Employment legal update #67 | November 2023

1. Increases to illegal working penalties

The Home Office has announced significant increases to illegal working penalties for employers who employ individuals without the appropriate immigration permission in the UK. These are increasing very significantly as follows:

• From £15,000 per illegal worker (for a first breach), to £45,000 per illegal worker and
• From a maximum of £20,000 per illegal worker (for repeat breaches), to £60,000 per illegal worker.

These changes will take effect in 2024, though an exact date has not yet been announced. Additionally, the Home Office proposes to consult on options to strengthen action against licenced businesses which employ illegal workers.

2. Statement of Changes to the immigration rules

The government has published a Statement of Changes to the immigration rules: HC 1780, with most changes implemented from 5 October 2023 onwards. These include:

• Expanding the age range of the Youth Mobility Scheme route for Australian and Canadian nationals from 18-30 to 18-35.
• These nationals will also be able to extend their permission under this route up to a maximum of three years.
• Removing the right of administrative review for EU Settlement Scheme decisions.
• Amendments to the definition of “lawful residence” for Long Residence applications to clarify that time spent under previous visitor, short-term student visa or seasonal worker routes is excluded.
• Removing NHS debt as a ground for refusal of an Electronic Travel Authorisation application.

3. National Minimum Wage

Expected to come into force on 1 April 2024 are the National Minimum Wage (Amendment) (No.2) Regulations 2023 which remove the exemption from the national minimum wage (NMW) that currently applies to domestic workers who live in the employer’s family home and are treated as members of the family. Currently, the National Minimum Wage Regulations 2015 exempt employers from paying the NMW to those undertaking work in the employer’s family household, where they live in as family and where there is no deduction from their wages for food and accommodation. This exemption covers au pairs, nannies and companions. The rationale for this is the recommendation by the Low Pay Commission that the exemption is removed following a tribunal decision to disapply the equivalent provisions in the NMW regulations 1999 because they were indirectly discriminatory against women. However, the NMW exemption will continue to apply to actual members of the family in respect of domestic duties where the worker resides at home.

4. Treaty on the Functioning of the European Union

The government has indicated that it will introduce regulations to replicate the effect of Article 157 of the Treaty on the Functioning of the European Union which allows comparisons in equal pay claims to be made between workers “in the same establishment or service” where their terms and conditions are attributable to a “single source”, if that single source has the power to correct the discrepancy in pay or terms and conditions. Equal pay claimants have sometimes found it necessary to rely on the direct effect of Article 157, because under domestic equal pay law, the claimant and her comparator must be (or have been) employed by the same employer or by associated employers, either at the same establishment, or at different establishments where “common terms” of employment apply. Notably the multiple claimant case brought against Tesco confirmed that the UK claimants could rely on article 157 both for equal work and work of equal value claims. The government has issued assurances that there will be no reduction in equal pay protections by taking this step and it is just bringing the legislation into line with the case law.

5. The Workers Act 2023

The Workers (Predictable Terms and Conditions) Act 2023 (Predictable Terms Act) received Royal Assent on 18 September 2023. However, it is not yet in force, and neither are the regulations which will stem from it, because the government wants employers to have time to prepare for it coming in. It is anticipated to come into force around the year after it became an Act. It amends the Employment Rights Act to give workers and agency workers the right to request a predictable work pattern in the following circumstances:

• Where there is a lack of predictability in any part of their work pattern; i.e. fixed term contracts of 12 months or less are presumed to lack predictability.
• The change relates to their work pattern.
• The reason for applying for the change is to get a more predictable work pattern.

The following conditions will apply:

• No more than two applications may be made in a 12-month period.
• Applications may be rejected on statutory grounds (presumably regulations will identify what these are).
• There will be a minimum service requirement to access the right, expected to be 26 weeks, to be specified in regulations. Potential claims will need to be based on procedural failings by the employer, unlawful detriment and automatic unfair dismissal.
• Regulations will provide further details of the statutory regime.
• Acas is producing for consultation in Autumn 2023, a new code of practice to provide guidance on making and handling requests.

