Employment Law Alert UK – March 2022

Cases

D&I

• Employment tribunal ordered equal pay audit to be undertaken by a bank following a successful equal pay claim. Following a successful claim for equal pay, sex discrimination and victimisation the tribunal has awarded a claimant compensation of £2m. As part of this compensation the tribunal ordered a 20% uplift, of around £300k, as a result of a failure to follow the ACAS Code on Disciplinaries and Grievances. The bank had held a grievance procedure and appeal but was criticised by the tribunal for failing to carry out necessary investigations to establish all the factors and approach the grievance impartially. Whilst the tribunal recognised the bank had taken the liability decision seriously it noted the bank had chosen to retain an opaque pay system, even though there was increased transparency around job hierarchies. The tribunal ordered the bank to carry out an equal pay audit for all its employees for 2021. This was ordered despite the bank already having taken remedial actions, which included an internal equal pay exercise. (Macken v BNP Paribas).

• The High Court has declared that the government's National Disability Strategy published in July 2021 is unlawful as a result of the government's failure to consult. Prior to releasing the National Disability Strategy, the government launched a survey to gather views from disabled people which would be used to inform the Strategy. The survey received 14,000 responses. An application for judicial review was brought by four disabled adults who argued that the government had failed to consult lawfully about it. The High Court found that the Secretary of State, Therese Coffey, had voluntarily chosen to consult about the Strategy and taken on consultation duties which were then not discharged. The High Court was critical of the failure to provide the proposals in clear terms to enable intelligent consideration and response. It also criticised the multi-choice format of the survey and word limit on free form responses as not allowing a proper response. The claimants did not seek to quash the Strategy. However, the High Court confirmed in its judgment that the claimants would expect further appropriate consultation with a view to revising the Strategy. The government has indicated that it intends to apply for permission to appeal against the High Court's decision so it is not yet clear the impact this decision may have both on the proposals contained within the Strategy, including the current consultation on disability workforce reporting, and on the timelines for implementation. (R (Binder and others) v Secretary of State for Work and Pensions).

Employment contract/ status

• Worker can claim all unpaid holiday leave accrued from the start of a contract - taken and untaken. Workers have the right to four weeks’ “paid annual leave” under the Working time Directive; this right does not lapse but carries over and accumulates until termination of the contract, when the worker is entitled to be paid accumulated unpaid annual leave (whether or not that leave was taken). A worker can only lose the right to take leave at the end of the leave year if the employer can demonstrate that it specifically and transparently gave the worker the opportunity to take paid annual leave, encouraged the worker to take paid annual leave and informed the worker that the right would be lost at the end of the leave year. Here the claimant had taken periods of annual leave but these were not paid as his employer believed him to be an independent contractor. Following the decision in the Supreme Court which confirmed the claimant’s worker status, he made a claim for holiday pay. The Court of Appeal held that the worker could bring a claim in respect of his entire accrued holiday entitlement under Article 7(1) of the Working Time Directive (2003/88/EC) (WTD), whether taken or untaken, going back to the start of his contract.

  The Court held that whilst Mr Smith had not pleaded his claim for leave that was not taken from any years, it concluded that due to the error of confining the principles in King v Sash Window Workshop Ltd to untaken leave only, the pleaded claim should have been read differently. LJ Simler, confirmed the principle in King is a single composite right to take paid annual leave. This right is not lost in circumstances where the worker takes leave but the pay is disputed by the employer. In this case the worker is not exercising the right. Although domestic legislation can provide for the loss of the right at the end of each leave year, to lose it, the worker must actually have had the opportunity to exercise the right conferred by the WTD. The Court held that the three-month time limit for making a claim runs from the termination of employment.

  Although the court did not strictly need to deal with this point, it also expressed a "strong provisional view" that the EAT's decision in Bear Scotland Ltd v Fulton, that a series of deductions for the purposes of s23(3) of the Employment Rights Act 1996 is broken by a gap of three months or more between deductions, was wrong.

  The Court of Appeal has added a postscript to the judgment setting out additional suggested wording to be read into the Working Time Regulations to comply with EU law. Although the court acknowledged that it had "no power to draft regulations" it suggested a form of words that would best reflect EU law, as an appendix to its earlier judgment. It includes the following additional wording to be read into the WTR 1998 at regulation 13(16): "Where in any leave year an employer (i) fails to recognise a worker's right to paid annual leave and (ii) cannot show that it provides a facility for the taking of such leave, the worker shall be entitled to carry forward any leave which is taken but unpaid, and/or which is not taken, into subsequent leave years." (Smith v Pimlico Plumbers Ltd).

