Employment Law Alert UK - January 2022

Cases

Diversity and Inclusion/Discrimination

• European Court of Human Rights declares appeal inadmissible in the long running cake case. You may remember that the Supreme Court decided that the Christian owners of a bakery had not directly discriminated against a gay man when refusing to supply him a cake with a slogan supporting gay marriage. The refusal was because of the message and their religious objection to gay marriage, not on the ground of the actual or perceived sexual orientation, according to the Supreme Court. This was not an instance of less favourable treatment because of association with the gay and lesbian community. Mr Lee lodged an application to the ECtHR citing interference with his Convention Rights (Article 8, 9, 10 and 14) by a public body (namely, the Supreme Court), but the ECtHR has now ruled that his appeal is inadmissible as a result of his failure to expressly invoke his rights under the European Convention on Human Rights before the UK courts – he had not exhausted domestic remedies. The issues of the bakery owner’s right to freedom of thought, conscience, religion and to freedom of expression were considered by the Supreme Court. But what was principally at issue was not the effect on the applicant’s private life or his freedom to hold or express his opinions or beliefs, but rather whether the bakery was required to produce a cake expressing political support for gay marriage. (Lee v United Kingdom).

• Claims regarding facial recognition and the use of AI in the workplace generally. Facial recognition software used by Uber to provide real time verification checks on drivers to stop drivers sharing accounts is alleged to misidentify people of colour leading to private hire drivers having accounts wrongly suspended or terminated. Claims of indirect racial discrimination are being brought against Uber in the Employment Tribunal, supported by two unions (IWGB and App Drivers and Couriers Union). There is an increasing spotlight on the use of Artificial Intelligence in monitoring employees, with concerns that intrusive monitoring can breach workers’ right to privacy under Article 8 of the European Convention on Human Rights and the Human Rights Act 1998.

• Disability – taking into account avoidance behaviour for adverse effect. There must be a causal link between a physical or mental impairment and a substantial adverse effect on the person’s ability to carry out normal day-to-day activities, to establish a disability discrimination claim. Evidence is required to substantiate an employee’s assertion that engaging in a certain activity will risk triggering or exacerbating some adverse effect of the impairment: simply relying on their avoidance behaviour is not sufficient to establish adverse effect. (Primaz v Carl Room Restaurants).

Employee relations processes/implied contractual terms

• Employers may have an implied duty to act fairly in disciplinary proceedings, according to obiter comments by Court of Appeal. There is no general implied duty on an employer to act fairly in the employment relationship but obiter dicta comments by two Court of Appeal judges provide support for tribunals and courts to find that there is a narrower implied term to conduct disciplinary proceedings fairly. Singh LJ said “… it does not appear to me that there would be a legal impediment to such an implied term.” This is separate to the implied term of trust and confidence. Mrs Justice Simler (as she then was) also indicated support for this view in Chakrabarty v Ipswich Hospital NHS Trust. How such an implied term would operate in practice is not yet clear. In this case, the impact of a potential implied duty of “fairness” was considered in the context of disclosure: whether such an implied term would require an employer to disclose certain relevant documents beyond what may be required by the terms of a disciplinary policy. But the decision leaves open the possibility that a disgruntled employee may assert that such a term should be implied to give rise to a breach of contract claim or even potentially a constructive dismissal. (Burn v Alder Hey Children’s NHS Foundation Trust).

• Employee able to bring flexible working claim despite participating in a delayed appeal process. There was a delay in holding an appeal hearing in relation to an employee’s flexible work request; the employee attended the hearing even though it fell outside the three-month 'decision period' for resolving flexible working requests. The EAT overturned the tribunal’s decision that attending the appeal hearing was, by implication, an agreement to extend the decision period. Attending a delayed hearing does not necessarily signal an employee’s agreement to extend the decision period. Employers should aim to process flexible work requests promptly. An employer who fails to process a flexible work request within the required three-month period cannot rely on an employee’s participation in that delayed process to defeat a claim alleging breach of the flexible working legislation. (Walsh v Network Rail Infrastructure Limited).

