Annual employment law update, January 2017, Manchester

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Annual employment law update 2017
Manchester

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Today’s session
Looking back over the last 12 months, there were
significant developments in relation to:-
1. Working time regulations
2. Equal pay
3. Restrictive covenants
4. Discrimination
5. Immigration Act 2016

Today’s session
Looking forward over the next 12 months (and beyond);
1. Whistleblowing
2. Gender Pay Reporting
3. Employment status
4. Data protection
5. Discrimination

Looking forward…
6. Apprenticeship levy
7. Trade Union Act 2016
8. Tribunal update
9. Autumn statement
10. Brexit

1. Working Time Regulations
1998 (WTR) Update

WTR - Topics
a) Holiday pay calculations
(commission, voluntary
overtime and increased
working hours)
b) Entitlement to rest
breaks

WTR – Brief recap
• Implements European Working Time Directive
• Directive aims to protect the health of workers
• Contains legislation governing holiday entitlement, pay and
rest periods
Significant cases:
– Fulton v Bear Scotland
– Paterson v Castlereagh Borough Council
– Plumb v Duncan Print Group Ltd

a) Holiday Pay: Commission
British Gas Trading Ltd v Lock (CA) – October 2016
– Mr Lock’s results based commission should have been
factored in to holiday pay calculations
– BUT Court emphasised that each case should be decided
on its own facts
– Bankers’ bonuses (and different established commission
schemes) may be decided differently
– Court of Appeal refused to go into further detail
– British Gas requested leave to appeal to Supreme Court

a) Holiday Pay: Voluntary overtime
Brettle v Dudley MBC (ET)
– Voluntary overtime, out of hours standby, and call-out
allowances to be included in holiday pay calculation
– Non-binding decision
– BUT illustration of how tribunals may interpret existing case
law in the future
– The normal rule = elements of pay need to be intrinsically
linked to the required performance under the contract
– Even though the extra shifts were voluntary in this case, once
the employee put their name forward, they were committed to
carrying out the work

a) Holiday Pay: Increased working
hours
Greenfield v The Care Bureau Ltd (ECJ)
– Where a part time or variable hours contract employee increases their
hours, annual leave that has already accrued does not need to be
recalculated retrospectively
– Going forward, leave entitlement should be recalculated to reflect the
new working pattern
– Any leave taken in excess of the entitlement that applied under the
previous working pattern should be deducted from the leave going
forward
– The calculation of leave entitlement is the same, regardless of
whether employment has terminated or is continuing

b) Rest breaks
Grange v Abellio London Ltd (EAT)
• “Working time” is defined as:
– any period during which a worker is working, at his employer's
disposal and carrying out his activity or duties;
– any period during which he is receiving relevant training;
– any additional period which is to be treated as working time for
the purpose of these Regulations under a relevant agreement.
• “Rest period” – any period that is not working time
• Decision: an employer has a duty to afford a worker the right to a
rest break, regardless of whether it has been requested by the
employee

So what?
• Review risk areas in light of most recent decisions – do you have a
lot of employees who:
– Undertake voluntary overtime; or
– Work on results based commission?
• Consider reviewing working arrangements and reviewing holiday
pay calculation formulae
• Any audit would therefore require a close comparison of working
arrangements to the arrangements in these cases

Next steps: Rest breaks
• Consider policies and procedures
for rest breaks
– 48 hour working week
– 20 minute rest break for shifts
over 6 hours
– 11 hours between shifts
– 24 hours rest each week
• Check that policy reflects reality!
Is it always possible for
employees to take their rest
breaks?

2. Equal Pay

Equal pay: Overview
• Equality Act 2010
• Employers must give men and women equal treatment
in the terms and conditions of their employment
contract
• Employees can compare any terms in the contract of
employment with the equivalent terms in a
comparator’s contract. A comparator, broadly, is an
employee working for the same employer (and who has
pay set by the same source) doing like work, work
rated as equivalent or work of equal value.

