOO sought a declaration that the bank was under an obligation to record the specific number of hours worked each day by its staff in order to check whether working time limits under national legislation were being properly adhered to. The National High Court referred the matter to the CJEU.

In its judgment, the CJEU ruled that in the absence of a system enabling daily working time to be measured, it would be “excessively difficult, if not impossible” for workers to ensure that their rights were being complied with. Member States must therefore require employers to set up an “objective, reliable and accessible system enabling the duration of time worked each day by each worker to be measured”. Member States are free to determine how to implement such a system, including the form it must take, having regard to sector characteristics and size of operations.

In the UK, the Working Time Regulations (which implement the EU Directive) currently require employers to maintain “adequate records” to show that workers (other than those who have opted out) are working within the weekly and night working time limits. Guidance from the Health and Safety Executive (the enforcing authority in respect of these requirements) states that it is not necessary to create specific records and that employers may be able to rely on other records, such as pay records, to meet their obligations. It therefore seems likely that the Regulations and guidance will require review - although if and in what respect that happens will depend to some extent on progress in Brexit. In the meantime, there remains a risk of national court reference to this case and employers may wish to take the opportunity to review their time recording processes and consider whether data is already collated which might support a relevant record keeping obligation.

Listen to our recent European Webinar for further information on the impact of this decision across Europe.

Shared parental leave: failure to match enhanced pay not discriminatory

Ali v Capita Customer Management and Hextall v Chief Constable of Leicestershire - Court of Appeal (CoA), 24 May 2019

In this combined appeal, the practice of paying different rates of pay for mothers on maternity leave and fathers on shared parental leave (SPL) has been found not to amount to unlawful direct sex discrimination, indirect sex discrimination or a breach of equal pay requirements.

In the case of Ali, the CoA agreed with the EAT that the practice of paying less to fathers on SPL than mothers on maternity leave could not amount to direct sex discrimination because the two types of leave have a different purpose. It rejected the argument that after 14 weeks (the minimum period of maternity leave under the EU Pregnant Workers Directive) the two types of leave have the same purpose, namely the facilitation of childcare. In line with previous EU case law, it took the view that maternity leave has numerous special purposes which are not shared by the husband/partner, including to cope with later stages of pregnancy, recuperate from the pregnancy and effects of childbirth, and to breastfeed.

The decision in Hextall was more surprising in that the CoA overturned the previous ruling of the EAT that the practice of paying fathers less on SPL could amount to indirect sex discrimination. It held that the claim should be characterised as an equal pay claim, rather than indirect discrimination - those claims being mutually exclusive (ie you cannot claim both). In an equal pay claim, the sex equality clause is specifically excluded where there is “special treatment in connection with pregnancy or childbirth”, and therefore Hextall’s claim failed on that basis. Whilst it was not necessary to determine the indirect discrimination claim, the CoA commented that even if it did, there was no valid comparison because a man on SPL cannot be compared to a woman on maternity leave as it has a different purpose (as in Ali above).

Whilst this judgment makes the position clear for now, the practical impact of not matching shared parental pay on the uptake of shared parental leave is an important consideration for many. Both Ali and Hextall are seeking permission to appeal, so this may yet be considered by the Supreme Court.

Jurisdiction: overseas whistleblower could not bring claim against overseas co-workers

Foreign and Commonwealth Office and others v Bamieh - Court of Appeal, 09 May 2019

Overturning the decision of the EAT, the Court of Appeal has held that a British prosecutor, employed by the FCO and seconded to work for an international mission (EULEX) in Kosovo, could not bring a claim for whistleblowing detriment against overseas co-workers in a British employment tribunal. When the Claimant’s fixed-term contract was not renewed, she believed that this was due to protected disclosures she had made and brought claims against the FCO, EULEX and personally against two other FCO employees who worked alongside her at EULEX.

The CoA ruled that it was not sufficient to assess the strength of the connection between each individual respondent and Great Britain. In such a case, the “sufficiently British connection” test in Lawson v Serco must be adapted to consider whether the relationship between the co-workers has a sufficiently British connection. Despite sharing a common UK employer, the co-workers had not been seconded together, they only worked together in Kosovo, and only came into contact by virtue of their international mission - and there was no sufficient connection between that mission and British law.

Disability discrimination: dismissal potentially discriminatory where knowledge of disability only at appeal stage

Baldeh v Churches Housing Association of Dudley and District Ltd - Employment Appeal Tribunal, 11 March 2019

The Claimant, a support worker employed by a housing association, was disabled by reason of depression. Having felt that she had not made satisfactory progress during her six-month probationary period, the association terminated her employment. In a hearing to appeal her dismissal, the Claimant told her employer that she suffered from depression and that this had an effect on her behaviour as well as causing short-term memory loss. The association rejected her appeal and she subsequently brought a claim of discrimination arising from disability under section 15 of the Equality Act 2010.

At the Tribunal, her claim was rejected on the basis that the association had no knowledge of her disability at the time of the decision to dismiss, and that there were other reasons that would have led to her dismissal. However, the EAT took the view that the appeal was “integral to the overall decision to dismiss” and that the Tribunal should have considered whether the appeal decision was discriminatory. Further, it was not determinative that there were other reasons for dismissal, the question was whether the “'something arising from disability'” had a material influence on the decision to dismiss. The case has been remitted to a fresh tribunal.

