Employment legal update #63 | June 2023

Our Employment & HR team brings June's review of new legislation, guidance and case law.

News: 

The annual changes to the national minimum and living wage took effect from 1 April 2023 as follows:

• The NLW for workers aged 23 and over increases from £9.50 to £10.42 per hour.
• The NMW for 21 to 22-year-olds increases from £9.18 to £10.18 per hour.
• The NMW for 18 to 20-year-olds increases from £6.83 to £7.49 per hour.
• The NMW for 16 to 17-year-olds increases from £4.81 to £5.28 per hour.
• The apprentice rate increases from £4.81 to £5.28 per hour.
• The accommodation offset amount increases from £8.70 to £9.10

The Strikes (Minimum Service Levels) Bill has had its committee stage and third reading and completed its passage through the House of Common without amendment. It has now gone to the House of Lords. If enacted, the Bill would allow the government to make regulations prescribing minimum service levels (MSLs) during a strike in the fields of health, transport, education, fire and rescue, border control, nuclear decommissioning, and radioactive waste management services. This has been introduced as a direct result of the excessive strike action in recent months, especially in the transport sector.

One of the main recommendations of the Taylor Review in 2017 was to introduce measures to address the issue of "one-sided flexibility" where a worker has no guarantee of work but is expected to be available at very short notice when required. The government has now stated its support for a private member’s bill entitled the Workers (Predictable Terms and Conditions) Bill. The Bill has passed its second reading and, if enacted, would amend the ERA to give workers and agency workers the right to request a predictable work pattern. Key provisions are as follows:

• Workers who have unpredictability in any part of their work pattern (fixed term contracts of 12 months or less are presumed to lack predictability) can make a request to require certainty
• The change must relate to their work pattern
• Their purpose in applying for the change is to get a more predictable work pattern
• Employers, temporary work agencies or hirers would be able to reject applications on specified grounds
• Workers and agency workers would have the right not to suffer a detriment short of dismissal for making an application under the procedure or for bringing proceedings to enforce the right to request a predictable work pattern
• It would be automatically unfair to dismiss an employee for making an application or for bringing proceedings to enforce the right
• No more than two applications may be made in any 12-month period
• There may be a minimum service requirement of 26 weeks before an application can be made

In many respects this Bill is the same as the statutory framework for flexible working applications. It does not, however, contain provisions reflecting the other proposals in the government's consultation, which included the right to reasonable notice of working hours and compensation for shift cancellation or curtailment without reasonable notice.

The Worker Protection (Amendment of Equality Act 2010) Bill has had its first reading in the House of Lords. A date for the Bill's second reading is awaited. It will come into force a year after it is passed, and its purpose is to amend the Equality Act as follows:

• An employer will be treated as harassing an employee when a third party, such as a customer or client, harasses an employee in the course of their employment and the employer has failed to take all reasonable steps to prevent that harassment.
• Other than sexual harassment, an employer will not be taken to have failed to take all reasonable steps to prevent harassment where the harassment involves a conversation / speech in which the claimant is not a participant; the conversation / speech contains the expression of an opinion on a political, moral, religious or social matter; the opinion is not indecent or grossly offensive; and the harassment is unintentional.
• There will be a new duty for employers to take all reasonable steps to prevent sexual harassment of employees in the course of their employment. The Equality and Human Rights Commission may enforce this duty if it is breached under its existing enforcement powers and, where a claim for sexual harassment has been upheld, by an employment tribunal.
• Where a tribunal upholds a claim for sexual harassment, if it finds that the employer breached the duty to take reasonable steps to prevent sexual harassment, it may order an uplift in compensation of up to 25% to reflect the employer's breach.

The amendments to the Equality Act in relation to sexual harassment will be supported by an EHRC statutory code of practice, which should be published when the changes come into force. Prior to this, the Government Equalities Office will produce guidance which will be published in due course.

