Employment Law Alert UK - February 2023

Employment Relations processes

Victimisation claim caught by COT3. A COT3 entered into to waive a claim for race discrimination, was sufficiently broadly drafted to also constitute a valid waiver of a victimisation claim. Importantly, although the victimisation claim was brought after the date of the COT3 agreement, it related to events that occurred prior to the date of the agreement; the Court of Appeal held that the victimisation claim was caught by the COT3 which stated: “the payment … is accepted in full and final settlement of all or any costs, claims, expenses or rights of action of any kind whatsoever, wheresoever and howsoever arising under common law, [statute] or otherwise (whether or not within the jurisdiction of the employment tribunal) which the claimant has or may have against the respondent…arising directly or indirectly out of or in connection with the claimant’s employment with the respondent, its termination or otherwise. This applies to a claim even though the claimant may be unaware at the date of this agreement of the circumstances which might give rise to it or the legal basis for such a claim.” The Court of Appeal found that the COT3 was drafted widely to include matters arising “directly or indirectly out of or in connection” with the Claimant’s employment, rather than just arising “indirectly out of employment”. The Court of Appeal was persuaded that the express intention and purpose of the COT3 was to settle all claims connected to the Claimant’s employment which existed at the time of the settlement agreement, and therefore the waiver included the victimisation claim. Potential employment statutory claims based on facts in existence at the time a claim is settled can be settled under the terms of a COT3 (or a settlement agreement) provided it is drafted broadly enough. NB we covered recently Bathgate v Technip UK Ltd and ors in which the court adopted a strict approach to the settlement of claims future claims by settlement agreement. (Arvunescu v Quick Release Ltd).

Reducing unfair dismissal compensation to zero was not appropriate: a redundancy pool of one did not mean dismissal was inevitable. The EAT held that the Employment Tribunal should not have made a 100% Polkey reduction even where a pool of one could fairly have been applied to the Claimant. The Claimant was one of ten chefs but was a “non-speciality chef”, with considerably less experience than the other chefs. The Respondent followed no process in making the Claimant redundant and this was found to be unfair by the Employment Tribunal. The EAT gave consideration to the recent EAT decision in Mogane v Bradford Teaching Hospitals NHS Foundation Trust & Regan and found that it was wrong to have made a 100% reduction in compensation on the basis that dismissal was inevitable. It is permissible to have a pool of one in some circumstances and there is still a duty to carry out meaningful consultation. If a fair procedure had been followed it would have taken some time, during which the Claimant would have had some pay, and further a proper consultation could have led to a different outcome for the Claimant. The case was remitted for reconsideration. (Teixeira v Zaika Restaurants).

Grievance was existing dispute for the purposes of without prejudice rule. For the without prejudice rule to apply, there must be a dispute between the parties, and the written or oral communications must be a genuine attempt to settle it. The EAT found that an employee’s grievance (alleging bullying, harassment and maternity discrimination) constituted an existing dispute such that evidence of a settlement offer made at a meeting about the grievance could not be relied upon in Tribunal proceedings. On 8 November, the Claimant had a meeting with the Respondent’s external HR and employment law adviser to discuss the Claimant’s grievance. The adviser then initiated a ‘without prejudice’ conversation. The adviser assumed that the Claimant understood what this meant, but the Claimant sought to later argue that the meeting was not “without prejudice”. The EAT was satisfied that there was an existing dispute at the time of the meeting for the purposes of the without prejudice rule and that there was no unambiguous propriety. NB: It is interesting to contrast this decision with that of the EAT in BNP Paribas v Mezzotero, in which the court found that the existence of a grievance was not sufficient to constitute a “dispute” for the purposes of the “without prejudice” rule. (Garrod v Riverstone Management Ltd).