• Dental practice owner liable for alleged negligence of self-employed dentists under non-delegable duty of care. A non-delegable duty arises (where certain criteria are met) to ensure a person to whom a task is delegated takes reasonable care, and this extends to acts of independent contractors. The Court of Appeal (upholding the High Court) decided that a dental practice owner, Dr Rattan, was liable for losses suffered by a patient as he owed her a non-delegable duty of care in relation to treatment received from three self-employed dentists working at his practice. In non-binding obiter comments, the Court of Appeal concluded that vicarious liability did not arise as the relationship between Dr Rattan and the self-employed associates was not akin to an employment relationship. Employers are generally vicariously liable for negligent acts of their employees, but not for acts of independent contractors.

  Non-delegable duties are different from vicarious liability as they put primary liability on the person to avoid harm, to take reasonable care or to see that care is taken by others. In Woodland v Essex County Council the Supreme Court identified five factors which needed to be satisfied to impose a non- delegable duty (including that the claimant was particularly vulnerable or dependent on the protection of the defendant against the risk of injury (such as a child or a patient; the parties had an antecedent relationship from which a positive duty to protect could be imputed; and the claimant had no control over whether the defendant chose to perform that duty personally or through others). Vicarious liability imposes secondary liability for the wrongdoing of another person.

  Dr Rattan had a contract to perform NHS work, he had entered non-exclusive license agreements with dentists to undertake this work by practising from his premises. The agreements had stringent restrictive covenants preventing the dentists from treating anyone who had been a patient of the practice in the prior 12 months. The dentists had their own professional indemnity cover for negligence claims, were responsible for their own work and clinical audits, had clinical control over the dental treatment they provided, paid their own tax and national insurance contributions and received no sick pay or pension. The patient maintained she was a patient of the practice, she saw whichever dentist she was allocated and made payments at reception. In the treatment plan that she was provided with the dentist named as providing the treatment was Dr Rattan.

  Bean LJ, agreed that Dr Rattan owed a non-delegable duty of care to the patient. She was a patient of the practice as a matter of law, factors that were relevant to this were only naming Dr Rattan on the treatment plan, describing patients as “patients of the practice” and the restrictive covenants in the agreements with the dentists. The court held that a patient included anyone receiving dental treatment, not only those considered vulnerable. The antecedent relationship between Dr Rattan and the patient was established each time she signed the treatment plan, as he was the owner of the practice. The fact that each treating dentist had complete clinical control when performing treatment did not mean that her interactions with the practice were "entirely administrative". The patient had no control over how Dr Rattan chose to perform his obligations, whether personally or through third parties.

  The Court of Appeal was not required to also determine whether the High Court decision that Dr Rattan was also vicariously liable for the acts and omissions of the self-employed dentists was correct. However, it expressed a view that it would not uphold this decision as did not believe that the test in Supreme Court decision of Barclays Bank Plc v Various Claimants was met (see our insight). As a result of this case the critical question appeared to have reverted to being whether the relationship with the self-employed dentists could properly be described as "akin" (or "analogous") to employment. On the facts here this was not the case, key factors included that they were free to choose their own hours, work for other practices, there was no control over clinical judgments or the manner of treatment, they chose laboratories to use and shared the costs, they were responsible for their own tax and national insurance, took a share of bad debts, they paid for their own professional clothing and development, required their own professional indemnity insurance and there was and no disciplinary or grievance procedure. (Hughes v Rattan).

Litigation Process

• Scope of expert's duty did not extend to protecting party from risk of adverse credibility finding. The High Court has dismissed a claim for breach of duty in both tort and contract against a medical expert who had given evidence as a joint expert in a tribunal. The claimant had brought a disability discrimination claim against his employer following treatment for leukaemia. His claim was dismissed following findings that the claimant had not told the truth and a large cost order of £600k was made against him. The claim against the expert was that he failed to read the claimant's medical notes with care and notice the discrepancy between his recorded weight during treatment and the weight reported to the expert by the claimant during an assessment. The claimant believed that this led to his credibility being undermined in the tribunal proceedings.

