Employment litigation in review – 2021

In this insight we provide:

• our top 10 employment litigation trends/developments of 2021;
• our predictions for 2022: the top ten future employment litigation trends

Top 10 case law developments of 2021

1. Enforceability of restrictive covenants

There have been some important case law developments in relation to restrictive covenants in the past year, including two High Court decisions looking at the enforceability of covenants. In Quilter Private Client Advisers Ltd v Falconer and anor, the High Court ruled that a short notice period (including during a probationary period) undermined the enforceability of a nine-month non-compete in a financial adviser's employment contract. It was also relevant that some more senior employees had the same or shorter covenants despite their having greater access to confidential information, suggesting that a standard form contract had been used for Ms Falconer and not tailored appropriately. In contrast, in Gemini Europe Ltd v Sawyer, the High Court granted cryptocurrency firm Gemini an application for an interim injunction to enforce a nine-month non-compete covenant to prevent its former managing director from competing against it and from disclosing its confidential information.

Alongside the shift to remote working this year, there has been a trend towards employees using their own devices (e.g. phones, laptops etc) for business purposes (BYOD) which creates additional data security issues as well as new questions in relation to disclosure obligations in litigation. In Pipia v BGEO Group Ltd, the Court ordered one key witness to disclose material held on his smartphone. Similarly in Phones4U Ltd v EE Ltd & Ors, the Court of Appeal upheld an order for searches to be conducted on the personal devices of former employees. Read our Insight.

2. Defending discrimination and harassment claims

The Courts have provided important guidance on defending discrimination and harassment claims – including where an employer is seeking to rely on the defence of taking all reasonable steps to prevent harassment. The EAT ruled that an employer cannot rely on the defence where equality and diversity training was "stale" and required refreshing (Allay (UK) Ltd v Gehlen). The case reinforces that the threshold to establish all reasonable steps is high and offering training as a tick-box exercise is unlikely to suffice.

The Supreme Court has also reaffirmed the position on burden of proof in discrimination claims. It confirmed that the claimant bears the initial burden of establishing facts that support a case of discrimination but clarifies that, when assessing the case, the tribunals can adduce facts from the evidence of both the claimant and the respondent. In other words, although the test is framed as placing a burden on the claimant, in practice the courts will consider evidence from all relevant sources, when determining whether the facts establish a prima facie case of discrimination. If that hurdle is cleared, the burden then shifts to the employer to explain the reason for the treatment and the tribunal will go on to consider whether there is a non-discriminatory explanation (Efobi v Royal Mail Group Limited).

3. Interim remedies in discrimination claims

This year, there has been a rise in applications for interim relief – and particular focus on interim remedies in discrimination claims. Overturning the EAT decision, the Court of Appeal ruled that the lack of availability of interim relief as a remedy in discrimination claims does not breach the European Convention on Human Rights (Steer v Stormsure Ltd). It said that the fact that a whistleblowing claimant can apply for interim relief whereas a discrimination claimant cannot does not amount to discrimination.

In subsequent case Anwar v AG (for BEIS Scotland), Ms Anwar (who failed to receive compensation awarded in her discrimination claim) argued that the Tribunal does not have the power to effect an arrestment of funds, which is incompatible with her right to an effective remedy. However, the Advocate General (representing BEIS in Scotland) concluded that current practice on interim remedies in discrimination claims is proportionate. In welcome news for employers, the status quo is preserved.

4. Positive action

As part of the increased focus on diversity and inclusion, in practice we have seen more clients considering positive action. There is very little case law on the positive action provisions in the Equality Act but this year we have seen a cautionary tale of unlawful positive discrimination. Two male advertising executives brought successful sex discrimination claims after they were made redundant after raising concerns about comments made by the creative director: who said she wanted to "obliterate" the reputation that the agency was full of white, privileged straight men. The Tribunal concluded that the dismissal was because of their sex, including to open senior positions for women and for the impact on its gender pay gap figures. (Bayfield & Jenner v Wunderman Thompson). This decision serves as a helpful reminder of the importance of framing diversity and inclusion objectives properly and by reference to the steps permitted by the legislation.