The Protection from Redundancy (Pregnancy and Family Leave) Bill has completed its third reading in the House of Commons. This Bill is a Private Member's Bill which, if enacted, would allow for regulations providing protection against redundancy "during or after" maternity leave, adoption leave or shared parental leave and to add a new provision allowing for regulations about redundancy "during or after" a "protected period of pregnancy". In previous consultation response the government has committed to extending redundancy protection to apply from the date an employee notifies the employer of her pregnancy until six months after the end of her maternity leave and is also considering the argument for the limitation period to be extended to 6 months.

The Carer's Leave Bill has also had its third reading in the House of Commons and first in the House of Lords. If enacted, this Bill will entitle all unpaid carers to one week's unpaid leave a year to deal with caring responsibilities.

The Retained EU Law (Revocation and Reform) Bill 2022-23 has had its second reading in the House of Lords with the committee stage in February  (during which every clause of the Bill has to be agreed and votes on any amendments take place). The response to the second reading debate included the following:

• A major cross-government programme is under way to identify retained EU law that can be reformed, repealed or replaced. When the Bill receives Royal Assent, a cross-government legislative programme will commence to manage change ahead of the “sunset date” which is the end of 2023)
• The government will need to pass hundreds of statutory instruments before the sunset date
• The government will ensure that the necessary legislation is in place to uphold the UK's international obligations, including the Northern Ireland Protocol and the UK-EU trade and co-operation agreement, after the sunset date

A recent written question in Parliament about the average waiting times in employment tribunals elicited the response that the average number of weeks between receipt of a claim and the first employment tribunal hearing has steadily increased, from 31 weeks in 2008 to 49 weeks in 2021. This includes both single and multiple claims. No information is yet available for 2022. The answer also stated that the waiting times have risen since 2019 (average of 38 weeks) because of the COVID-19 pandemic.

The trial of the four-day working week has concluded. A total of 61 companies took part, and 56 have extended the four-day week (92%) including 18 who have made the change permanent. Significant benefits, in particular with employee well-being, have come out of the trial analysis. In all, 2,900 employees took part in the trial. Surveys taken before and after found that 39% considered they were less stressed, 40% were sleeping better and 54% found it easier to balance work and home responsibilities. The companies were satisfied with productivity and business performance during the trial. Sick days fell by about two-thirds and 57% fewer staff left the companies taking part compared with the same period a year earlier. The findings of the trial will be presented to MPs as part of efforts to promote a 32-hour week for workers in Britain.

Commentary:

Term Time salaried worker entitled to NMW

In Lloyd v Elmhurst School Limited the EAT has overturned an employment tribunal decision that a term-time salaried hours worker was not entitled to the national minimum wage for the hours outside the school terms which she did not work.

The claimant was a learning support assistant who was paid a salary in equal monthly instalments and worked three days a week during school terms. Her contract entitled her to what were described as the "usual school holidays" as "holiday with pay". Her contract made provision for her undertaking some work outside normal school hours although in reality she only worked during term time.

The claimant brought a claim for unlawful deduction from wages under the ERA, on the grounds that she had not been paid the national minimum wage. Her claim was dismissed by the employment tribunal on the grounds that her basic hours for the purposes of the relevant regulations were 21 hours over 40 weeks, comprising the 36 weeks she worked during school terms and her leave entitlement of 4 weeks under the Working Time Directive. The tribunal took the view that the additional 12 weeks' contractual holiday were not part of her basic hours.

The claimant appealed to the EAT which held that the tribunal had been wrong to look at the hours which the claimant had worked instead of what her employment contract said. The EAT found that a salaried hours worker's basic hours do not depend on the hours actually worked; basic hours can include periods of absence for which salary is payable under the contract (even if they are not absences from a period when a worker would otherwise be working). The tribunal had been wrong to focus on whether or not the claimant was working outside school terms.

The question of what counted as her basic hours under regulation 21(3) of the NMW regulations was not helped by looking at the MENCAP case because in that case, the Supreme Court had been looking at the treatment of sleep-in shifts under the previous legislation to the NMW Regulations. Additionally, the question in that case of whether a worker is "available at or near a place of work" for the purpose of doing work was very different to the position of the claimant here where the issue was what counted as her basic hours.