• Dismissal for raising numerous frivolous grievances was fair. A helpful example for employers of a situation where an employee’s dismissal for bringing numerous vexatious and frivolous grievances, which he was unwilling to progress or withdraw, was fair, according to the EAT (upholding the ET). The employee’s conduct was sufficiently serious for dismissal to be within the band of reasonable responses. The ET had not erred by failing to consider whether the employee’s conduct amounted to gross misconduct in the contractual sense. (Hope v British Medical Association).

• Joint and several liability for two decision-makers and the company for pregnancy and maternity discrimination; maximum 25% uplift correctly applied for breach of Acas Code, held EAT. A business owner and a manager who “engineered” the departure of two employees because of their pregnancies by “an entirely spurious and vindictive disciplinary process”, accusing one of misconduct, suspending and dismissing her, failing to pay them correctly, failing to pay statutory maternity pay and ignoring their grievances, were jointly and severally liable for discrimination. The maximum 25% uplift was correctly applied to the compensatory award for unfair dismissal, the awards for injury to feelings and the aggravated damages awarded, according to the EAT. Further, the tribunal was correct to gross up the awards for injury to feelings and aggravated damages as the discrimination was in connection with the termination of employment and therefore taxable under section 401 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA). The absolute value in money terms of the 25% uplifts was not too high or disproportionate.

  The EAT gave guidance for tribunals assessing the appropriate uplift for breach of Acas Code on Disciplinary and Grievance procedures:

  • is an Acas uplift just and equitable;
  • if so, at what percentage, considering all the circumstances;
  • is there any overlap or double-counting with other awards, such as injury to feelings, and, if so, what adjustment is necessary; and
  • applying a final “sense-check”, is the sum of money represented by the uplift disproportionate in absolute terms.

  A salutary reminder of the risks of joint and several liability; and that the Acas uplift may be regarded as punitive as well as compensatory. Whilst the two individual respondents were not personally liable in respect of the claims for unfair dismissal and holiday pay, the EAT has confirmed liability for an Acas Code uplift applies equally to all respondents where the loss is attributable to their conduct. Further, there is equal responsibility even where findings of fact may implicate one more than the other for discrimination – as here where one was “the driving force and controlling influence behind these acts”, and the other was “doing his bidding”. (Slade and Hamilton v Biggs, Stewart & Aethelbert Ltd).

Employee status

• Employee status: owner driver franchisees for DPD were not employee or workers. The EAT has upheld a decision that individual owner driver franchisees (ODFs) who provided delivery services to DPD were neither employees nor workers. The EAT held that the tribunal had correctly analysed whether the franchise agreement represented the true agreement between the parties, following Autoclenz Ltd v Belcher [2011] UKSC 41, and was entitled to find that it did. Although in practice the claimants had only used cover drivers who were also ODFs, or drivers of other ODFs, that did not detract from their broad contractual right to use any substitute of their choice at any time. (Stojsavljevic and another v DPD Group UK Ltd).

Other

• Employer owned copyright in software created in an employee’s “personal time”. Court of Appeal upholds decision of the first instance court. Despite an employee having worked on software at home, in his spare time, and on his own computer, this did not overturn the strong indication that this was work done in the course of his employment according to the Intellectual Property Enterprise Court at first instance. The court considered the nature of the employee’s duties and concluded that development of the software fell within those duties; and therefore that the employer owned the copyright. Analysis of the ownership of copyright created in "personal time" turned partly on the interpretation of a document (November 2008 Agreement) drafted without professional legal advice. At first instance, the judge found that if the employer had not already been entitled to ownership of copyright in the software by dint of its status as the employer, the November 2008 Agreement assigned copyright to it. The employee appealed and argued that he had merely licensed copyright to his employer in return for payment of royalties. But the Court of Appeal rejected the employee’s appeal holding there was no copyright infringement: the Agreement was an assignment and the payments described as a “bonus” point away from the payment being a royalty or licence fee. The case highlights the importance of taking legal advice where there is uncertainty about ownership of works created by employees in their personal time, to understand the legal position and ensure the parties’ intentions with regard to ownership and exploitation of such rights. (Penhallurick v MD5 Ltd).

