Employment Law Alert UK – August 2023

Diversity, Equity & Inclusion / ESG

Tribunal upheld claim for harassment on basis of all staff email with comments against gender critical beliefs. The Employment Tribunal upheld the Claimant's claim for harassment on the basis of an all-staff email, but found that another related all-staff email did not cross the threshold for harassment. The Claimant worked for the Arts Council England (ACE). The ACE suspended a grant which was due to be paid to a charity due to alleged transphobia and hosted a drop-in session for staff to discuss this. The Claimant holds gender critical views and challenged the consensus view expressed about the charity. There followed an email from the Deputy Chief Executive of ACE which noted his personal solidarity with ACE's trans and non-binary staff, and then an email from another employee criticising the views expressed at the drop-in meeting and linking to a petition (an "allies support sheet"). The fact that the Claimant's gender critical views were protected under the Equality Act was not disputed. The Employment Tribunal noted that it had been inappropriate for the Deputy Chief Executive to express his personal views but that his email did not amount to harassment. In contrast the content and tone of the second email was deemed derogatory and found to amount to unwanted conduct which had the purpose or effect of violating the Claimant's dignity and creating an intimidating, hostile, degrading, humiliating or offensive environment. This case illustrates that an inclusive workplace requires an employer to accommodate those with opposing views. (Fahmy v Arts Council England) 

First-Tier Tribunal pushes back on HMRC's strict interpretation of criteria for tax-free disability payment. The First-Tier Tribunal has disagreed with HMRC's interpretation of a settlement payment, finding that compelling evidence that at least part of a severance sum was made as a Disability Payment should be enough to exempt that part of the payment from tax. The relevant employee had been in receipt of PHI payments from her employer for some time. At the point at which the PHI provider was no longer prepared to make payments the employee met with her employer to agree the terms of her exit. Her exit package constituted: her outstanding salary; a payment in lieu of untaken holiday (both of which were taxable); and "compensation for loss of office and termination". Her employer sought to argue that £83,907 of the compensation payment related to settlement of the PHI claim and therefore should be tax-free. HMRC disagreed, but the First-Tier Tribunal shared the view of the employer. The First-Tier Tribunal noted that legislation has to be construed purposively, and that the purpose of the disability exemption is to exempt from tax any payment made on account of disability. As a result, they found that it was enough to provide evidence that £83,907 was clearly on account of disability for that portion of the compensation sum to be paid tax-free. This case serves as a reminder about the importance of properly categorising different elements of an exit package, and being able to properly evidence the basis for making any payments tax-free. (Howard-Ravenspine v HMRC UKFTT)

Maya Forstater awarded over £100,000 in compensation for gender critical belief discrimination. An employment tribunal has awarded £105,778.47 to Maya Forstater following her successful claim for direct discrimination on the grounds of belief. The tribunal found that the case fell at the top of the Vento middle band, and Forstater was awarded £25,000 for injury to feelings. The tribunal awarded an additional £2,000 in aggravated damages due to public statements made on behalf of the Respondents. She was also awarded £14,000 in loss of earnings, £50,000 for the loss of opportunity and earning capacity and an additional sum for interest due. (Forstater v CGD Europe & ors)

FCA publishes letter on non-financial misconduct. On 5 July 2023 the House of Commons Treasury Committee published a letter from the FCA in relation to the FCA investigation into Odey Asset Management. The letter confirms that the FCA remains focussed on culture within the firms it regulates. Nihil Rathi confirms that the non-financial misconduct is relevant to assessments of fitness and propriety for the FCA, with the promise of further guidance to be published later in 2024 on how non-financial misconduct should be considered within the conduct rules. In the meantime the FCA is clear that it expects regulated firms to take allegations of non-financial misconduct seriously and investigate through appropriate internal systems and controls.

