Working Relations August 2019

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HighlightsKey developmentsKey casesStay ahead of the curveEvents






With the parliamentary Summer recess, the pipeline of Government developments in employment law has slowed, other than continued preparations for a no-deal Brexit. In the meantime, there have been a number of interesting cases in relation to holiday pay for part-year workers, the publication of employment judgments and employee shareholder status.

Key developments

Law Society issues new guidance for workers on NDAs

The Law Society has published further guidance aimed at individual workers to help them understand their rights in relation to NDAs, "Non-disclosure agreements: what you need to know as a worker". The short guidance note reflects the guidance already provided to solicitors and employers when drafting confidentiality provisions/NDAs, but spells out workers’ rights in simple plain English. In particular, it sets out what a confidentiality agreement cannot stop a worker from doing and the benefits of seeking independent legal advice.

Launch of Sexual Harassment at Work Legal Advice Line

The charity Rights of Women has launched a free legal advice line for women in England and Wales experiencing sexual harassment at work. The aim of the advice line, which is the first of its kind in England and Wales and was set in motion by donations from actor and activist Emma Watson, is to provide specialist legal advice on issues including what sort of behaviour constitutes sexual harassment, how to make a claim in an employment tribunal and how to address settlement agreements and NDAs.

Brexit: preparation for no-deal which could bring abrupt end to freedom of movement

The preparations for a no deal Brexit on 31 October 2019 continue, as the Government has made new regulations to bring into force Section 1 of the European Union (Withdrawal) Act 2018, which will repeal the European Communities Act 1972 on exit day. The effect of repealing the ECA 1972 will bring an end to the flow of EU law into the UK and the supremacy of CJEU case law.

This month, the Home Office also announced that if the UK were to leave the EU on 31 October with no deal then freedom of movement will come to an end abruptly. Previous plans to ease the transition may not be implemented, instead being replaced by a new approach. EU citizens will continue to be able to travel to the UK for a holiday or short business trips (up to 3 months), but those arriving in the UK after Brexit and wishing to work or study for longer periods would need to apply for temporary leave to remain and meet the requirements of the new immigration system which is yet to be identified.

The Government has also published updated guidance on Workplace rights after Brexit. In the event of a no-deal Brexit, there will be no substantive changes to employment rights, other than rights on an employer's insolvency and in respect of European Works Councils which may be affected.

FCA publishes SMCR Stocktake Report

The FCA has published it’s SMCR Banking Stocktake Report, which summarises the findings of the FCA’s review into the embedding of the SMCR in the banking sector including commentary on senior managers, conduct rules and certification.

In particular, the Report refers to concerns expressed by many Senior Managers around understanding the meaning of ‘reasonable steps’ in the context of their business, and that some wanted more guidance from the FCA. In response, the FCA referenced the non-exhaustive guidance in DEPP but also that it is looking to Senior Managers to think more broadly. In relation to the Conduct Rules, the Report recognises issues arising from a lack of consistency between firms in recording breaches (which also affects regulatory references). It also reported that, on the Certification front, firms have taken steps to ensure that their frameworks are robust, but were unable to demonstrate effectiveness or how they ensure consistency.

The Report flags that the FCA will continue to build on the links between the SMCR and firm culture - with the regime being an important way to establish “a culture of accountability for conduct”.

BSB publishes final good practice guidelines on Regulatory References

The Banking Standards Board (BSB) has published its final good practice guidance on Regulatory References containing a high-level set of principles and guidance to help firms implement the regulatory reference regime. This follows the BSB’s consultation earlier this year (a summary of consultation responses also published).

The guidance focuses on regulatory references in relation to candidates for certification functions in the banking sector but it may also be relevant to candidates for Senior Management Functions and notified NED functions. It follows earlier good practice guidance for the Certification Regime on F&P assessment.

Key cases

Calculating holiday pay for "part-year workers"

The Harpur Trust v Brazel - Court of Appeal, 06 August 2019

The Claimant is a "visiting music teacher" at a school run by the Trust, which she continues to work for. She is employed under a permanent zero-hours contract and only paid for work undertaken. She works primarily during term-time and therefore does not work for large parts of the year (ie during the school holidays). The Trust made three payments in respect of holiday to her each year, at the end of each school term, by calculating her earnings and paying her one third of 12.07% of that figure - in line with ACAS guidance for workers “with very irregular hours”.

The issue considered before the CoA was whether the Claimant’s holiday entitlement/pay should be reduced to reflect that she was a “part-year worker”, and accordingly how the Claimant’s holiday pay should be calculated. Upholding the decision of the EAT, the CoA concluded that there was no requirement to pro rate the leave entitlement of part-year workers on permanent contracts. In line with the Working Time Regulations 1998, it should be a simple calculation of identifying a week’s pay (from the previous 12 weeks in accordance with the Employment Rights Act 1996) and multiplying that by 5.6. We expect ACAS to update their guidance.