  Lambert LJ in the High Court found that the loss suffered did not fall within the scope of the expert’s duty to the claimant. The expert had been instructed by both parties jointly to provide evidence on the claimant’s illness, his treatment and its side effects. It was not part of his role, nor could he, give evidence or assist on issues regarding the claimant’s credibility or reliability of his evidence. An expert witness should provide independent assistance to the court by way of objective unbiased opinion in relation to matters within their expertise. The expert’s evidence is admissible regarding the issues that are within their expertise, it is the court’s role to address the other matters. The scope of the expert’s duty of care does not extend to protect a party from a risk which he was not competent to give advice on. It was acknowledged that the expert’s evidence may highlight an oddity or inconsistency or discrepancy in evidence which may then influence a court’s judgement on credibility or inconsistency but this did not extend the scope of the expert’s duty. The High Court rejected the claim that if the medical evidence had been without the issues raised by the claimant then the findings on his credibility would not have been made. The credibility findings were made based on a number of factors, not just in relation to his weight, including the demeanour of the claimant and other witnesses. (Radia v Marks).

ER Processes

• A tribunal cannot consider events after a decision to dismiss had been taken and so find that the dismissal was disability related - the disability could not have affected the reason for dismissal. In a long-running case, with three previous appeals to the EAT, the EAT has overturned the disability discrimination decision made by the Tribunal and considered the correct identity of decision maker.

  The EAT held that it was wrong to consider events that took place after the decision to dismiss had taken place on 19 March 2012. His disability could not have affected the reason for dismissal as he only went on sick leave in April 2012 and became disabled from that date. The EAT upheld the Tribunal’s decision that the interim CEO was the decision-maker, despite the fact that when the dismissal was confirmed to the employee by letter the interim CEO was no longer at the employer. The delay in implementing the dismissal was due to the employee’s absence on sick leave and did not alter the fact that the decision to dismiss was made by the interim CEO in March and merely followed through, by others, after he had left. The EAT remitted the same tribunal after the EAT held that the claim for victimisation could succeed as it only needed to be a significant influence on the employee’s treatment (not the principle reason as for dismissal) and needed to be re-considered. (Citizens Advice Merton and Lambeth Ltd v Mefful).

• High Court grants an injunction against Tesco to prevent the use of termination and re-engagement as a means of withdrawing a contractual benefit: an implied term prevented termination on notice for the purpose of removing or diminishing the employees’ entitlement to that benefit. The trade union and three employee trade union representatives successfully brought a claim in the High Court for a declaration as to the terms of their employment and an injunction restraining Tesco from terminating their employment and offering re-engagement on less favourable terms.

  In 2007 as part of a re-structure and re-location of distribution centres, Tesco wished to retain staff and persuade them to relocate to new sites rather than being made redundant. As a result, it negotiated with the trade union a new entitlement known as “retained pay” which would apply for as long as the employee was in their current role. A joint statement issued at the time said that "retained pay is guaranteed for life and will increase in line with any future pay increases". It was an express term incorporated into the relevant employment contracts which stated that retained pay was a permanent feature of their contract subject to the following principles (i) could only be changed by mutual consent; (ii) would cease on promotion to a new role; (iii) would be adjusted when an employee requested a change to working patterns, such as nights to days; (iv) would not be subject to change or adjustment if the defendant made shift changes. In January 2021, Tesco announced it would be removing retained pay and offered an advanced payment of 18 months of retained pay in return for giving up the entitlement. This would be a significant reduction in pay of 32-39% for the employees. Employees who refused to agree were told that their employment would be terminated and they would be offered re-engagement on the new terms, which excluded retained pay. The claimants argued that there was an implied term in their contracts that Tesco would not exercise its right to terminate the contract for the purpose of removing retained pay.

  The claimants argued successfully that their contracts of employment were subject to an implied term that Tesco would not exercise the right it would otherwise enjoy to give notice to terminate the contracts for the purpose of removing or diminishing the right to retained pay. Ellenbogen LJ at the High Court granted the relief sought: such a term should be implied on the basis of business efficacy and/or obviousness. The word permanent in the context of the retained pay benefit should be construed to mean for as long as the relevant employee is employed in the same substantive role. The court held that, without such a term, the employee’s entitlement to retained pay would not be permanent and the contract would lack practical coherence. The court found that damages would not be an adequate remedy to the dismissal and re-engagement.

