Working Relations July 2019

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HighlightsKey developmentsKey casesStay ahead of the curveEvents

 

 

 

 

Highlights

This month marked the end of Theresa May’s premiership in Government, and before stepping down, there were a flurry of new consultations and responses published. We have seen important publications in relation to sexual harassment and NDAs, off-payroll working, the Good Work Plan, and family leave. The final rules on the extension of the SMCR were also published.

Key developments

Non-Disclosure Agreements (NDAs) - Government response published

On 21 July 2019, the Government published a response to its consultation on confidentiality clauses/NDAs in harassment/discrimination cases primarily in settlement agreements, which ran from 04 March to 29 April 2019. See here for the full response (formally titled “Confidentiality clauses: measures to prevent misuse in situations of workplace harassment or discrimination”). The response addresses a number (but not all) of the recommendations from the Women and Equalities Committee (WESC), following its inquiry of last year and recent report into the use of NDAs in discrimination/harassment cases.

Most notably, the Government will legislate to ensure that limitations in confidentiality clauses are clearly set out in settlement agreements and cannot prevent disclosures to the police, regulated health professionals and legal professionals. It will also extend the legislation to ensure that individuals receive independent legal advice on the limitations of confidentiality clauses in settlement agreements. It is not adopting some of the more surprising suggestions from the WESC, such as standardised wording or making inappropriate use of NDAs an offence, but there is an increasing focus on the role of the SRA as regulator (and in turn our roles as solicitors).

See our elexica article for more details.

New Government consultation on sexual harassment in the workplace

On 11 July 2019, the Government Equalities Office published a new consultation on Sexual Harassment in the Workplace. It follows the WESC report on NDAs in discrimination/harassment cases published last month and its consultation on NDAs earlier this year. The consultation is split into two parts: there is a “technical consultation” focussing on the current legal framework on sexual harassment and whether it is operating effectively, which sits alongside a public consultation inviting the views and experiences of the public (via an online questionnaire). Click here for the full technical consultation paper.

Specifically, the technical consultation explores introducing a mandatory duty on employers to protect workers from harassment and whether the three-month time limit for bringing a tribunal claim for harassment (and in fact, all Equality Act claims) should be extended to six months, as well as other non-legislative solutions to tackle harassment at work. Notably there is no proposal to adopt some of the more surprising recommendations of the WESC (e.g. legal aid, payment of fees, mandatory obligation to complete investigations, or increasing awards). The consultation closes on 02 October 2019.

Extending redundancy protection - Government response published

On 22 July 2019, the Government published its response to its consultation on extending redundancy protection for women and new parents. The Government has confirmed that it will:

  • ensure that the redundancy protection period applies from the date when an employee informs her employer of the pregnancy
  • extend the redundancy protection period for 6 months once a new mother has returned to work
  • afford the same protection to those taking adoption leave, and
  • extend redundancy protection for those returning from shared parental leave – and to consult further on the design of this protection over coming months.

Currently there is no indication as to when these changes are to be enforced. The Government has also confirmed that it will consult further to explore whether to extend the time limit to bring a pregnancy and maternity discrimination claim.

Off-payroll working (IR35) - consultation response, draft legislation and factsheet published

On 11 July 2019, the Government published a response to its recent consultation on the reform of the off-payroll working rules (which closed on 28 May 2019). It has also published draft legislation, an explanatory note and factsheet. The full documents are available here. By way of reminder, the off-payroll working rules which currently apply to the public sector will be extended to the private sector in April 2020. As a result, businesses in the private sector engaging individuals through a personal service company (PSC) will be required to determine whether the individual is a "deemed employee" under the rules, and if so, account for any tax and NICs on their payments.

The recent consultation focused on the detailed design of the reform and the key takeaways are:

  • Small organisations will be exempt from the reform - based on the Companies Act 2006 definition for incorporated companies or a simple test based on turnover (>£10.2 million) for unincorporated companies.
  • Clients will be required to pass the status determination and reasons for the determination down the contractual chain together, as well as passing them directly to the worker.
  • The government will extend the provisions for transferring tax and NICs to the first agency or client where there has been non-compliance in the labour supply chain and where it is not possible to secure the tax liability from the non-compliant entity.
  • Clients will be required to implement a minimum process to resolve status disputes.
Consultation for proposals to reduce ill-health related job loss

On 15 July 2019, the Department for Work and Pensions and the Department of Health and Social Care published a joint consultation “Health is everyone’s business: Proposals to reduce ill health-related job loss”, seeking views on how government and employers can take action to reduce ill health-related job loss.