Sexual harassment Bill diluted by House of Lords. The House of Lords has approved two significant amendments to the Worker Protection (Amendment of Equality Act 2010) Bill. The first amendment is to remove employer liability for employees who are harassed by third parties in the course of employment. The second amendment is to require employers to take "reasonable steps", rather than "all reasonable steps" to protect employees from sexual harassment in the course of employment. It is expected that the government will seek to approve these amendments but during the debate it was noted that Labour may revisit these issues in the future.

Long-awaited response to mandatory ethnicity pay gap reporting consultation published. The government has published its response to the mandatory ethnicity pay gap reporting consultation launched in 2018. The government had already confirmed in 2022 that mandatory ethnicity pay gap reporting would not be introduced. The response confirms this, and signposts guidance on voluntary reporting published earlier this year. The consultation response notes that challenges were identified with identifying a methodology for ethnicity pay reporting, but noted that most responses advocated a model close to that used for gender pay gap reporting with explanatory information to ensure that reporting is correctly understood. There was a general consensus that a standardised approach to ethnicity classification is needed to allow for meaningful comparisons to be drawn.

Flexible working in the spotlight. On 12 July 2023 ACAS launched a consultation on its updated Code of Practice on handling flexible working requests. The updated Code of Practice is intended to take into account changes in working practices and to provide guidance to employers on handling requests reasonably ahead of the anticipated legislative changes to flexible working rights (see below). The Code extends the categories of individuals who may accompany an employee to meetings to discuss a request. It also recommends that employers set out additional information to help explain their decision in respect of a flexible working request and recommends that an appeal be allowed where a flexible working request has been rejected. The consultation closes on 6 September 2023.

Meanwhile the Employment Relations (Flexible Working) Act, which will affect the changes to flexible working rights, received royal assent on 20 July 2023. It is expected that section 1 of the Act (which makes changes to 80F and 80G of the Employment Rights Act 1996) will come into force around July 2024 to give employers time to prepare. The Department for Business and Trade has also issued a call for evidence on non-statutory, or informal, flexible working to inform the government's flexible working strategy. The call for evidence covers ad hoc arrangements, regular arrangements and organisational approaches and will close on 7 November 2023.

Greater flexibility for those taking paternity leave. On 19 July 2023 the government published a long awaited response to the 2019 consultation on parental leave and pay, in which it confirmed its intention to make changes to the paternity leave and pay legislation. The government intends to allow fathers or partners to split their leave into two blocks of 1 week which can be taken at any time in the first year after the birth or adoption of a child. Partners or fathers will still be required give notice of their entitlement to paternity leave and pay 15 weeks prior to the expected week of childbirth, but they will then only be required to give 4 weeks' notice prior to each period of leave.

Parliament introduces bill to define bullying at work. On 11 July 2023 the 'Bullying and Respect at Work' Bill which would define workplace bullying and introduce legal duties on employers to prevent it had its first reading in Parliament. If passed employees would be able to bring bullying claims in the ET and employers would face sanctions if they did not take steps to implement a statutory "respect at work code".

Employee relations

Claimant did not have the right to insist that management witness attend a disciplinary hearing. The High Court has dismissed the Claimant's application for an interim injunction in connection with his employer's conduct of a disciplinary process, finding that the Claimant did not have an unqualified right to insist that any "management witness" be required to attend the disciplinary hearing. The Claimant is employed as a consultant in oral and maxillofacial surgery. He was the subject of disciplinary proceedings arising from allegations that he had intimidated and bullied colleagues. The Claimant brought an interim injunction claiming that his employer had acted in breach of professional standards published by the Department of Health (which the Claimant claims had been incorporated into his employment contract) and his employer's own conduct policy in the way that it had carried out the disciplinary process. He specifically raised issues in relation to the witnesses involved in the process and his employer's approach to disclosure. The High Court found that there was no serious issue to be tried, because the Claimant had no real prospect of establishing a contractual basis for his alleged rights (based on the wording of the relevant documents) and because the courts should not become involved in the "micromanagement" of disciplinary proceedings, and should instead allow those to run their course. This decision will come as welcome relief for employers for sending a clear message about the limits on an employee's ability to dictate the conduct of disciplinary proceedings and the reluctance of the courts to become involved in their management. (Colbert v Royal United Hospitals Bath NHS Foundation Trust)