  Tesco are able still to terminate the employment contracts for good cause, such as a genuine redundancy or for gross misconduct. The judge held that consistent with the Aspden case (concerning PHI benefit) that the right of dismissal was limited by the usual circumstances that the contracts were entered into resulting in contradictory terms. The court believed the employees claims sat outside the “Johnson exclusion zone” (which restricted breach of contract claims based on a dismissal for breach of the implied term of mutual trust and confidence where the matter falls within the scope of the statutory regime protecting against unfair dismissal); the circumstances were not concerned with the manner of dismissal, or the application to a dismissal of the implied term that the parties will not act in a manner which is calculated, or likely, to destroy or seriously damage the relationship of mutual trust and confidence between them. Here the relief sought by the claimants was effectively continued employment on the same terms they currently enjoyed which the court decided (perhaps surprisingly) that this was different to an unfair dismissal claim. Any unfair dismissal claim would take a long time to be heard, any award would be capped, reinstatement is unlikely to be ordered and if it was the employer can show it is not practicable to comply.

  The court granted declaratory relief: it agreed an express contractual term relating to retained pay which is incorporated into their contracts of employment, and which confirms that it is subject to the implied term that the employer cannot give notice to terminate the contract for the purpose of removing or diminishing retained pay. (Union of Shop, Distributive and Allied Workers and others v Tesco Stores Ltd) NB Interestingly, Paul Scully MP, Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy), suggested that the government has no plans to legislate against "fire and rehire" practices.

• Wide COT3 waiver wording held to cover future claim. The EAT has held that a victimisation claim brought after a COT3 had been signed was covered by its waiver clause. The COT3 was signed in March 2018 to settle a 2014 complaint of unfair dismissal and race discrimination against the respondent. Following signature an employment tribunal claim was made alleging that in early 2018, prior to signing the COT3, the claimant had been rejected for a role based in Germany with the respondent’s subsidiary because of his previous tribunal claim and this rejection had been engineered by the respondent. The EAT held that this victimisation claim was within section 112 of the Equality Act 2010, which prohibits one person knowingly helping another do an act of discrimination. The claimant argued that as the person helping another to discriminate in these claims does not need to involve a link with employment this would bring it outside of the COT3 waiver. The EAT did not accept this, in this case it was his previous employer that was being accused and therefore there was an indirect link or connection with his previous employment. The EAT held that despite the COT3 clause not being the best drafted that it was intended to be very wide reaching and did cover the claim being brought. The EAT also considered Royal National Orthopaedic Hospital Trust v Howard which considered the extent to which a waiver may cover future claims. This case was distinguished as the allegations had arisen prior to the COT3 being entered into and fell within the drafting of the clause, reinforced by the phrase at the end of clause which meant it to apply even if the claimant was unaware of the legal basis for such a claim. The EAT's conclusion was based on the construction of the clause itself and it noted that the background did not assist on resolving the issue. (Arvunescu v Quick Release (Automotive) Ltd).

Other interesting things

• Agency workers’ right to be notified of job vacancies does not extend to a right to apply and be considered for the roles. The Court of Appeal has ruled that the right of an agency worker to be notified of vacancies with a hirer in accordance with regulation 13, Agency Workers Regulations 2010 (AWR), did not extend to a right to be notified of a job vacancy or a right to apply for or be considered for such roles. The claim was brought by an agency worker at Royal Mail. When vacancies for permanent roles became available, they were put up on a notice board but offered to those in permanent posts first. Agency workers could only apply for the roles once they were advertised externally and would be in competition with other external candidates.

  Green LJ, in the Court of Appeal analysed the purpose of the underlying Directive (2008/104) the recitals did not indicate that the right of notification should extend beyond its natural meaning. The Directive was a measure of minimum harmonisation, balancing competing interests and objectives, a pragmatic compromise between such competing interests. It was for member states to determine whether they wanted to add additional rights, there was no scope for courts to do so. The principle of non-discrimination in Article 5 was applicable only to basic working conditions which did not include the right to apply for a vacancy. This reflected the Directive’s recognition that temporary workers are not, in all respects, comparable with permanent workers. The court held that intention is to strike a balance between the protections given to agency workers and the benefits provided to employers and workers by agency working. The court held that if the intention had been for agency workers to have a right to apply for a vacancy this would have been explicit in the drafting. The right to apply is a more complex right than the right to be notified. The court noted that it is therefore unrealistic to assume that it intended such a right and duty to be introduced by "an invisible, unarticulated, side wind". (Kocur v Angard Staffing Solutions).

