August 24, 2020

Employment legal update #39 | August 2020

Employment law update

In this month's legal update, our Employment & HR team cover:

  Covid-19 legislation updates, including redundancy pay regulations; a job retention bonus; statutory sick pay update; record keeping for the NHS Test and Trace Scheme and more.

  Other employment law news, including rules for funding salaries of employees who are asked to self-isolate under the Test and Trace Scheme; new residence rights British Nationals (Overseas); and further details of the Government's plans for a new UK points-based immigration system from 1 January 2021.

Commentary on recent employment law tribunal cases, including reasonable adjustments; holiday pay calculation; and no procedure dismissal being fair.

Covid-19 update

The Employment Rights Act 1996 (Coronavirus, Calculation of a Week's Pay) Regulations 2020 SI 2020/814 came into force on 31 July 2020, essentially to ensure that those who are made redundant whilst on furlough will be paid their statutory redundancy pay in accordance with their normal wages, not what they have been receiving on furlough. The regulations also cover the calculations of basic unfair dismissal awards and statutory redundancy payments. The new calculations are complex and depend on the employee’s normal working hours but essentially:

  • Any reduction in the employee's pay for the purposes of furlough must be disregarded for calculating statutory redundancy payments for those with normal working hours.
  • For those without normal working hours, the calculation is based on their "reference salary" for the purposes of claiming furlough but without the statutory cap imposed by the CJRS.
  • Various other statutory rights dependent upon the calculation of a week's pay.

The Chancellor has announced that businesses will receive a job retention bonus of £1,000 for each furloughed worker who returns to work and remains in employment until at least 31 January 2021.

The Statutory Sick Pay (Coronavirus) (Suspension of Waiting Days and General Amendment) (No. 2) Regulations 2020 (SI 2020/681) are now in force. These provide for SSP to be payable where an individual self-isolates because they are in a "bubble" with another household and someone else in that bubble has COVID-19 symptoms. They also provide for SSP entitlement to cease where there is a notification for clinically extremely vulnerable individuals to stop shielding.

Updated shielding guidance has been issued reflecting this change to SSP eligibility from 1 August 2020, when shielding in England was paused. With effect from that date, those previously shielding are advised to keep two metres away from those outside their household or bubble wherever possible. Employers may need to make different arrangements for any former shielders returning to the workplace on 1 August than for other non-vulnerable staff.

In a written answer to a Parliamentary question about the amended purpose of the CJRS, the Financial Secretary to HM Treasury confirmed that employers may continue to claim CJRS funds for furloughed employees who are under notice of termination of their employment.

On 30 June 2020, the FCA published a press release announcing that, in the light of the COVID-19 pandemic, the deadline for solo-regulated firms to undertake the first assessment of the fitness and propriety of their certified persons under the Senior Managers and Certification Regime (SM&CR) has been delayed. HM Treasury has agreed to delay the deadline from 9 December 2020 until 31 March 2021.

To ensure SM&CR deadlines remain consistent, and to provide extra time for firms that need it, the FCA intends to consult on extending the deadline for the following requirements from 9 December 2020 to 31 March 2021:

  • The date the conduct rules come into force for non-SM&CR employees.
  • The deadline for submission of information about directory persons to the register. However, the FCA will still publish details of certified employees of solo-regulated firms on the financial services register from 9 December 2020. Where firms can provide this information before March 2021, they are encouraged to do so.
  • References in the FCA's rules to the deadline for assessing certified persons as fit and proper.
  • To give solo-regulated firms certainty, the FCA intends to consult alongside parliamentary process to allow it to finalise its policy as soon as possible.

On 2 July the Department of Health and Social Care published guidance on how employers can keep records of staff, customers and visitors to support the NHS Test and Trace scheme. It provides guidance on how employers can keep records for 21 days which is proportionate and manageable, stating that organisations should do the following:

  • Keep names, and contact details, of staff and the dates and times when they are at work.
  • Keep details of customers and visitors including contact details or, if a group, the lead in the group, including the date and time of arrival, who they are seeing, and departure time.
  • Advance booking systems can be used to collate these details.
  • The records must be held for 21 days but after this can be destroyed.
  • The guidance states that, with regard to data protection, consent is not required and the information can be shared for health and safety purposes, unless in respect of sensitive personal data such as attendance at religious or political meetings, in which case consent is recommended. It should be made clear why the information is being collated, to those concerned.