Holiday Pay – 3 month link for series of deductions abolished

A landmark decision from the Supreme Court widens the scope of holiday pay claims for workers and employees. Up until this decision the time limit for employees or workers to bring claims for underpayment of holiday spanning a number of periods was limited to the gaps between holidays (or any period when underpayment was claimed) being no more than three months apart. In other words, the series of deductions all had to have taken place within 3 months of each other for these claims to be valid.

The case of Chief Constable of the Police Service of Northern Ireland v Agnew, which emanates from Northern Ireland, has now changed this. The Northern Ireland Court of Appeal had previously held that there did not need to be a break of no more than 3 months between periods of deductions for the claims to be valid. This contrasted with the EAT decision in Bear Scotland v Fulton which held that, for claims for a series of deductions to be brought, there had to be no more than 3 months between each period clamed for. The Chief Constable case was not binding on the UK courts because it was in Northern Ireland. However, the case went on appeal to the Supreme Court; which has agreed with the Northern Ireland Court of Appeal – and so it is now binding on UK courts, over-ruling Bear Scotland.

Just under 4000 police officers and civilian employees brought claims that their pay whilst they were on holiday was only calculated by reference to basic pay and did not include other pay, such as regularly worked overtime. While the respondents admitted this, they argued that claims for underpaid holiday which had a break of more than 3 months between holidays, broke the chain of a series of deductions.

However, the Northern Ireland Court of Appeal disagreed and held that a series of deductions could be evidenced if they occurred with sufficient repetition, even if the intervals of time were different and the amounts themselves were different. The Supreme Court has accepted this argument; and in doing so, has opened the door for a potentially sizeable increase in number of unlawful deductions claims for underpayment of holiday because claimants will no longer be constrained by the limit of three months to evidence a series of deductions. The Supreme Court argued that what constitutes a series of deductions will be a question of fact in the individual circumstances; but that the purpose of the provisions is to protect workers and employees, especially vulnerable ones, from being paid too little for the work they do.

So employees and workers will no longer need to worry about a gap of more than 3 months between periods of holiday defeating their claims for underpayment of holiday pay. While this is bad news for employers, who may now face increased holiday pay claims, there is at least the small comfort that the employees and workers can only go back a maximum of 2 years to claim underpaid holiday, and no further, so unforeseen liabilities will be limited.

Dismissal not unfair when termination date repeatedly extended

In Garcha-Singh v British Airways plc the EAT has held that an employee was not unfairly dismissed when his employer extended his termination date seven times after reaching the decision to dismiss. Although the employer’s contractual absence management policy did not provide for postponement of termination, the employer’s decision to repeatedly extend the date to give the employee further opportunity to return to work from sickness absence did not constitute a breach of his employment contract. Even if there had been a breach of contract, it did not necessarily follow that the dismissal was unfair because the tribunal still had to consider whether the procedure adopted by the employer was within the range of reasonable responses. It was clear from the tribunal’s findings that there was no substantive unfairness to the employee and that each of the extensions was for his benefit.

The EAT further held that the failure to offer the employee the opportunity to appeal against the final decision not to extend his termination date further did not constitute a breach of contract, nor affect the reasonableness of his dismissal. Although the original decision to dismiss was made over a year before the eventual termination date, the tribunal had been entitled to find that the additional matters the employee wanted to raise at a further appeal added little to what had gone before and did not address the employer’s reason for terminating his employment. In the circumstances, fairness did not require the employee to be given a second appeal and it was open to the tribunal to find that the procedure adopted by the employer was within the range of reasonable responses.

This may be a case that turns on its facts but is interesting, nonetheless.

Use of racially discriminatory word led to unfair dismissal

The case of Borg-Neal v Lloyds Banking Group plc is a tribunal decision concerning a manager who was attending race education training run by the bank. During the training the claimant asked the trainer how they would handle a situation of an ethnic minority delegate using a word which might be considered offensive during a training session. When the trainer did not respond, he repeated his question using as an example a particular term which has long been outlawed, beginning with N – in full. He was disciplined and dismissed for gross misconduct. The fact that he explained the context in which he was using the term, and apologised profusely, made no difference. He brought a claim for unfair dismissal, discrimination arising from disability, and direct race discrimination.