There were also two cases which highlighted the importance of evidence when demonstrating justification in discrimination claims. The EAT considered the combined appeals of two professors who were compulsorily retired under the Employer-Justified Retirement Age (EJRA) of the University of Oxford. Both brought claims on similar facts: in one it was held that the EJRA was a proportionate means of achieving a legitimate aim and in the other it did not. However, the evidence is critical - and in this case, the evidence differed in material respects. It was relevant that one of the professors had been granted an extension – suggesting that employers should consider when writing exceptions into their policy whether they are departing from the original aim to such an extent that the policy can no longer be justified (Pitcher v University of Oxford; University of Oxford v Ewart). Employers should, however, take note of the importance of exact data.

5. Protected beliefs under the Equality Act 2010

There has been a trend of cases looking at protected philosophical/religious beliefs and the tension between those beliefs and the rights of others. In a high-profile decision, the EAT ruled that Maya Forstater’s "gender-critical" beliefs are protected as a philosophical belief under the Equality Act. Her beliefs include that sex is immutable (e.g. it is biologically determined at birth). The EAT said that the Tribunal had wrongly applied the test in Grainger: a belief would only be deemed "not worthy of respect in a democratic society" if it was akin to Nazism or totalitarianism (Maya Forstater v CGD Europe & ors).

Earlier this year, in Page v NHS Trust Development Authority, Page v Lord Chancellor and another, the Court of Appeal said that there are circumstances in which it is right to expect Christians (and those of other faiths/beliefs) who work for an institution to accept some limitations on how they express their views. Dismissing his appeal, the Court of Appeal agreed that Page was not discriminated against on grounds of his religious beliefs after he was removed from office (as NED for an NHS Trust and separately from his role as a magistrate) for publicly expressing a faith-based objection to same-sex adoption.

6. Menopause

There has been a significant increase in menopause-related cases. According to reported data, tribunal cases referencing the Claimant's menopause have increased from five cases in 2018, six in 2019 and 16 in 2020. There have been a further 10 in the first half of 2021 alone, suggesting that the figure for 2021 will be higher again.

In one of the first binding EAT decisions on the issue, the EAT has confirmed that the symptoms of menopause can constitute a disability. It held that the Tribunal was wrong to find that an employee suffering from menopausal symptoms was not disabled under the Equality Act 2010. The Tribunal’s decision was surprising given the severity of her symptoms and the judgment failed to properly consider the evidence. (Rooney v Leicester City Council).

7. Covid-related litigation

As we emerge from the pandemic, this year has seen an inevitable surge in Covid-related litigation regarding health and safety breaches, furlough issues and mandates to return to the office. In particular, claimants are seeking to rely on section 100(1)(e) Employment Rights Act 1996 (the "serious and imminent" danger provision). To name a few:

• In Rodgers v Leeds Laser Cutting, it was held that an employee who was dismissed for refusing to return to work during the first national lockdown was not unfairly dismissed under s100 ERA. While he had general concerns about the virus, the Judge took the view that it was not appropriate to absent himself from work entirely and he did not take appropriate steps to communicate concerns of serious and imminent danger at work.

• In contrast, in Gibson v Lothian Leisure, the Tribunal held that an employee who refused to return to work to protect their vulnerable father was unfairly dismissed under s100 ERA. The Tribunal was satisfied that he had a reasonable belief that there was serious and imminent danger at the time, and that Gibson took appropriate steps by raising the issue of PPE.

• In Mhindurwa v Lovingangels Care Ltd, the Tribunal ruled that an employee who was made redundant in the early months of the pandemic was unfairly dismissed because her employer did not consider furloughing her. However, in Handley v Tatenhill Aviation Ltd, the Tribunal ruled that an employee who was supported under the CJRS (or furlough scheme) was not unfairly dismissed because his employer chose to make him redundant when it could have chosen to furlough him for longer.

As employers implement their return to office strategies, related discrimination claims have also started to emerge. In Follows v Nationwide, the Tribunal ruled that the employer's requirement for a senior manager to no longer work from home amounted to indirect disability discrimination by association. The requirement to be office-based put her at a substantial disadvantage because of her association with her mother's disability as her primary carer.