In response to a written question in Parliament, HM Treasury has confirmed that it does not intend to fund the salaries of employees who are asked to self-isolate under the Test and Trace system but cannot work from home. However, they will be eligible for statutory sick pay (SSP) from day one of self-isolation, even if they are asked to self-isolate more than once. Self-employed individuals in a similar position are eligible for "new style" contributory employment and support allowance (ESA) from day one.

Following China's imposition of a national security law in Hong Kong, the UK government has confirmed that new residence rights will be put in place for British Nationals (Overseas). The new immigration route, expected to be launched in the next few months, will allow:

  • those who hold BN(O) status and their families to come to the UK without the current six-month limit, granting them 5 years limited leave to remain, with the ability to live and work in the UK.
  • After 5 years, they will be able to apply for settled status and, after a further 12 months with that status, apply for full British citizenship.
  • Full details of the eligibility criteria, conditions of leave and application fees will be announced in due course, but the Foreign Secretary has confirmed that there will be no minimum salary threshold to obtain the visa and no limit on numbers or quotas.

This will be open to all those who hold BN(O) status and are eligible to apply for a BN(O) passport which, it is understood, is an estimated 2.9 million people.

In the recently published ACAS annual report, ACAS has stated that the number of calls received since the commencement of lockdown increased by 50% per day on the norm.

On 13 July 2020, the Government published a statement setting out further details of its plans for a new UK points-based immigration system from 1 January 2021, following the end of free movement within the EU. It provides more detail for applicants, employers and educational institutions on the draft requirements and conditions underpinning the key immigration routes in the new points-based system. Further guidance and simplified Immigration Rules are expected later this year but the statement includes details of:

  • Changes to the sponsored employment regime, including suspending the cap on the number of sponsored workers and the abolition of the resident labour market test requirement.
  • How migrants can score the necessary points to qualify for the new Skilled Worker visa.
  • Eligibility for the new Health and Care visa (previously described as the NHS visa).
  • Changes to the rules for switching immigration categories from within the UK.
  • The new Graduate visa scheme launching in summer 2021.
  • Changes at the UK border from January 2021.


Reasonable adjustment for employer to give undertaking

In Hill v Lloyds Bank plc the EAT has upheld an employment tribunal decision that it would have been a reasonable adjustment for an employer to give an undertaking to a disabled employee that she would not have to work with two colleagues who she alleged had bullied and harassed her and, if there was no alternative, she would be paid a severance payment equivalent to a redundancy payment. The EAT found that she would have suffered a level of stress and anxiety about work of a far greater level than those who were not disabled, and the giving of this undertaking would have alleviated this concern.

The claimant was employed for 30 years but was off sick for over a year from July 2016 because of stress caused by the bullying and harassment she experienced at the hands of 2 colleagues, about whom she raised grievances which were not upheld. When she returned to work she made it clear that she did not want to work with either of these colleagues, the feeling for which was reciprocated. However she was very concerned that, further down the line, a restructure or reorganisation may result in her having to work with them once again. She therefore sought an undertaking from the bank that they would not at any stage require her ever to work with them and that, if this proved impossible to fulfil, they would offer her a severance package equivalent to a redundancy payment.

The bank declined to do so, and she brought a claim for failure to make reasonable adjustments. The basis of the claim was that she, as a disabled person, was placed at a substantial disadvantage compared to non-disabled people with the threat hanging over her that, at some stage, she may have to work with these two people again. Because of her disability she experienced far greater stress and anxiety levels than other, non-disabled, people would have done.

The tribunal upheld her claim on the basis that it considered it would have been reasonable for the employer to give such an undertaking, instead of its practice of merely providing words of comfort. It accepted that this practice placed her as a disadvantage because of the heightened levels of stress and anxiety she felt over the fear that she may have to work with one or other of these individuals again.

The tribunal initially made an order for injury to feelings and a Recommendation under S.124 (2)–(3) of the Equality Act, that the bank would undertake to ensure that she did not work in any capacity with either of these individuals; and that, if this was not possible, it would explore suitable alternative employment for the claimant; and if neither of these worked, that it would use its best endeavours to ensure she left with a severance package.
On a Reconsideration, however, the tribunal set aside this Recommendation on the basis that it was inappropriate of it to make financial recompense part of a Recommendation. The bank appealed the liability decision and the claimant appealed the Reconsideration of the Recommendation.

The appeal on liability was dismissed, the EAT considering that the tribunal was right to determine that the undertaking requested by the claimant was reasonable. The underlying purpose of the undertaking was to ensure that the claimant could work safely without fear, at some point, of being required to work with these two individuals, with the backstop being a severance package if this did not prove possible.