Equal pay – Brierley v Asda Stores Ltd
• 7,000 (mainly female) equal pay claims from
current and former retail employees
• Arguing that the (mainly male) employees in the
distribution depots were paid substantially more
• ET preliminary hearing on whether the retail staff
can use the distribution staff as comparators when,
on the face of it, they do different work

Equal pay – Brierley v Asda Stores Ltd
• Asda argued that there was not a ‘single pay
source’ (the employees were split between Retail
and Distribution) and that the two groups were not
on common terms or carrying out like work
• ET thought differently, deciding that the executive
board was the single pay source and, whilst specific
terms were different, the ET found the
employment terms were broadly similar

So what?
• Watch this space – only a preliminary hearing, the full
claim may yet be unsuccessful
• BUT take note if you employ staff on broadly similar
terms who carry out different roles
• Are they of equal importance to the business?
• If they are paid unequally – a risk assessment may need
to be carried out
• Court is willing to look beyond corporate structures and
determine who has the power to create pay equality

3. Restrictive Covenants

Restrictive covenants: Overview
• Contractual term that can place post termination
restrictions on an employee in relation to:
– Employment with competitors
– Poaching colleagues
– Poaching clients/customers
• To be enforceable they must be reasonable in
duration and geography, not going beyond what is
reasonably necessary in order to protect legitimate
interests of the employer’s business

Bartholomews Agri Food v Thornton
• Employee began work with the employer as a trainee
agronomist in 1997
• At this time he had no experience or customer base
• At the time of termination, the employee’s customer
base made up for 2% of the employer’s overall turnover
• Employee challenged the enforceability of a non-
compete clause which prevented him from working
with the whole of the employer’s customer base for 6
months

Bartholomews Agri Food v Thornton
• High Court rejected the covenant on two grounds:
• If a covenant is unenforceable when it is first imposed
(it was imposed when the employee was a trainee,
meaning, at that time, it was wholly unreasonable due
to his lack of client base), it will remain
unenforceable regardless of experience gained or
promotions
• Preventing an employee from dealing with any
customer regardless of previous dealings is too wide,
even after a 20 year career

So what?
• Don’t just get off the shelf covenants drafted up –
think about it!
• When was the covenant agreed? The question is
whether it was reasonable then, not whether it is
reasonable now
• Is the covenant limited?
• Many covenants in employment contracts are
outdated and too wide – check them every time
your employees are promoted – do they still work?

4. Discrimination Case Update

Recent developments – age
discrimination
Gorka Salaberria Sorondo v Academia Vasca de
Policia y Emergencias (ECJ)
• Article 2 Equal Treatment Framework Directive & Equality
Act 2010
• Police force entitled to set an upper age limit of 35
• The difference in treatment was not based on age itself, but
a characteristic related to age
• Must be a ‘genuine occupational requirement’
• Treat with caution – good health and fitness may have
been a more appropriate requirement

Recent developments – sham job
applications (1)
Kratzer v R+V Allgemeine Verischerung AG, (ECJ)
• C application for graduate trainee position rejected,
forming the basis of a complaint for age discrimination
• C later found out that the four positions were all
offered to women, leading to a subsequent sex
discrimination claim
• Employer explained to C that the rejection had been
automatically generated and did not reflect its
intentions

applications (2)
• ECJ held that European discrimination law does
not protect those who are only applying for a
job to enable them to bring a discrimination
claim
• Whether or not the application is genuine will
be a question of fact in each case

applications (3)
• A sham applicant is
often a recruiter’s worst
nightmare and this case
is very welcome
• It also reflects the ECJ’s
willingness to stamp out
the abuse of
employment rights

Reasonable adjustments (1)
G4S Cash Solutions v Powell (EAT)
• Engineer developed back problems and could no
longer carry out his role
• Classed as disabled under the Equality Act 2010
• Moved to junior ‘key runner’ role – salary protected
• Employer later tried to reduce salary to reflect less
skilled role
• Held that pay protection can be a reasonable
adjustment in appropriate circumstances