The key proposals include introducing a new right to request workplace modifications for employees with health conditions that do not constitute a disability under the Equality Act 2010, and reforms to the Statutory Sick Pay (SSP) system including to extend SSP to low earners and offer a rebate to small businesses. In addition, the consultation will consider improving access to Occupational Health services and strengthening statutory guidance for employers supporting sick employees returning to work.

The consultation closes on 07 October 2019.

Good Work Plan: new consultations launched

The Government has launched three further consultations based on recommendations set out in the Good Work Plan.

  1. Establishing a new single enforcement body for employment rights (see here). This consultation seeks views on whether a new body should have a role in enforcing rights in relation to statutory sick pay, supporting the Equality and Human Rights Commission, and enforcing unpaid tribunal awards. The consultation closes on 06 October 2019.
  2. One-sided flexibility - addressing unfair flexible working practices (see here). This consultation seeks views on providing workers with a right to reasonable notice of work schedules and compensation for shifts cancelled without reasonable notice. The consultation closes on 11 October 2019.
  3. Proposals to support families (see here). This consultation is split into three parts, looking at (1) high level options to reform parental leave and pay, (2) proposals for new leave/pay entitlement for parents of babies that require neonatal care after birth, and (3) the transparency of flexible working/family leave policies. The consultation on parental leave and pay closes on 29 November 2019. Sections (2) and (3) (neonatal and transparency) close on 11 October 2019.
Proposed Flexible Working Bill to make all jobs flexible by default

Under a new bill introduced in the House of Commons by Conservative MP Helen Whately on 16 July 2019, employers could be required to ensure that all job roles are flexible by default, rather than it being up to employees to request flexible working arrangements. The Flexible Working Bill 2017-19 would require employers to offer flexible working in employment contracts and to advertise vacancies as suitable for flexible working unless certain conditions are met. Supporters of the bill believe that it could help to reduce the gender pay gap and help businesses retain female employees who would otherwise consider working part-time or dropping out of work completely to care for their children if flexible working is not an option. A date for the second reading of the bill is to be announced.

SMCR: Final Rules published

The FCA has now published the Final Rules on the extension of the Senior Managers & Certification Regime (SMCR) and additional changes following consultation on optimisation of the SMCR in PS 19/20. Broadly the final rules are similar to the near-final rules previously published in PS 18/14. However, key points to note include:

  • confirmation that the head of legal function is not a senior management function (although will be subject to the certification regime and conduct rules)
  • the scope of the Enhanced Firm category will be expanded to bring Non-Retail Mediation Activity (RMA) B firms in scope, and
  • the scope of the client-dealing function has been amended to exclude individuals who have no scope to choose, decide or reach a judgement on what should be done in a given situation and whose tasks do not require them to exercise significant skill, confirming the approach the FCA proposed in CP19/4.

See our elexica article for more details.

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.

We have also run our recent webinar series “SMCR implementation: The Final Countdown, are you ready?” which can be accessed here.

APPG on Whistleblowing Report published

The All Party Parliamentary Group (APPG) on Whistleblowing, launched back in July 2018, has published its first report setting out a 10-Point Plan of recommendations for improvements to the current whistleblowing regime. The 10 recommendations set out in the report include revising the existing legal definition of whistleblowing, implementing mandatory internal and external reporting mechanisms, reviewing compensation and the establishment of a regulatory enforcement body. There is continued focus on the use of NDAS with the APPG recommending that NDAs are banned in whistleblowing cases, which does not seem to take into account the Government’s recent response on NDAs in harassment/discrimination cases (see above). Two additional reports from the APPG are expected in due course.

Key cases

Discrimination based on stereotypical assumptions

Commerzbank AG v Rajput - Employment Appeal Tribunal, 28 June 2019

The female Claimant and two others (one male and one female) applied for the role of head of market compliance. Despite the Claimant being the deputy head of the team, the male applicant was appointed as the “acting head” pending the final decision on the basis (on the evidence of the Respondent’s witness evidence) that the women were considered to be “divisive personalities” who had tried to “further their own interests” while the male candidate was “the most innocuous”. Following the Claimant announcing that she was pregnant, the role was ultimately filled by an external (male) candidate.

The Claimant was also criticised when she sought to join meetings during her maternity leave and aspects of her role were removed on her return on the basis that the role had “naturally developed”.

The Claimant successfully brought claims for sex discrimination, harassment and maternity discrimination in the tribunal, which (among other findings) found that the bank had acted on the basis of “stereotypical assumptions”, regarding her commitment to work as negative whilst men with similar attributes are often praised.