Government launches Code of Practice on dismissal and re-engagement. On 24 January 2023 BEIS launched a consultation on its draft Code of Practice on dismissal and re-engagement. The draft Code sets out detailed steps that an employer should take when contemplating making changes to employees’ terms and conditions (where dismissal and re-engagement is possible). The Code advocates the provision of sufficient information (such that employees understand their employer’s motivation and the nature of the proposals), engaging in meaningful consultation and deterring employers from using the threat of dismissal as a negotiating tactic. The draft Code does not suggest a prescribed timeframe for consultation but notes that it is unusual for a long timeframe to be detrimental. Subject to the outcome of the consultation, which closes on 18 April 2023 the draft Code would be issued under section 203 of the Trade Union and Labour Relations (Consolidation) Act 1992 giving Employment Tribunals the power to adjust compensation by up to 25% for non-compliance.

Government issues consultation paper on holiday pay for part-year workers. Following the Supreme Court decision in Harpur Trust v Brazel, the government has issued a consultation paper to address issues arising from the judgment, principally that part-year workers can be entitled to a larger holiday entitlement than part-time workers working the same hours across the course of a year. The consultation paper acknowledges the complexity and challenges for employers when calculating holiday pay for irregular working patterns and aims to ensure that holiday pay is proportionate to the time spent working. The consultation closes on 9 March 2023.

Legal Services Board to consult on the use of NDAs. Board papers published by the Legal Services Board in January 2023 include plans for a consultation on steps to tackle the misuse of non-disclosure agreements by lawyers. The consultation is driven by evidence that confidentiality agreements may be used inappropriately by employers towards employees. It is expected that a formal consultation will take place in the summer.

Regulatory

SMCR review to take place in Q1 2023. On 9 December 2022, a large package of UK financial services regulatory reforms was published. The Edinburgh reforms claim to “take forward the government’s ambition for the UK to be the world’s most innovative and competitive global financial centre” and include a review of the SMCR regime. The government will launch a call for evidence and seek views on the regime’s effectiveness, scope and proportionality as well as potential improvements and reforms.

FCA and PRA consult on removing the bankers bonus cap. On 19 December 2022, the FCA and PRA issued a consultation paper on proposed changes to the banker’s bonus cap. The consultation seeks views on the proposal to remove the bonus cap on the basis that the current ratio requirements between fixed and variable remuneration can place upwards pressure on fixed remuneration. The consultation advocates increasing the proportion of compensation which is subject to deferral, payment in instruments and risk adjustment. The consultation closes on 31 March 2023.

Diversity and inclusion

With ‘heavy heart’ EAT reject claims of discrimination because of marriage. The EAT held that when determining a claim for discrimination on the basis of marriage, a Tribunal must ask itself whether the individual was treated unfavourably because he/she was married, not whether they were treated unfavourably because they were married to a particular person. The Claimant commenced employment as a bookkeeper for Advanced Fire Solutions Ltd (AFS) in 2005. She later married Mr Bacon who was a MD and majority shareholder at AFS and became a director and shareholder herself a few years later. In 2017, when the Claimant informed Mr Bacon that she wished to separate from him false allegations were made about her, her directorship was removed, her dividends were unpaid, and she was ultimately dismissed. Although Judge Shanks acknowledged that the Claimant had been ‘badly treated’, applying the law the Claimant could not show that she would have been treated any differently to an unmarried woman who was in a relationship with Mr Bacon. (Ellis v Bacon & Advanced Fire Solutions Ltd).

Dismissal of employee on long-term sickness absence did not constitute discrimination arising from disability. The Claimant worked for HMRC between 2011 and 2018. During this time, he suffered from anxiety and depression and had long absences from work. Between 2016 and his dismissal, the Claimant was absent from work for a total of 245 days on 23 different occasions. In 2018 when the Claimant had been absent for seven months and remained unfit to return to work, HMRC decided that all reasonable adjustments had been exhausted and given the impact of the Claimant’s absences on productivity and staff morale, the Claimant was dismissed. The Claimant then brought claims for discrimination arising from disability. The EAT upheld the finding of the Employment Tribunal that the dismissal was a proportionate means of achieving the employer’s legitimate aim of ensuring satisfactory attendance and maintaining a fair sickness management regime. The EAT found that the Claimant’s absence had a very real impact on HMRC’s use of resources, in particular on time management and staff morale. (McAllister v HMRC).