Developments

Litigation process

• HM Courts and Tribunal Service announces new service for accessing tribunal lists. HMCTS is developing a new service to modernise and improve how members of the public, the media and legal professionals find court and tribunal hearing lists, as part of its commitment to open justice.

  The intention is that the new service will make it easier to find hearing lists. They will be available on GOV.UK in one place and in a standardised format. Courts and Tribunals will be moved onto the new service in phases, which means the number of hearing lists on the service will build over time.

  HMCTS has worked on the practical design of the new service, there will be predictive search boxes to help members of the public find information quickly. Legal professionals and the media can become verified users and subscribe to receive specific hearing lists by email, removing the need to contact courts or tribunals to be added to multiple distribution lists.

  Testing of the service will continue throughout early 2022 and it is proposed that the service should be available to be used by a small number of courts from Spring 2022. The number of courts and tribunals available on the service will then be expanded throughout the year. As courts adopt the service, they will contact subscribers about it.

D&I

• FTSE Women Leaders Review report: Achieving Gender Balance published on 22 February 2022, states that women now hold 39.1% of FTSE 100 board positions (up from 36.2% in 2020).

• Mandatory ethnicity pay gap reporting is recommended by Women and Equalities Committee. The House of Common's Women and Equalities Committee examined the case for mandatory ethnicity pay gap reporting in a one-off evidence session on 12 January 2022. In the report of the session, the committee recommends that the government should make ethnicity pay gap reporting mandatory by April 2023. While the report acknowledges the challenges of collecting ethnicity data, such as concerns over the data protection implications of small sample sizes, it states that businesses are ready for the government to act. Chair of the Women and Equalities Committee, Rt Hon Caroline Nokes MP, said “The Government's failure to move forwards on ethnicity pay gap reporting is perplexing.” The government consultation, which stated that it was "time to move on ethnicity pay reporting", closed in January 2019 but a response has not yet been published.

• The Financial Services Culture Board and the Financial Services Skills Commission (FSSC) have published a report on piloting a common approach to measuring inclusion across the UK financial services sector. The Report sets out the pilot undertaken in Autumn 2021 and the aggregate findings from across all 13 participating firms. The survey identified five principal findings, it was encouraging that 89% of respondents said that their managers promoted an inclusive environment. However, there is more to do, 19% of respondents were worried about being judged on their ability based on stereotypes about their identity or background. 17% of employees worried about the negative consequences of raising a concern, and a quarter were unsure or did not feel listened to when speaking up. When asked what leaders could do to make their organisation more inclusive, 19% made suggestions related to listening and openness. One third (33%) of firms participating in the survey do not currently discuss inclusion metrics at board level. Based on the findings, four actions were set out to help firms improve inclusion:

  • Aim to measure inclusion as well as diversity in a way that allows different views across employees to be gathered and assessed. A detailed firm-wide view is necessary to uncover the variations in employment sentiment and experience.
  • Develop and demonstrate a culture of listening and learning. Firms should visibly demonstrate that employee feedback is being listened to and that giving feedback is recognised and valued.
  • Maintain and demonstrate fair and transparent processes and systems. As the workplace evolves, firms should keep internal processes and systems under review from a fairness perspective.
  • Demonstrate strong leadership on inclusion.

• Mercer reports highlights employers' struggle to reduce gender and ethnicity pay gaps. A new report from Mercer, which polled 130 UK employers, highlights that almost half of employers (49%) are struggling to reduce their gender and ethnicity pay gaps despite support for measures to promote equality. Despite respondents' commitment to inclusive workplaces, fewer than a third of employers reduced their gender pay gap by more than 2% between 2019 and 2020 and only 1% of employers managed to reduce it by more than 10%. Ethnicity pay gap reporting is supported by 65% of employers and 75% of employers already collect ethnicity pay gap data or plan to do so.

Other

• Employment law rate changes in April 2022

  The Employment Rights (Increase of Limits) Order 2022 SI 2022/1822 has been published. This sets out the increasing limits to certain employment tribunal awards payable from 06 April 2022. The cap on compensation for unfair dismissal rises from £89,493 to £93,878. The cap on 'a week's pay' for the purposes of calculating redundancy payments and certain other compensation measures, increases from £544 to £571. Further compensation increases from 06 April can be found here.

  Other proposed increases in April for employment law rates, including the minimum wage and statutory sick, maternity, adoption, paternity and shared parental pay are noted here.