Employment legal update #71

1. Section 1 of the Employment Relations Act 2023

Section 1 of the Employment Relations (Flexible Working) Act 2023 came into force on 6 April 2024 by virtue of the Employment Relations (Flexible Working) Act 2023 (Commencement) Regulations 2024. The Act makes the following changes to the statutory flexible working request procedure:

• An employee is now entitled to make two requests in any 12-month period; and
• Does not now have to explain what effect, if any, they think their requested change would have on the employer and how any identified effect might be dealt with
• Employers are not permitted to refuse a request unless they have consulted the employee
• The time frame within which the employer has to make a decision is now reduced to two months from three, but the parties can agree longer if they wish
• The statutory right to request flexible working now becomes a day one right under The Flexible Working (Amendment) Regulations 2023, revoking regulation 3 of the Flexible Working Regulations 2014 which requires continuous employment for at least 26 weeks to be entitled to make a request
• The revised statutory ACAS Code of Practice on requests for flexible working, also came into force on 6 April 2024.

2. Statutory payments

With effect from 7 April 2024, the following statutory payments have changed:

• Statutory maternity pay (after the first six weeks), statutory adoption pay (after the first six weeks), statutory paternity pay, statutory shared parental pay and statutory parental bereavement pay increased to £184.03 per week (from £172.48) or 90% of the employee’s average weekly earnings, whichever is lower. This also applies to maternity allowance from 8 April 2024.
• SSP has increased from 6 April 2024 to £116.75/week (up from £109.40 / week).

3. Statutory Code of Practice

The new statutory Code of Practice on Dismissal and Re-engagement will come into force in July 2024, subject to Parliamentary approval. However, this may well now be affected by the forthcoming election so don’t hold your breath. The draft Code does not introduce any new legal obligations or ban the practice of “fire and rehire” altogether; but it states in several places that an employer “should” rather than “must” do something, including the fact that a threat of dismissal “should not be used as a negotiating tactic”. There is a proposed 25% uplift to any compensation awarded where an employer has unreasonably failed to comply with the Code; however this is not thought likely to act as a sufficient deterrent to employers intent on dismissing and re-engaging staff. The Code has already been approved by the House of Lords.

4. Fit note procedure

The government is considering reforming the current fit note procedure. It has announced a call for evidence which will end on 8 July 2024. The key purpose is to identify the extent to which the current system supports those returning from a longer-term illness as opposed to just short-term periods off sick. Employers and individuals are invited to comment on the efficacy of the current fit note process in meeting their needs, what could be improved and what, if any, additional information provided by a “may be fit for work” fit note could support employees return to work from sickness absence.

5. The Worker Protection Act 2023

The Worker Protection (Amendment of Equality Act 2010) Act 2023 is due to come into force on 26 October 2024. This Act will bring in a new mandatory duty on employers to prevent sexual harassment of their employees, and give employment tribunals a new power to uplift an employee’s compensation by up to 25% where an employer is found to have breached the new duty. As a result of this, the Equality and Human Rights Commission (EHRC) has announced its intention to open a six-week consultation in early summer on its planned changes to sexual harassment and harassment at work: technical guidance. This guidance will be updated to reflect the changes that will be introduced by the new Act. It will also update its statutory Employment: Code of Practice to reflect the Act. The final revised guidance will be published in September 2024, a month before the Act come into force.

6. The Paternity Leave Act

The Paternity Leave (Bereavement) Act, which will provide up to 52 weeks leave for a bereaved parent in circumstances where the mother or primary adopter has died, received Royal assent on 24 May 2024. The leave will run from the date of the death of the person concerned during the first year of the child’s life.

7. Lifting the cap on bonuses

Goldman Sachs has announced that it is lifting the cap on bonuses for its bankers following the announcement by the PRA and FCA in October 2023 that the limit on bankers bonuses will be lifted. The bank states that lifting the bonus cap will allow for “greater flexibility” to pay employees for performance, bring the UK in line with other financial centres, and encourage recruitment of the best talent. Several other large banks are considering similar steps.