Employer could not reasonably have known of substantial disadvantage suffered by employee prior to sick leave. The EAT upheld the decision of the ET that the Claimant was not discriminated against by virtue of his disability. The Claimant suffered from Primary Reading Epilepsy however he did not communicate this to his employer prior to a period of sick leave in autumn 2017. As a result, the EAT found that until 18 October 2017, the Claimant’s employer could not reasonably have been expected to know that the Claimant was at a substantial disadvantage or that there was a duty to make reasonable adjustments. The EAT supported the Tribunal’s conclusion that the Claimant was dismissed because he refused to engage with suggested adjustments to support his return to work and concluded that this was therefore a proportionate means of achieving a legitimate aim. (Preston v E.on Energy Solutions Ltd).

Claimant unsuccessful in claims of unfair dismissal and discrimination on the grounds of sex and age. The Claimant was made redundant by the Respondent, after which she brought claims of unfair dismissal and discrimination on the grounds of sex and age. The Employment Tribunal rejected the Claimant’s claims finding that the Claimant was dismissed because her role was genuinely redundant, rather than due to age or sex discrimination. The case made the headlines because the Claimant was reportedly nicknamed “Christine Lagarde” on the basis that she is female, French and has grey hair. However, the Employment Tribunal did not consider that this indicated a ‘culture’ of discrimination and noted that no-one who was involved in the redundancy decision used the nickname, nor did the Claimant complain about it at the time. (Maugers v DB Group Services (UK) Limited).

UK government and Scottish Parliament in constitutional crisis over Gender recognition reform. In December 2022 the Scottish Parliament passed the Gender Recognition Reform (Scotland) Bill. The Bill will allow an individual with a Scottish birth certificate, or who is ordinarily resident in Scotland, to self-certify after living as their acquired gender for three months (reduced from two years), but the changes will only apply in Scotland. On 16 January 2023 the UK government announced that it was invoking section 35 of the Scotland Act 1998 to block the Bill from receiving Royal Assent (on the basis that it would have an “adverse effect” on the operation of equality law across Great Britain. It has been reported that Nicola Sturgeon may change the section 35 order using judicial review proceedings. See our Insight.

European Parliament and Council reach provisional agreement on pay transparency directive. On 15 December 2022, the European Parliament and Council of the EU reached provisional agreement on a directive on pay transparency. The new rules are intended to provide for more transparency and better enforcement of equal pay between men and women, as well as improving access to justice for victims of discrimination. The measures will include: pay transparency for job seekers; rights of information for employees; gender pay gap reporting; and joint pay assessments. The proposed directive is now subject to formal approval from legislators, following which member states will have three years to transpose the new requirements of the directive into national law.

Government publishes response to recommendations for supporting women with menopause in the workplace. On 12 January 2023, the government sent a response to the Women and Equalities Committee (WEC) to their report of 28 July 2022 into menopause in the workplace. The WEC report set out 12 recommendations to support women in the workplace, of which five have been rejected outright, only one has been accepted in full and six have been accepted in part. The government’s response has been called a “missed opportunity” by the WEC.

Litigation

Employer faces claim for misuse of employee’s private WhatsApp messages. The High Court has refused to strike out a claim for misuse of private information brought by the Claimant against her former employer, who had obtained 18,000 of the Claimant’s private WhatsApp messages to use against her in Employment Tribunal proceedings. Whereas the Claimant alleged that the messages were obtained by hacking her account, her employer asserted that the messages were found on her work laptop. In either case, the High Court found that the WhatsApp messages were private messages about the Claimants professional, social and private life, including her health and sex life and that it was obvious that the Claimant would ordinarily have a reasonable expectation of privacy in relation to them. Master Davidson also noted that there was no authority to suggest that downloading information to a work laptop would stop information being private. (FKJ v RVT & ors).