8. Equal Pay

We have seen major developments in the long-running equal pay claims involving some of the UK’s largest supermarkets. In Asda Stores Ltd v Brierley & others, the Supreme Court finally settled the preliminary issue that the predominantly male distribution workers are a valid comparator to the predominantly female retail store staff for equal pay purposes. The case is now a leading authority on the cross-establishment comparison and provides guidance for future case management. In another large equal pay claim against Tesco, the CJEU ruled that work done in different locations can be compared if there is a “single source” for terms of employment, reinforcing the Supreme Court decision in Asda (K Element & ors v Tesco Stores).

9. Worker status in the gig economy

We have seen key developments on the question of employment status in the gig economy. In one of the most highly anticipated judgments of the year, the Supreme Court dismissed Uber’s appeal in Uber BV and others v Aslam and others and confirmed that Uber drivers are workers. Read our Insight. Addison Lee was then denied permission to appeal the finding that its drivers were workers, in line with Uber decision (Addison Lee v Lange & ors). The cases confirm that the drivers are workers and entitled to certain rights such as national minimum wage, holiday pay and rest breaks.

However, the Central Arbitration Committee (CAC) decided that Deliveroo drivers were not workers because they could use substitutes to do the work. As they were not workers, the union could not seek recognition (The Independent Workers Union of Great Britain v CAC & Roofoods Ltd t/a Deliveroo). Yet the Court of Appeal ruled that Stuart Delivery drivers with only a limited right of substitution were still deemed workers: the right was limited enough to be consistent with personal performance (Stuart Delivery v Augustine).

10. Non-financial misconduct

The FCA has continued to step up its enforcement action in relation to non-financial misconduct and we have seen a series of decisions which provide guidance for regulated firms. Most recently, the Upper Tribunal upheld the FCA’s decision regarding Jon Frensham who was banned from working in financial services on the basis that he was not fit and proper following a conviction for sexual grooming of a child. The Tribunal ultimately upheld the FCA's decision due to his failure to be transparent and co-operative during the process: interestingly, it said that if it had been asked to decide the case on the basis of the conviction alone then it may have asked the FCA to reconsider its finding (Frensham v FCA).

This decision is interesting in the context of the High Court's decision regarding Ryan Beckwith (published November 2020), in which the High Court found that his conduct did not affect his reputation as a provider of legal services or the reputation of the profession. The Frensham decision confirms that non-financial misconduct in an individual’s private life will not necessarily mean that a person is not fit and proper.

The recent PRA/FCA/Bank of England Discussion Paper referenced D&I misconduct as being potentially relevant to fitness and propriety (F&P) assessments and conduct rule breaches (page 45-46), and a Consultation Paper is expected in the first half of next year - there are hopes that this will deliver more clarity around regulatory expectations in relation to non-financial misconduct.

What's on the horizon - 10 future litigation trends

1. More restrictive covenant / business protection disputes

With hybrid working arrangements now largely the norm, businesses are managing a workforce based at home (at least in part). This has led to heightened risk of confidentiality breaches because employees may find it easier to avoid oversight. Communication between employees may also be more difficult to monitor, amplified by the wide variety of technologies available. Maintaining team culture and loyalty continues to present challenges as record numbers of employees are planning to leave their employers (or at least thinking about it). We therefore predict an increase in disputes arising from the misuse of confidential information, more team moves and potential breach of post-termination restrictions.

2. Stronger focus on D&I / discrimination

This year we have seen an unprecedented focus on diversity & inclusion as we emerge from the pandemic. As a result, businesses have become increasingly focussed on their D&I initiatives and what positive action can be taken, and so too are their employee populations. We are likely to see a continued increase in discrimination claims, and potentially also unlawful positive discrimination. The recent cautionary tale of Bayfield & Jenner v Wunderman Thompson (highlighted above) demonstrates what can happen when positive action goes wrong. We understand that the case is being appealed and expect to see the appeal decision in 2022.

For financial services firms, accelerating D&I progress is a key priority for the regulators, as set out in their recent joint discussion paper and we will likely see new regulatory policy during 2022.

3. Rise in harassment cases

The Government recently published its response to its 2019 consultation on Harassment in the Workplace. The response confirms that it will introduce a new mandatory duty on employers to take all reasonable steps to prevent harassment at work, which would be enforceable without the need for an incident to take place. Employees will also be protected from harassment from third parties. Once the new duty and protections come into force (timing unconfirmed), there will be an increased risk of litigation from employees, who will have more avenues under which to bring their claims and without the need to show an incident has occurred.