The EAT agreed that there were problems with the wording of the Recommendation made by the tribunal, including no time limit on the undertaking to be given, and very wide scope for not working with the two colleagues; but it did not see a problem with recommending financial recompense within a Recommendation in general terms. The EAT remitted the question of a more appropriate Recommendation back to the tribunal.

Holiday pay did not include profitability bonus

In Econ Engineering Ltd v Dixon and others the EAT has held that a profitability bonus was not part of a week's pay for a worker with normal working hours under section 221(2) of the Employment Rights Act 1996 and therefore was not part of the holiday pay calculation under regulation 13A of the Working Time Regulations 1998.

The company paid all employees a profitability bonus, which was a variable uplift on their hourly rate for the past month to take account of company profit above a certain target. When a calculation in respect of this bonus was not included in their holiday pay, the claimants brought deductions from wages claims, arguing that their holiday pay under the WTR should have included this bonus.

The employment tribunal agreed, and so the employer appealed. It conceded that the profitability bonus should be included in pay for the four weeks' holiday under regulation 13 of the WTR 1998, as it was part of "normal remuneration" under EU law. However, the argument centred on pay for the 1.6 weeks' holiday under regulation 13A which, the employer argued, did not emanate from EU law and therefore fell to be determined under section 221 ERA 1996. This says that, for workers with normal working hours, whose pay remains constant regardless of the amount of work done, a week's pay is the amount payable "if the employee works throughout his normal working hours in a week". The claimants accepted that section 221 applied. However, since once the profitability bonus was declared, it was payable to any employee who worked during the relevant period, they argued that it fell within section 221(2).

The EAT disagreed. It held that the wording of the relevant section simply applied to employees who worked their normal working hours and as such received the amount of pay applicable to those terms. For the entitlement to basic pay to arise, it was enough that the employees had worked their normal hours. However, the bonus payment was also contingent on the company hitting a profitability target. Working the hours was, while necessary, not of itself a sufficient condition for payment. The profitability bonus therefore did not count towards a week's pay under section 221(2).

Pensions Ombudsmen and Failure to Auto-Enrol

The Pensions Ombudsman has held that an employer failed to auto enrol an employee into the NEST scheme under a claim to it in Determination in a complaint by Mrs R 24 April 2020, despite deducting her employee contributions.

On joining the employer, she was told that she had been automatically enrolled into NEST and employer and employee contributions were duly deducted. However, when she left, she received a refund of her employee contributions; and discovered that she had never in fact been auto enrolled.

The Pensions Ombudsman found that this was maladministration and required the employer to pay into the employer’s pension account the total value of the employer and employee contributions including a lump sum to represent any loss of investment from date of inception until the contributions were paid into her pension scheme. The employer was also required to pay £2000 to the employee concerned for the distress caused.

Long-term supply of agency worker was still “temporary”

In Angard Staffing Solutions Ltd and another v Kocur and others the EAT has upheld a tribunal decision that an agency worker who had a contract of employment with the agency who only ever supplied workers to one end user client on a long-term basis was nonetheless an “agency worker” for the purposes of the Agency Workers Regulations 2010, regulation 3 (1) because each assignment was deemed to be temporary. The EAT found that the tribunal was entitled to hold that each of the assignments was “temporary” in accordance with shifts undertaken, and that the agreement between the agency worker and the agency was relevant but not determinative.

Dismissal with no procedure not unfair

In what may amount to a rare situation based on the facts, an employee who was dismissed for "some other substantial reason" (breakdown in trust and confidence) where no procedure was followed, was nonetheless deemed to have been fairly dismissed. The EAT has upheld the tribunal decision in Gallacher v Abellio Scotrail Ltd.

The claimant was a senior manager, whose continued good relations with her Manager were critical during a difficult period for the business. However, they experienced a number of workplace disagreements, as a result of which the trust and confidence between the two of them broke down. At her annual appraisal she was told that she was being dismissed due to a lack of trust. This followed on from 2 meetings where efforts had been made to resolve the differences, which had not succeeded. The claimant herself accepted the breakdown in the relationship and had no interest in trying to patch it up.

The tribunal held that, although rare, this was a situation whereby the following of any process prior to the decision to dismiss would have been futile. There had already been meetings to try and resolve the issues in the relationship, which had failed; and the claimant herself was not interested in trying to repair the damage. In upholding this decision, the EAT held that although in many cases a dismissal without following a fair process would be deemed to be outside the range of reasonable responses and so unfair, nonetheless if following procedures was likely to be futile, the employer could dispense with them without the dismissal being unfair. However it did state that the situation was likely to be rare. The employer did not offer a right of appeal - unsurprising since no process was followed.

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