This case may be a very fact specific one, because of the drafting of the contract terms, but is interesting nonetheless.

Without prejudice letter effective as dismissal letter

In Meaker v Cyxtera Technology UK Ltd, the EAT has held that a letter to an employee headed ‘without prejudice’, which stated that his employment would terminate by mutual agreement and including a draft settlement agreement, amounted to an effective letter of dismissal. Notwithstanding that the reference to mutual agreement was incorrect, the remainder of the letter stated a date of termination, and the payments that would be made and when. The letter was therefore sufficiently clear and unambiguous to effect a dismissal for the purposes of unfair dismissal in the Employment Rights Act.
The facts were these. The claimant was employed in a heavy manual night role. Following back injuries nearly 2 years apart and substantial periods off work, the claimant and respondent accepted that there were limitations on his ability to undertake manual work on a permanent basis. His application, and appeal, for PHI were unsuccessful.

The employer had several conversations with the claimant during which it mooted the possibility of terminating his employment and the offer of a settlement agreement. After one of these discussions the claimant understood that alternative employment was being considered, which the claimant believed was being pursued; erroneously as it turned out. Shortly thereafter the claimant received a letter headed ‘without prejudice’ which stated that there had been a mutual agreement to terminate his employment; the termination date; the amount of holiday pay and PILON he would receive; and that he would be paid an additional ex gratia payment conditional upon signing the enclosed settlement agreement. The letter started by stating that it had been agreed that there would be a mutual termination of employment. Shortly thereafter, the claimant received a payment in lieu of notice and holiday. No other correspondence was sent and the claimant did not sign the settlement agreement. He then brought a claim of unfair dismissal.

The employment tribunal convened a preliminary hearing to consider whether the claim was presented in time, and this turned on the termination date and whether this was the date of the letter or the date on which the claimant was paid notice and holiday. The tribunal found that the letter was an effective letter of dismissal, and the EDT was 2 days later; as such the claim was out of time.

The claimant appealed to the EAT, arguing, among other things, that the tribunal was wrong not to consider the contractual date of termination (which is not necessarily the same as the statutory EDT); that if the letter was a termination without notice in breach of contract, that breach was not accepted; and that the letter was insufficiently clear and unambiguous to constitute an effective dismissal.
The EAT dismissed the appeal. It applied an earlier EAT decision which established that, where an employee is dismissed summarily, the EDT is the date of the summary dismissal, even if the dismissal was potentially a repudiatory breach of contract. Notwithstanding the argument about the case law, the EAT confirmed that this case remains good law.

Regarding whether the letter could amount to a dismissal letter, the claimant argued that it was not clear and unambiguous that his employment was to terminate on an identified date. The letter was clearly marked without prejudice, with a draft settlement agreement and included terms which had not been agreed.

While the EAT acknowledged that this had caused it to stop and consider the situation, it ultimately rejected this proposition. It held that the construction of the letter was a question of fact for the tribunal to determine and as such this decision could only be overturned if it were perverse. The EAT considered that the tribunal was entitled to conclude that the letter, read in the round and in the circumstances of the case, was clear enough to be unilaterally terminating the claimant’s employment. It concluded that the letter was not a complete surprise to the claimant; he and his employer had agreed he could not return to his original role and they had discussed terminating his employment.

Although the letter was headed ‘without prejudice’, the tribunal had considered that it was distinctly divided into two sections; one dealing with the termination of the claimant’s employment and the payments which would be made, and the other a proposal for settlement of any claims if he signed the settlement agreement. Although there was an incorrect reference to termination by mutual agreement, the letter clearly stated the final day of employment, the arrangements that would be made for the claimant on termination in terms of payments; and that the tribunal had justifiably concluded that this was a clear termination letter and that part of the letter was not reliant on anything else happening i.e. it was not the case that his employer would only terminate if he signed the settlement agreement.
An interesting case and it would certainly be helpful to have known the exact wording of the letter. Often these letters are accompanied by an open letter formally terminating employment and then a without prejudice letter making an offer of settlement, but it appears that in this case, the employer combined the two albeit with separate sections within the letter.