So what?
• Joins the body of case law that suggests that just about
anything can be considered a reasonable adjustment
• Unions may use this case as a basis to start suggesting
pay protection as the normal response to disability
• Remember that each case turns on its own facts, and
that indefinite pay protection as a reasonable
adjustment depends on all kinds of factors, not least
the size and resources of the employer
• Remind unions of this and seek advice

McFarlane v EasyJet (ET)
• Air stewardesses, on medical advice, requested
adjustments to working hours to allow them to
express milk
• EasyJet refused to accommodate
• Held that this indirectly discriminated against
women

Analysis:
• ET decision = not binding
• BUT reflects general trend towards support for family
life
• Consider alternative working arrangements for
returning maternity leavers carefully
• If alternative working arrangements are refused, ensure
you have very good reasons and solid evidence -
particularly if this conflicts with medical advice

Other interesting cases in 2016…
“Pulling a sickie” - Dismissals
• Employees that make up, or exaggerate the effects of, an injury or
illness to take sick leave fundamentally breaches the implied term
of trust and confidence which can result in dismissal for
misconduct.
Assault at a Christmas party – Vicarious liability
• Company not vicariously liable for an assault on an employee by
another employee which occurred at 3am after the Christmas
party. BUT, they could have been liable had it occurred during the
party…

5. Immigration Act 2016 (IA 2016)

IA 2016 - topics
a) Immigration overview
b) Public sector fluency duty
c) Other changes

a) Immigration: Overview
• It is unlawful to employ a person who does not
have a right to live and work in the UK or who is
working in breach of their conditions of staying in
the UK
• Initial and, sometimes, follow up checks required
• Failure to do so can lead to civil or criminal
penalties
• Enforced by the Home Office (via immigration
officers)

b) Public Sector Fluency Duty
• Introduced under the Immigration Act 2016
• Came into force on 21 November 2016
• Applies to public authorities (including NHS Trusts)
• Public authorities
• Code of practice will come into force on 22
December 2016 – gives guidance and examples for
employers

b) What is it?
• The fluency duty applies to those persons working
in roles which have, as a regular and intrinsic part
of that role, a requirement to speak to members of
the public in English.
• This could be in face to face discussions or over the
telephone.
• It covers employees, apprentices, workers and
agency workers

b) Steps to take
• Assess what standards are required for particular
roles and whether those standards are being met.
• If not, consider training / methods of support
• Review existing policies and procedures to include
reference to the fluency duty
• Review employment contract to include reference
to required fluency standard
• Ensure members of the public are aware of the
complaints procedure and how they can access it

c) IA 2016: Other changes (1)
• It used to be a criminal offence to knowingly employ
an individual who does not have the appropriate
permission to undertake the work for which they are
employed
• From 12 July 2016, the offence was widened to include
employing an illegal worker where the employer has
“reasonable cause to believe” the employee does not
have the appropriate immigration status.
• Increased conviction on indictment from 2 to 5 years

c) IA 2016: Other changes (2)
• A power of immigration officers to close businesses that
continue to employ illegal workers
• Increased powers for immigration officers to enter
businesses and seize/retain evidence
• A requirement that public authorities ensure public sector
workers in customer-facing roles speak fluent English
• April 2017 - Provisions giving the secretary of state the
power to introduce an ‘immigration skills charge’ on certain
employers who sponsor skilled workers from outside the EEA

Looking ahead

1. Whistleblowing

Whistleblowing - recap
• Cannot dismiss or subject
an employee to a detriment
for making a protected
disclosure
• To gain protection from
regulations, employee must
make a qualifying
disclosure of information
• Disclosure must be “in the
public interest”

Who is covered? (1)
McTigue v University Hospital Bristol (EAT)
• C was a nurse supplied to UHB by an employment
agency
• C made protected disclosures and was dismissed by
UHB
• C believed her dismissal was a result of the
protected disclosures
• C brought a whistleblowing claim against UHB