4. Continued increase in whistleblowing claims

In 2022, we expect to see a continued rise in whistleblowing claims. This stems from the new whistleblower environment emerging from the pandemic and heightened risks around remote working and lack of oversight. This will likely extend across Europe, as the requirements of the EU Whistleblowing Directive are implemented and protections from retaliation come into force. However, studies have shown (HBR) that companies that have more concerns raised via their internal whistleblowing channels actually face less litigation because it tends to show a positive feedback culture. Alongside the continued focus on whistleblowing and ESG, the importance of fostering an effective speak up culture is paramount.

5. Discrimination on grounds of philosophical/religious belief

The trend of cases looking at discrimination on grounds of philosophical or religious belief looks set to continue into 2022. Although the Forstater decision (see above) will not be appealed, the case will be remitted to the Tribunal to hear the substantive discrimination claim – to consider whether the treatment complained of was because of her protected belief.

The appeal of a similar case involving a Christian doctor (who refused to address patients by their chosen pronoun and his objection to transgenderism was not protected) has been withdrawn from the list for reasons unknown (Mackereth v DWP).

Another similar case – that of Higgs v Farmor’s School, which involved a Christian teacher dismissed for posting transphobic comments on Facebook - has been appealed and is awaiting listing in the EAT. In that case, the Tribunal ruled her dismissal was not related to her Christian beliefs, so we will see whether the EAT agrees.

6. Continued rise in menopause disability cases

As we know, menopause is now firmly in the spotlight partly due to the WEC Inquiry (launched in July 2021 to examine the extent to which menopausal women face discrimination) and press coverage of the large numbers of women negatively affected and forced to leave their jobs. Many employers are focussed on this issue, raising awareness and looking to implement practices to better support them. At the same time, we are seeing an increasing number of menopause-related claims. Now that the EAT has made clear that menopause can constitute a disability (see above), the numbers of cases will only continue to rise.

7. More Covid-related litigation

As the pandemic evolves, the HR and employment law issues evolve too. This year, we have started to see the cases resolving the issues which arose in the earlier stages of the pandemic, such as health and safety issues due to lack of PPE and employees claiming they should have been furloughed. Appeals in some of these cases will be heard in 2022 (including Accattatis v Fortuna Group and Rodgers v Leeds Laser Cutting). As businesses are now implementing their Return to Office policies, the associated HR issues have started to emerge, for example around those with health concerns, or childcare/caring responsibilities and vaccination status, which will inevitably lead to claims. Future Covid-related claims may include increased discrimination claims e.g. where flexible working requests are refused or for example from those with underlying health conditions such as Long Covid.

8. Next stage in equal pay claims

The long-running equal pay litigation against many of the UK’s supermarket chains continues to rumble on. The high profile decisions in the Asda and Tesco cases have highlighted the issue and may well lead to litigation across industry sectors. However, all that has been determined at this stage is the preliminary issue that they can use the distribution workers as a valid comparator. It remains to be determined whether the roles are of “equal value” and if the “material factor” defence can be relied upon. In 2022, we are likely to see that litigation progress and potentially other similar cases.

9. Focus on vicarious liability

We expect to see the Court of Appeal decision in the case of Chell v Tarmac Cement, due to be heard on 24/25 November 2021. Previously, the High Court upheld a county court decision that an employer was not vicariously liable for the actions of an employee whose practical joke unintentionally caused injury to a contractor at work. However, if the Court of Appeal overturns the decision, this may have implications for employers who may be expected to implement health and safety policies which descend to the level of horseplay or playing practical jokes.

10. Holiday pay

Two key appeal decisions on holiday pay are anticipated early next year. First, we are expecting the Supreme Court decision in Harpur Trust v Brazel, heard on 9 November 2021, regarding whether “part-year” workers should have their annual leave entitlement capped at 12.07 per cent of annualised hours. A Court of Appeal decision is also anticipated in the case of Smith v Pimlico Plumbers Ltd, due to be heard on 8/9 December 2021, regarding whether a worker has the right to carry over payment for annual leave where they have been permitted to take unpaid leave. These cases will shine a light on employers’ current practices and procedures and may give rise to similar disputes.