The bank appealed on the basis that the alleged “stereotypical assumptions” had appeared for the first time in the tribunal’s judgment and that it had not had the opportunity to challenge them. The EAT agreed. In respect of sex discrimination and harassment claims which were founded on the basis of stereotypical assumptions about women, it was unfair that the case had not been put to the bank or its witnesses by the Claimant or the tribunal, which may have impacted the result. The appeal was allowed in respect of those claims, which have been remitted to a freshly constituted tribunal. The maternity discrimination claim was not overturned.

Disability discrimination: constructive knowledge

A Ltd v Z - Employment Appeal Tribunal, 08 July 2019

The Claimant suffered from mental and psychiatric impairments, including depression and schizophrenia. However, she did not disclose those impairments to her employer at the outset of her employment and subsequently concealed them by giving alternative reasons (eg physical ailments) for her sickness absences. After some 85 days of unscheduled absence, she was dismissed for being unreliable. She subsequently brought claims for discrimination arising from disability. The tribunal upheld her claim, finding that her employer had constructive knowledge of her disability because her doctor’s certificates evidenced a deterioration in her mental health and that it should therefore have enquired as to her mental wellbeing.

On appeal, the EAT found that the tribunal had been incorrect in finding that the employer had constructive knowledge of her disability. The tribunal had failed to apply the correct test, namely what the employer might reasonably have been expected to do in terms of process, but also what it might then have been reasonably expected to know. Given the Claimant’s desire to conceal her mental health condition, it could not reasonably have been expected to know of her disability.

Harassment and race discrimination: racially offensive image posted on Facebook

Forbes v LHR Airport Ltd - Employment Appeal Tribunal, 08 July 2019

An employee (X) of LHR airport shared a racially offensive image of a golliwog on her Facebook page, alongside the message “Let’s see how far he can travel before Facebook takes him off”. The image was shared with Facebook friends, including a colleague (Y) who then showed the image to the Claimant. The Claimant complained, which escalated into a grievance, and X was subject to disciplinary proceedings and received a final written warning. When the Claimant was later asked to work alongside X, he complained and brought a claim for harassment.

The EAT confirmed the tribunal’s view that X’s actions in sharing the image on Facebook were not “in the course of employment” and therefore the employer could not be held vicariously liable for harassment. Whilst it was accepted that the image was offensive, it found that it was not her purpose to cause offence to the Claimant and did not constitute harassment. The employer was found to have complied with the statutory Code of Practice to take all reasonably practical steps to prevent harassment by a third party from occurring, having given the respondent employee an official final warning thereby taking the complaint seriously.

Covert recordings

Phoenix House v Stockman - Employment Appeal Tribunal, 05 July 2019

Ms Stockman was employed in the finance team at Phoenix House. Following a restructuring in which her post was removed, she obtained a more junior role but she was eventually dismissed for alleged breakdown of relationship. She brought a claim for unfair dismissal. During the tribunal proceedings, it emerged that the Claimant had made a covert recording of a meeting with the employer’s head of HR. Phoenix House argued that it would have dismissed Ms Stockman for gross misconduct had it known about the covert recording and therefore that the award of compensation should be reduced to nil . The tribunal took the view that the Claimant did not make the recording for entrapment purposes and reduced the compensatory award by only 10%.

On appeal, the EAT found that the tribunal had not erred in the way it had reduced the claimant’s award and gave helpful guidance on covert recordings. The EAT confirmed that recording a meeting without declaring an intention to do so would generally amount to misconduct, but it does not necessarily amount to gross misconduct. Given that most people now carry a mobile phone, the EAT said that it is now much easier to record meetings discreetly (and therefore potentially less indicative of an intention to “entrap or gain a dishonest advantage”). It is important to consider the purpose of the recording, with the tribunal recognising that purpose can vary widely from, for example, seeking to entrap to a desire to keep a record or guard against misrepresentation. It is also important to consider the extent of the employee’s blameworthiness, the subject matter and the employer’s attitude to such conduct (ie as set out in their disciplinary policy). Employers may therefore consider reviewing the wording of such policies and consider practical steps to put individuals on notice of expectations in this respect.

Data privacy: WhatsApp group chat

BC and others v Chief Constable Police Service of Scotland and others - Court of Session, Outer House, 28 June 2019

In a group action brought by ten police officers, all of whom had misconduct proceedings brought against them for posting offensive messages on their WhatsApp group chats, Lord Bannatyne held that while the right to privacy is recognised by the common law of Scotland (the first express judicial acknowledgement of this), these officers could have “no reasonable expectation of privacy” in relation to the WhatsApp messages given their offensive content and the high standards expected of those in their position which applied both when the officers were on and off duty.

Stay ahead of the curve 

An overview of anticipated 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.