Developments

• Disability Workforce reporting. The Government launched a consultation on disability workforce reporting just before Christmas – it closes on 25 March 2022 and the Government has committed to publishing a response by 17 June 2022. Employers may wish to consider undertaking an audit to understand whether there is a disability pay gap and/or to publish this pay gap data on a voluntary basis.

• Human Rights Act reform. On 14 December 2021, the Ministry of Justice published a consultation on reforming the Human Rights Act 1998 and replacing it with a Bill of Rights. The consultation closes on 8 March 2022.

• Government backs new five-year review to continue focus on gender balance on FTSE boards. The government announced that it will back a new initiative to monitor women’s representation at senior levels of FTSE companies: The FTSE Women Leaders Review. This new five-year review will follow the successful Hampton-Alexander Review that saw 50% increase in women on FTSE boards in just 5 years. Women on Boards reported numbers for Women on Boards of FTSE 350 companies, as at 11 January 2021: • FTSE 100 at 36.2% • FTSE 250 at 33.2% • FTSE 350 at 34.3% (Source: BoardEx). New leadership is currently being appointed to steer the review and take forward new targets.

• Gender pay gap barely changed over the past 25 years, according to “Women and men at work”, a report for the Institute for Fiscal Studies. The average working-age woman in the UK earned 40% less than her male counterpart in 2019: just 13 percentage points (or 25%) lower than in the mid-1990s, with working women earning 19% less per hour than men, according to new research which measured gender earnings gaps across three different margins: employment, hours and wage rates. Inequality in earnings increase vastly after parenthood, suggesting unpaid care work shapes in equalities in the labour market. Whilst there have been improvements in the gender earnings gap, these are relatively modest once the rising education of women is accounted for. An accumulation of policies consistently supporting a more equal sharing of responsibilities between parents may help build up a change in attitudes, argue the authors.

• Gender Recognition Act 2004 (GRA): Women and Equalities Committee reiterates call for reform. The Women and Equalities Committee has published a report criticising the Government’s response to the public consultation on reforming the GRA. The Committee recognises that debate in this area has “sometimes become extremely toxic” but reiterates the case for reform of the GRA, advocating removing the requirement for: (i) an applicant to live in the acquired gender for two years; (ii) for a diagnosis of gender dysphoria in order to obtain a Gender Recognition Certificate, and moving the process closer to a system of self-declaration; and (iii) spousal veto – recommending a consent provision so that a full Gender Recognition Certificate could be issued at the same time as an annulment, if necessary. The Committee also reiterates its recommendation for better guidance on the single-sex and separate-sex exceptions.

• Council of the EU agrees common position on the draft EU Pay Transparency Directive to tackle the gender pay gap. On 6 December 2021, the Council published its general position paper which demonstrated broad support for the measures set out in the draft Pay Transparency Directive. This draft Directive was presented by the European Commission in March 2021 and is subject to the approval of the Council and European Parliament. The draft Directive proposes a powerful set of measures aimed at improving gender equality across the EU. It includes requiring gender pay gap reporting (as the UK already does) and for gaps of more than 5% which cannot be justified, it proposes that a joint pay assessment with workers groups be conducted. The European Parliament will now determine the final text for the Directive which will be important for businesses with European operations and may have implications for the UK. At the Council, concerns were raised about proportionality, financial and administrative burdens for employers, especially micro and small-sized employers, the limitations of the Directive in tackling intersectionality. Some of the concerns are reflected in the Council’s mark-up of the draft Directive, annexed to their position paper. The President of the Council is authorised to enter into negotiations with the representatives of the European Parliament in order to agree on a final text for the Directive.

• Commission proposes new EU Directive to improve working conditions for digital labour. This new Directive published on 9 December 2021 aims to introduce measures to correctly determine employment status. Businesses will also need to inform workers of the ways in which algorithms are used for monitoring and evaluation, allocating tasks, and setting fees. Although the proposed Directive will have no direct legal impact in the UK, it will be of relevance to businesses operating in the EU and may influence future UK government policy.

• Umbrella employment companies: the government publish a call for evidence on the role of umbrella companies in the employment market and in particular the tax risks that they pose. The aim is to gather further information about the role that umbrella companies play in the jobs market and what risks, both to workers and to government revenues, umbrella company structures pose. The call for evidence is open for responses until 22 February 2022.