Who is covered? (2)
• Only those classed as ‘workers’ are covered
• C’s main contract was with TMS Ltd, not UHB
• Employment Tribunal decided that, for this reason,
C was not a ‘worker’ of UHB – claim struck out
• Employment Appeal Tribunal decided that she was
a worker because UHB had substantially
determined terms of C’s work, regardless of
whether this was to a lesser extent than the agency

What to look out for this year
Chesterton Global Ltd v Nurmohamed; Underwood v Wincanton Plc:
– Contractual disputes can be in the public interest
– “Public” can be small section of society
– Public interest test is subjective
– Appeal was due November 2016, now to float on 8 June 2017
Royal Mail Group Ltd v Jhuti:
– An employee can be automatically unfairly dismissed for making a
protected disclosure, even where the person dismissing them is
unaware of those disclosures
– Court of Appeal: To float on 28 or 29 June 2017

Whistleblowing – what you need
to do
• Ensure policies are clear and up to date
• Ensure management understand their obligations
under such policies
• When dealing with dismissals take a broad
approach to spotting a potential whistleblowing
situation and seek legal advice if unsure
• Don’t assume agency staff are not protected – if
you exercise a degree of control over contract
terms, they could be ‘workers’

2. Gender Pay Gap Reporting

Gender Pay Reporting
• Final draft Government regulations published 6
December 2016
• All relevant employers with more than 250
employees will be required to publish
information about their gender pay gap
• Includes bonus information
• Government has pledged to work with
businesses to eliminate all-male boards in top
350 companies

Gender Pay Reporting – next
steps
• carry out a pay audit to identify what your likely
gender pay gap will be and the reasons for this;
• benchmark your gender pay gap within your industry;
• consider what information you will want to add to any
report to set your figures in context;
• start to plan a strategy to address your gender pay gap
• Consider communication strategy ahead of publication
date
• We can help you!

3. Employment Status

The ‘gig economy’
Aslam & Farrar v Uber
• Uber drivers are 'workers' and not self-employed,
according to the Employment Tribunal in a test
case brought by two claimants
• Judgment strongly critical of Uber for attempting
to argue that it was “technology platform”, rather
than a transport company

The “gig economy” continued…
Dewhurst v CitySprint Uk Ltd (ET decision)
Bicycle courier was expected to:
• Smile
• Wear a uniform
• Work when they said they would
• Follow directions
Result – “worker” and not self employed

So what?
• These cases are limited in factual scope (unless you’re a
company named Deliveroo…)
• BUT there is a trend emerging which undermines any
attempt to introduce flexible working with little liability or
security (the so-called ‘gig economy’)
• Coincidentally, an inquiry by a Commons Select Committee
into the issues affecting workers, zero hour contracts and
the self-employed has been launched
• Be aware of the complexity of determining employment
status, and the risks of getting it wrong

4. Data Protection

Data protection
• Criminal records checks
– Enforced subject access requests illegal for most
jobs since 10 March 2015
– What about enhanced criminal records checks?
• Can a subject access request be refused on grounds
of disproportionality or improper purpose?
– Potentially yes. Awaiting Court of Appeal judgment
to provide answer/guidance soon

General Data Protection
Regulation 2016
• EU regulation made April 2016 with direct effect as of
May 2018
• How will its provisions affect employers?
– SAR fee of £10 to be removed
– Any request to be completed in 1 month rather than 40
days
– Purposive approach means employers will likely have to
provide more detailed information
• Policies and handbooks may need revision in light of
this

5. Discrimination
Home Office (UK Border Agency) v Essop and others
• Claimants must demonstrate the reason why they suffer
a disadvantage in indirect discrimination claims
• Supreme Court judgment awaited…

6. Apprenticeship levy recap
• Expected to come into force in April 2017
• All employers will pay 0.5% of their pay bill but
will receive £15,000 annual allowance against
the levy
• In effect only employers whose pay bill exceeds
£3m per year will contribute (fewer than 2% of
employers)

7. Trade Union Act 2016
• Royal assent 4 May 2016 – provisions expected to come
into force early 2017
• Ballot thresholds and results
• Notice of industrial action increased
• Expiry date of industrial action
• Supervision of picketing
• Facility time
• Restricts most aspects of strike action and will come as
a relief to employers