EAT publishes checklist for appeals. The EAT has published a helpful checklist for lodging an appeal against an ET decision at the EAT, which details the documents and information which should be provided when lodging an appeal at the EAT.

The Senior President of Tribunals has launched a consultation on the composition of panels in the Employment Tribunal and Employment Appeal Tribunal. The consultation runs to 27 March 2023 and primarily considers proposals that lay-members should only be used on panels where they are really needed, given the existing pressures on the Tribunal system and the additional time and cost where there are non-legal members of the panel.

Whistleblowing

An assertion by a Chief Risk Officer of breach of internal rules and PRA rules can amount to a qualifying disclosure ie about a breach of a legal obligation, and grounds for a successful claim for unfair dismissal due to whistleblowing. The Claimant was appointed as the Respondent’s Chief Risk Officer in 2019. During his employment he made 11 protected disclosures in relation to the Respondent’s risk management framework and resourcing. The Claimant was dismissed on 1 April 2021. The Employment Tribunal found that the Claimant was automatically unfairly dismissed because of the protected disclosures he made. This case serves as a reminder of the importance of being receptive to queries and concerns being raised, particularly by senior individuals in Risk and Compliance roles. N.B. We consider that it will only be possible to argue in limited circumstances, that a detriment or dismissal was due to the manner of the disclosure, rather than the fact of disclosure i.e. the Supreme Court decision of Ling Kong v Gulf International Bank is likely to apply narrowly in practice. (Daniels v United National Bank & Firth).

Covid

Court of Appeal hears first Covid-19 case. The Court of Appeal has upheld the decision of the EAT (covered in our June Alert) that an employee who refused to return to work at the start of the COVID-19 lockdown had not been automatically unfairly dismissed. The Claimant sought to argue that the EAT had wrongly interpreted s100(1)(d) as being concerned only with workplace dangers. The Court of Appeal did not accept that suggestion, instead finding that the EAT had correctly distinguished between danger of infection “at large” and the danger directly at work. In any event the Court of Appeal agreed with the EAT that on the specific facts the Claimant did not have a genuine belief that there was a serious and imminent danger in the workplace. (Rodgers v Leeds Laser Cutting).

Employment Tribunal finds that it was not discriminatory to require a disabled employee to require a face mask for work. The Employment Tribunal held that requiring the Claimant, who was responsible for assisting with the production of medication for distribution to the Respondent’s customers, to wear a face mask (as required by a mandatory face covering policy put in place during the pandemic) was not discriminatory. The Claimant suffered from vertigo and said that she could not wear a face mask as a result. She resigned from her employment and brought claims of constructive unfair dismissal, failure to make reasonable adjustments and indirect discrimination. In a decision that will be welcomed by employers, the Employment Tribunal found that the Respondent’s policy was legitimate in the circumstances and that reasonable adjustments were explored (including alternative face coverings). At the time, relaxing the policy could have had serious health consequences for the Respondent’s staff and/or customers. This case illustrates the importance of meaningful engagement with possible adjustments to seek to remove disadvantages for employers, whilst acknowledging that there may be legitimate reasons why further adjustments cannot always be made. (Shields v Alliance Healthcare Management Services).

Brexit

Third reading for Retained EU Law (Revocation and Reform) Bill. On 18 January 2023 the Retained EU Law (Revocation and Reform) Bill 2022-23 completed its report stage and third reading in the House of Commons. Various government amendments to the Bill were agreed during this process. Proposed non-government amendments included moving the “sunset” of EU-derived legislation from 2023 to 2026 and requiring the publication of an exhaustive list of legislation to be revoked, but none of these amendments were agreed to. The Bill is scheduled for a second House of Lords reading on 6 February 2023. See our Insight.