Employment judgments must be published on register (other than in national security cases)

L v Q Ltd - Court of Appeal, 09 August 2019

In this case, L brought claims of disability discrimination, harassment and victimisation against Q Ltd. In the Tribunal, L successfully applied for the hearing to be private, the names of the parties and witnesses to be anonymised, and for the judgment not to be placed on the register. Q Ltd appealed and the EAT upheld the Tribunal’s orders, save that it set aside the order that the judgment should not be placed on the register. Instead, the EAT ordered that the judgment be published on the register, but with redactions so as to preserve the anonymity of the parties and others referred to in the judgment.

L appealed to the CoA requesting that the judgment not be published. He further requested that, if published, the judgment be further redacted to remove the nature and effect of his disabilities and a related incident, and that he should have the option to withdraw his claim rather than the judgments be published. The CoA dismissed his application on the basis that it would go against the authorities on open justice. It relied upon the case of Ameyaw v Pricewaterhousecoopers Services Ltd that there is no explicit power in the ET rules for the Tribunal not to enter a judgment on the public register, other than in national security cases. The CoA also held that to redact the nature of his disabilities would undermine any reader’s understanding of the judgment and that, given the anonymity of the parties and others, the chances of further embarrassment were remote.

Constructive dismissal: burden of proving fair reason is on the employer

Upton-Hansen Architects Ltd v Gyftaki - Employment Appeal Tribunal, 15 August 2019

The Claimant was a senior architect at an architecture firm. She had exhausted annual leave entitlement and requested permission to take additional leave to travel abroad. There was some confusion over whether her request had been granted, and in the absence of a response until the night before (when her request was refused), she travelled anyway, requesting that it be treated as unpaid leave. On her return to the office, the Claimant was suspended pending an investigation. She resigned and claimed constructive unfair dismissal. In their response, her employer included a generic denial that all claims were “denied in their entirety” but failed to assert any potentially fair reason for dismissal.

The Tribunal held that the decision to suspend the Claimant was a breach of the implied duty of trust and confidence, and, and that she had been constructively unfairly dismissed. The architecture firm appealed. The EAT agreed that the Tribunal was entitled to find that there was no fair reason for dismissal, given that the firm had not pleaded any such reason. The burden is on the employer to prove that there was a fair reason for the dismissal.

Employee shareholder status: not terminated by later service agreement

Barasso v New Look Retailers Ltd - Employment Appeal Tribunal, 22 August 2019

The Claimant was the UK Managing Director at New Look. When the Company was sold in 2015, the Claimant was offered 7000 ordinary shares in the parent company in exchange for becoming an employee shareholder, and therefore relinquishing certain rights usually available to employees (such as the right to claim unfair dismissal and redundancy pay). After expressing concerns about losing his statutory rights, he signed a valid employee shareholder agreement, containing a contractual right to the equivalent of an unfair dismissal award and redundancy payment (subject to arbitration). In 2017, he signed a director’s service agreement, which was stated to supersede all previous agreements, but purported to preserve the contractual right to unfair dismissal and redundancy pay.

When dismissed in 2018, he claimed unfair dismissal and that his employee shareholder status had been terminated by the service agreement. Agreeing with the Tribunal, the EAT dismissed his claim. The service agreement did not deal with his shareholder status and in fact sought to preserve his contractual right to the equivalent of an unfair dismissal award, suggesting that it did not intend to restore his statutory rights. Whilst employee shareholder status might be terminated if the parties entered into a subsequent inconsistent contractual arrangement, the service agreement in this case was not inconsistent with employee shareholder status.

Employee (but not employer) liable for racially harassing colleague in work vehicle

Mr A Leader v Mr Andrew Hossack and Leeds City Council - Employment Tribunal, 25 July 2019

The Claimant is employed by the Council and describes himself as being of black Afro-Caribbean ethnicity. On the way to a job, the Claimant’s supervisor made racist comments about the colour of his skin and nationality of others, which left him feeling vexed and upset. He informed his line manager and explained that he did not wish to work with him again. The Council responded by saying that the incident was being dealt with under its disciplinary policy and that the Claimant would not be required to work with him. However, as his supervisor was not suspended or relocated, the Claimant still regularly came across him in the workplace which made him feel anxious. He subsequently brought a grievance and claim for racial harassment.

Interestingly, the Tribunal dismissed his claims against the Council on the basis that the Claimant accepted at a preliminary hearing that it had taken all reasonable steps to prevent the supervisor from making racist comments in the workplace. The Tribunal heard evidence that the Council had investigated the complaints and referred the matter to a disciplinary hearing to consider whether it was gross misconduct, but his supervisor resigned before it took place. The case proceeded against the individual supervisor who made the remarks and the Claimant was awarded £2,500 for injury to feelings (plus interest).

Stay ahead of the curve 

An overview of anticipated changes to Employment law in England and Wales is available here.


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