Trade Union Act 2016: Next steps
R E L A X
• The upcoming changes generally make it more
difficult for unions to organise and carry out strike
action

8. Tribunal update
R (Unison) v Lord Chancellor and another [2015] EWCA Civ
935
• Court of Appeal rejected the arguments that Tribunal fees
regime:
– prevented claimants from having access to justice
– was indirectly discriminatory; and
– Lord Chancellor had failed to satisfy the public sector duty
• Unison has sought permission to appeal to the Supreme
Court
• A decrease in fees will probably lead to an increase in
litigation

New process for judicial
assessment at Tribunal
• Presidential Guidance creating a process of judicial
assessment
• intended to be a confidential and voluntary process
whereby a judge will make an initial assessment of
the strengths and weaknesses of the parties' cases,
to take place at a Preliminary Hearing
• Requires both parties to consent
• Process is free (but risky) – may either deter or
encourage litigants in person

9. Autumn Statement
Implications for employers and employees:
- NMW and NLW increase
- Income tax threshold increase
- Salary sacrifice: restricted to certain benefits
- Employee-shareholder status tax advantage
abolished
- Termination payment – taxation over £30k now
includes NI, this generally make termination
payments more expensive for employers

And finally, this annual update
would not be complete without…

Employment law to change?
• Perhaps but not just yet
• Once Article 50 is triggered (at the end of March 2017 –
according to the government timetable), there will be
a 2-year negotiation period (extensions can be agreed
with EU) during which EU law will still apply.
• On leaving the EU, it is expected that The Great Repeal
Bill will come into force, automatically transferring all
EU Law into UK law
• The Bill will be officially announced in the next
Queen’s Speech (April or May 2017)

Government pledges
• In theory, this would allow existing employment
law to be stripped back after March 2019,
particularly those employment rights (agency
worker protection, working time regulations etc.)
contained in secondary legislation
• However, Theresa May and David Davis (Secretary
of State for Brexit) have made assurances that this
will not be the case, and UK employment law will
remain untouched

What about EU staff?
• Currently around 3 million citizens of other EU
countries living in the UK
• Still have the right to live and work freely in the UK
• Right of permanent residency?
• Rights of non-EU skilled workers
– Refusal to hire EU candidates is grounds for
discrimination before Brexit implementation date

What about UK workers?
• Over 1.3 million UK nationals also live abroad in EU
countries
• British expats could lose right to visa-free
employment in EU/EEA countries
• Employers may find they have to comply with more
restrictive rules for employees based outside UK

The future
• The assurances of the prime minister does not bind her
government, even less so future governments
• Long term, there is a possibility that some of the more
unpopular EU derived regulations, such as agency
worker regulations or holiday pay, may be amended
• In the short term, it is important to remember that
freedom of movement is by no means guaranteed,
particularly if a ‘hard-Brexit’ occurs in March 2019

Practical Advice
• Uncertainty about extent/concessions to maintain free movement
• Continued compliance with EU regulations to preserve
competiveness (data protection)
• Time to apply for a sponsorship licence?
• Employers should prepare by undertaking an audit to assess how
many of their employees rely on membership of the EU for their
ability to work in the UK, in order to assess areas of vulnerability
• Current costs:
– £1,236 for naturalisation
– £85 for permanent residence card + biometric data
– Up to £1,476 for sponsorship licence

Speak to us…
Kerren Daly
Kerren.daly@brownejacobson.com
0330 045 2115

All information correct at time of production.
The information and opinions expressed within this
document are no substitute for full legal advice. It is for
guidance only and illustrates the law as at the published
date. If in doubt, please telephone us on 0370 270
6000.
© Browne Jacobson LLP 2017 – The information
contained within this document is and shall remain the
property of Browne Jacobson. This document may not
be reproduced without the prior consent of Browne
Jacobson.

Annual employment law update, January 2017, Manchester

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Annual employment law update, January 2017, Manchester