8. TUPE

The Government is consulting on proposals to clarify and reform TUPE by reaffirming that TUPE only applies to employees, and preventing complex contract ‘splitting’ in cases where a business is transferred to multiple transferees. This follows a couple of cases where, in the case of the definition of “employee”, the scope of TUPE was widened to encompass workers; and an ECJ decision which allowed employers to split the contract work and therefore the employees’ contracts to multiple different transferees. The proposals are designed to put a curb on such stretching of the regulations. The purpose of the consultation, which runs until 11 July 2024, is to try and reduce the regulatory burden on businesses.

9. Inequalities in healthcare and employment

The Women and Equalities Committee has published a report on inequalities in healthcare and employment for people with a learning disability and autistic people. The report finds that the disability employment gap continues to widen, as does the disability pay gap, with nearly 69% of disabled workers earning less than £15 an hour. The employment gap for people with learning disabilities and autism is wider than for those with other disabilities.

Breach of Article 11 ECHR with the lack of protection from detriment in industrial action

In a case which may change the wording of the Trade Union and Labour Relations (Consolidation) Act 1992, the Supreme Court has held, in Secretary of State for Business and Trade v Mercer, that there is incompatibility in relation to the lack of statutory protection from detriment for taking part in lawful industrial action. In terms of domestic interpretation, S.146 of TULR(C)A, which protects workers from detriment for taking part in trade union activities, does not provide protection from detriment for participating in lawful strike action. The Court held that the dearth of protection is incompatible with the right to strike under Article 11 of the European Convention on Human Rights. Under this section, the employer is able to impose any sanction it chooses, short of dismissal, on employees who participate in lawful strike action and as such this ameliorates the right to strike, because employees cannot thereby strike without exposing themselves to detrimental treatment. The Court argued that, because of this, S.146 encourages unfair and unreasonable conduct by employers and effectively renders it lawful because there is no sanction for detrimental treatment.

The Supreme Court agreed with the Court of Appeal that S.146 could not be interpreted as conforming with S.3 of the Human Rights Act 1998, since this would require the Court to make policy choices which would amount to judicial legislation – which is not permitted. However, the declaration of incompatibility under S.4 HRA made by the Supreme Court means it is now up to Parliament as to whether and if so how, it legislates in this area. But don’t hold your breath – the government has other things on its mind at the moment…

Holiday: series of deductions and statutory v contractual leave

In British Airways plc v De Mello and others the EAT has given guidance on how to determine whether allowances should be included in holiday pay for aviation workers, when deductions from holiday pay form part of a series, and whether holiday can be designated as statutory or contractual.

The claimants comprised a large number of British Airways cabin crew who brought claims in 2007 concerning which of the multiple allowances from which they benefitted fell to be included in holiday pay calculations. Many of the claims were settled in 2013, but the 6 claimants in this particular claim refused to settle and the claims came before the employment tribunal in 2019, and ultimately the EAT. The allowances concerned included (among others) a generous meal allowance and duty free concessions. A further claim was whether British Airways was entitled to designate the first tranche of leave as statutory and the additional leave above the statutory minimum, as contractual.

The tribunal found that the meal allowance should have been included (the question of whether part or all was adjourned to a separate hearing); but the duty free concession should not have been; the break in a series of deductions of more than 3 months applied; and BA was allowed to designate the first tranche of annual leave as statutory. BA appealed the meal allowance point and the claimants cross-appealed the disallowing of the duty-free and other concessions/allowances, the break in a series of deductions, and the allocation of the first tranche of leave as statutory only.

The EAT allowed both the appeal and cross appeal and remitted both to a different tribunal to consider the issues afresh. In doing so, it gave guidance on all aspects.

It found that the tribunal had been wrong by the way in which it had approached deciding whether allowances are part of normal pay for holiday pay purposes. Holiday pay should include all payments intrinsically linked to the performance of the worker’s duties under their employment contract. It need not include payments to cover ancillary or occasional costs. However, the tribunal should not apportion a costs payment into an amount which should be included in normal pay and an amount which should not, based on an assessment of what amount would be reasonable to cover costs (i.e. the apportionment of the meal allowance which had been adjourned to a separate hearing). The entire allowance is either included or not.