TUPE: transfer of client investments could give rise to transfer

Dodič v Banka Koper and Alta Invest - Court of Justice of the European Union (CJEU), 08 May 2019

The CJEU has held that there could, in principle, have been a transfer of undertakings under the Acquired Rights Directive in a scenario where a Slovenian bank (Banka Koper) ceased its investment operations as a stock market intermediary and gave its clients the option to transfer their securities to another named intermediary (Alta Invest). When Banka Koper’s operations ceased, it dismissed all employees in its investment services office - including Mr Dodic, who claimed that there had been a transfer of undertakings and that his employment should therefore have transferred to Alta Invest. The key question was whether the economic entity, namely the bank’s investment activities, retained its identity after the transfer. Ultimately, the case has been remitted to the national court to decide.

Jurisdiction: when a “dispute has arisen”

Merinson v Yukos International - Court of Appeal, 15 May 2019

Merinson was employed by Yukos International as a financial analyst under a contract of employment governed by Dutch law. In 2015, Merinson asserted that he had effectively been constructively dismissed, which resulted in a settlement agreement. In 2017, while Merinson was domiciled in the UK, Yukos discovered that he had allegedly taken kickbacks from financial institutions during his employment. Yukos brought a claim against him in the English High Court, seeking damages for losses suffered as a result of his breach of duty under his employment contract and a declaration that the settlement agreement did not bar the damages claim. Merinson challenged the jurisdiction of the English court on the basis that the claims came within the scope of the settlement agreement and were subject to the exclusive jurisdiction of the Dutch courts.

The Court of Appeal held that that English court did have jurisdiction to hear the claims. Under the Recast Brussels Regulation, an employer may only bring proceedings in the member state in which the employee is domiciled, unless there is a jurisdiction agreement entered into “after the dispute has arisen”. The CoA clarified that the correct test for whether a dispute has arisen is whether the parties had disagreed on a specific point and whether litigation in relation to that dispute was in contemplation. In this case, there was no pre-existing dispute regarding the alleged misconduct, which was the subject of the English litigation.

Disability discrimination: refusal to post abroad not discriminatory

Owen v AMEC Foster Wheeler Energy Ltd and another - Court of Appeal, 14 May 2019

The Claimant suffered from multiple disabilities, including double below-knee amputations, type 2 diabetes, heart and kidney disease, and hypertension. He was offered a 12-month posting to the UAE and underwent an external occupational health assessment. Based on the medical concerns raised by the doctor, his employer concluded that it would be inconsistent with their duty of care to allow him to take up the international posting and it was withdrawn. The Claimant brought claims for direct and indirect disability discrimination and a failure to make reasonable adjustments.

The CoA agreed with the Tribunal and EAT in dismissing all of the claims. In relation to the direct claim, the Tribunal found that an employee who had been identified as high risk in a medical assessment but who did not have the Claimant’s disability, would not have been treated differently. In relation to the indirect claim, the requirement to pass a medical examination prior to an international posting - a PCP that could result in a particular disadvantage in consequence of the Claimant’s disability - was held to be a proportionate means of achieving a legitimate aim. Further, there were no less discriminatory alternatives.

In particular, the CoA considered the concept of “indissociability” and determined that it does not readily translate to disability discrimination in the same way as it may apply to race or sex discrimination. For this reason, the Claimant may have had more success bringing a claim for discrimination arising from disability under section 15 Equality Act, but it is likely that the treatment would still have been considered a proportionate means of achieving a legitimate aim.

Harassment: one-off act can fall within middle Vento band

Base Childrenswear v Otshudi - Employment Appeal Tribunal, 17 May 2019

The Claimant was summarily dismissed by Base Childrenswear (Base) after three months of joining the Company, allegedly for redundancy. The Claimant subsequently submitted a grievance and appeal, which were ignored. She then brought a claim of racial harassment. At the hearing, Base changed its case to allege that she was dismissed because of suspected theft, but the allegations were never put to her.

Her claim was successful and she was awarded compensation, including £16,000 for injury to feelings (within the middle Vento band), as well as £5,000 aggravated damages for its post-dismissal conduct, and a 25% uplift for failure to follow the ACAS Code. Base appealed on the basis that the award was excessive.

The EAT confirmed that a one-off act of harassment will not necessarily fall within the lowest Vento band, and this was sufficiently serious to fall within the middle band. The appeal was largely dismissed, save that the award for aggravated damages was reduced by £1,000 on the basis that the Tribunal had double-counted the Company’s failure to respond to her grievance by also making the uplift. The case makes clear that employers should still follow the ACAS Code in relation to post-termination grievances.

Data subject access requests: Data Controller DSAR obligations further clarified

Dawson-Damer and others v Taylor Wessing LLP and others [2019] EWHC 1258 (Ch) – High Court, 17 May 2019

The High Court handed down the third (and likely final) decision in this dispute concerning compliance with data subject access requests (DSAR). The dispute originated between the beneficiaries of an offshore beneficiary trust and its trustee regarding the validity of a settlement, and as a result DSARs were made. Taylor Wessing (TW), acting for the trustee, withheld personal data on the basis that it was covered by legal professional privilege, and not held under a “relevant filing system”. Whilst this was upheld in the first instance, the decision was overturned by the Court of Appeal and remitted to the High Court.

At this remitted hearing, the High Court has given guidance as to the meaning of a “relevant filing system”, the application of legal professional privilege and how it can be waived, when compliance is disproportionate and appropriate redaction. Although due to the timing, this was decided under the Data Protection Act 1998, the issues are still relevant when handling DSARs under the new regime. TW’s application to appeal to the Supreme Court failed.

For further detail, see our elexica post here.

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.