The tribunal found that he had been unfairly dismissed. Context was everything here. He had demonstrably been using the word as an example to ask a valid question and this had not been taken account of by the dismissing officer. The dismissing officer had conflated the question of whether the word should have been used with whether he should have been dismissed for using it. Furthermore, no proper investigation had been carried out. It concluded that no reasonable employer in the same situation would have dismissed him. It had also emerged that he suffered from dyslexia, symptoms of which sometimes caused him to burst out what he was saying to avoid losing his train of thought, which contributed to how he expressed himself in the session.

However, his claim for direct race discrimination failed as there was no evidence that he had been dismissed because he was white.

Menopause was a disability: Equality Act section 15 claim

The case of Lynskey v Direct Line Insurance Services Ltd concerns the menopause being defined as a disability. The claimant had four years of good performance. Once the menopause hit, however, her performance dropped. Her manager was aware she was suffering from the menopause, and that her symptoms adversely affected her performance. The employer made adjustments, including additional support and training. However eventually it put her on performance management which culminated in a formal written warning meaning no pay rise, and cessation of sick pay when she was sick.

The tribunal considered that all the actions leading up to her eventual resignation were arising from something in consequence of a disability. No evidence had been adduced that other actions which were less discriminatory could have achieved the same aims i.e. looking at alternative roles and taking account of the mitigating factor of the employee’s disability.

However the claimant was found to have affirmed the repudiatory breach of contract of the appraisal rating, written warning and withdrawal of sick pay because she waited 8 months before resigning.

She was nonetheless awarded over £64,000 included £23,000 for injury to feelings; and £2,500 for aggravated damages because of the employer’s refusal to concede disability until close to the final hearing, which the tribunal considered oppressive and a cause of unnecessary upset to the claimant. The tribunal found that, as a result of the way in which she had been treated because of her disability, she was unable to work for several months, and the balance comprised loss of earnings.

Refusal to work weekends because of alleged childcare issues was not unfair dismissal

This case has been around the tribunal before and has previously been commented on in the Update. In Dobson v North Cumbria Integrated Care NHS Foundation Trust the EAT had held that a tribunal had been wrong to find that there was no evidence of group disadvantage to women who, because of childcare responsibilities, were less likely to be able to accommodate certain working patterns than men. The EAT instead held that there was group disadvantage and that the claimant suffered that disadvantage. As a result, it remitted the case back to the tribunal.

However, the tribunal upheld its original decision that the claimant had neither suffered indirect discrimination, nor had she been unfairly dismissed. It found that her dismissal for refusing to work weekends was a proportionate means of achieving the Trust’s legitimate aim of providing care in the community 24/7, balancing workload among the team, and reducing the cost of using more senior nurses at the weekend.

The situation came about because the Trust was transitioning community nursing to a more 24/7 service to treat patients at home with more complex needs. The claimant had a long-standing arrangement that she would work two fixed days a week which she said she could not change because she had two disabled children and was unable to get family help. As a result of the transition change, the Trust asked her to work occasional weekends provided she was given the required notice. If she did not work some weekends, it meant that other nurses had to do so more often; and more senior and expensive nurses had to work weekends more frequently, leaving them unavailable to deal with management issues during the week. The issue was whether the Trust could show that the provision, criterion or practice (PCP) of requiring all community nurses to work flexibly, including weekends, was a proportionate means of achieving a legitimate aim when assessing the extent of the disadvantage to the claimant against the reasonable needs of the Trust.

The tribunal found that the PCP was not only proportionate but viably a legitimate aim which the Trust was trying to achieve. She was not required to fully comply with it and was only being asked to work occasional weekends. The only other option was to exempt her entirely, which placed others at a disadvantage because they had to work weekends more often. The tribunal commented that flexible working has to be exactly that; flexible, and employer’s needs must also be taken into account and must sometimes take priority, as in this case. It turned out eventually that the claimant could enlist some family help so the disadvantage to her was less than she had tried to make out and at the lower end of the scale. So after all that, the claimant lost again…