When looking at the determination that a series of deductions was broken if more than 3 months apart, the EAT referred to the Supreme Court’s decision in Chief Constable of the Police Service of Northern Ireland and another v Agnew and others, the Northern Ireland case decision that any series of deductions from wages which was broken by a gap of three months or more was wrong. The EAT found that, when the tribunal had looked at whether the deductions were “sufficiently similar” and connected to form part of a series for the purpose of the time limit for a claim, the tribunal had decided that all the deductions related to holiday pay and that they all arose because of a failure to factor in one or more allowances. As such the EAT considered that the tribunal should have concluded they were sufficiently similar, and the same decision should be made with all of them. Notwithstanding that the three-month rule could be discarded, a decision still had to be taken as whether they were sufficiently linked in time to allow reliance on them as being part of the series.

The EAT also found that there was no power for BA to determine that the first tranche of annual leave was statutory, under the Civil Aviation (Working Time) Regulations 2004, which applied to the claimants in this case. The contracts did not give BA this power, and even if they had, there was no evidence that this had been exercised. As such, all leave days were to be treated equally. The claims were remitted back to a different tribunal to consider.

Individual respondents not liable for discrimination – decision overturned

In Baldwin v Cleves School and others the EAT examined section 110 of the Equality Act which deals with liability of individual respondents in discrimination claims. The employment tribunal had held that two individual respondents were not liable for discrimination under this section; however, the EAT, when reviewing the wording of the section, overruled this decision on the basis that there is no discretion allowed within the section once the component parts are fulfilled.

The claimant was a newly qualified teacher at Cleves School from September 2014 to March 2015. She resigned following several incidents, including separate ones with two different colleagues, one of which was the head teacher. She brought a claim for disability discrimination against the school, and both colleagues. The tribunal upheld two disability discrimination claims against the school, relating to the two incidents, but dismissed the rest, including those against the individuals. It held that the school was vicariously liable for the two upheld acts of discrimination.

However, in relation to the individuals, the tribunal found that they were not liable for those acts under section 110. The tribunal found that while their actions were described as “misguided” they were actually trying to deal with a complex situation and their main failing was that they did not ask for HR advice in a timely manner. The claimant appealed to the EAT, which examined the proper construction of section 110.

In doing so, it found that there was no discretion which could be exercised by the tribunal in circumstances where the constituent parts of the section where applicable. The conditions to be met by the section were that the individuals were employees; that they had done a discriminatory act that was treated as having been done by their employer; and that discriminatory act was a contravention of the Equality Act by the employer. The EAT’s conclusion was that the section was intended to be wide in scope and that as such the tribunal had no discretion: if the conditions were satisfied, the individuals were liable.

Furthermore the EAT considered that just because this was a case of vicarious liability, this did not mean that the individuals who were responsible did not have to be held liable under section 110. An essential component part of this section is that the individual is acting in the course of their employment, which means that the employer is always potentially liable.

The EAT therefore substituted a decision that the individuals were indeed liable for the discrimination.

Lack of knowledge of disability so employer did not discriminate

In Godfrey v NatWest Market plc the EAT has upheld a tribunal’s decision that an employer who did not know at the time of a former employee’s employment, and could not have reasonably been expected to know, that the employee was disabled, had not discriminated against him when the employee was only diagnosed with Asperger’s syndrome several years later.

The claimant was employed at the bank from 2006 until 2011. A few years after he left, he unsuccessfully applied for a number of vacancies. During that time he was diagnosed with Asperger syndrome although his evidence was that those who had worked with him would have been aware of his communication and social interaction difficulties. He brought claims of direct disability discrimination and discrimination arising from disability as a result of being unsuccessful.

The tribunal found unanimously that the respondent did not have actual knowledge of his disability; and the majority (note) concluded that it did not have constructive knowledge either. Furthermore it found that even if the respondent had investigated further, the claimant would not have cooperated. The claimant appealed on the basis that the tribunal had not applied the correct legal test, namely, that it had focused on whether the respondent could have reasonably been expected to know that he had an autistic spectrum condition, rather than whether it had knowledge of a mental impairment with a substantial and long-term adverse effect on his ability to carry out normal day-to-day activities.

His appeal was dismissed, the EAT finding that the tribunal had considered the correct test. The claimant’s behaviour during his employment gave very little evidence to suggest the respondent could have been alerted to his condition and consider that he may suffer from the condition that he did. The EAT held that the tribunal was entitled to find the respondent did not have actual knowledge; but the conclusion of the majority that the respondent also lacked constructive knowledge of disability was, in its view, unsafe. What swung the EAT here was that the tribunal had justifiably found that the claimant would have refused any assessment and as such lack of constructive knowledge was justified.