Decision maker does not necessarily have to conduct disciplinary hearings for fair dismissal. The EAT has upheld the decision of the ET that the Claimant's dismissal for misconduct was fair in circumstances where the decision maker did not attend the original disciplinary hearing with the Claimant. The Claimant was employed as a relationship manager for the Respondent (a Greek bank), based in the Respondent's London office. The Claimant was dismissed for gross misconduct after sending an email with highly confidential information to her lawyer and trade union representative, and then failing to disclose the full list of those she had sent it to (she also sent the information to her brother who worked for a different bank). The Respondent had suspended the Claimant and carried out an investigation and disciplinary hearing. The decision maker was then passed the notes of the investigation and disciplinary hearing and took the decision to summarily dismiss the Claimant. The EAT noted that it is "desirable" for a meeting between the employee and decision maker to take place (and many policies expressly require this) but that direct personal communication is not a requirement - the key is that an employee has a chance to explain their position sufficiently prior to a decision being taken. In any event the EAT found that the process of a dismissal must be looked at as a whole, including any appeal and therefore in this case any procedural unfairness in the initial decision to dismiss would have been sufficiently addressed by the internal appeal, which did involve a meeting between the Claimant and the manager appointed to hear the Claimant's appeal. This decision highlights the importance of the appeal process and its value in helping to address any potential procedural or substantive issues. (Charalambous v National Bank of Greece)

Government focus on health of workforce and Occupational Health services. On 20 July 2023 the Department for Work and Pensions issued a consultation: Occupational Health: Working Better, which is designed to help support the government's plans to boost UK employment. The government sees improving Occupational Health provisions as key means of improving productivity and reducing ill-health related unemployment. The consultation seeks views on different models of OH provision, considers international examples of OH provision and seeks views on developing OH capacity. Alongside this, HMRC and HM Treasury published a consultation on 21 July 2023 about possible tax incentives to support an increased uptake in OH services. The government is considering whether the current income tax and NICs exemptions for certain medical benefits could be expanded to cover further health screenings, check-ups and treatments to reduce workplace absence or increase performance. The consultation welcomes the suggestion of alternative proposals. Both consultations close on 12 October 2023.

Litigation

Bailey successful in £20,000 costs award due to issues with Tribunal bundle. The Respondent was ordered to pay some of the Claimant's costs following her successful claim for direct discrimination on the grounds of belief and victimisation. Following the conclusion of the case various parties sought cost awards. Whilst most of these applications were unsuccessful the Claimant was awarded some of her costs due to the conduct of the Respondent's solicitors in relation to the Tribunal bundle. The Tribunal noted numerous issues with the bundle, namely that large parts of it were not OCR-readable, lots of documents were omitted from the main index and the fact that lots of documents were added to the bundle late in the day. There was also general criticism of the Respondent solicitors' lack of constructive approach. It is worth noting though that the award was small in the context of the Claimant's legal fees for the case as a whole and account was taken of the fact that the Claimant did not introduce her claim of direct discrimination on the basis of belief at the outset, and she was also unsuccessful in relation to a number of her claims. (Bailey v Stonewall & ors)

New presidential guidance on ADR. The President of the Employment Tribunals has published new Presidential Guidance on Alternative Dispute Resolution (ADR). The guidance covers the use of ACAS, judicial mediation, judicial assessment and dispute resolution appointments. Of particular note, dispute resolution appointments have been piloted in the Midlands West region since July 2020, and the intention is for this to be extended nationally. Dispute resolution appointments are intended for cases which have been listed for six days or more, typically the most complex claims of discrimination and whistleblowing detriment. Unlike judicial mediation and judicial assessment they will be non-consensual, meaning that they can be listed by the Employment Tribunal without the consent of the parties. At these appointments an Employment Judge will give the parties an evaluation of their relative prospects of success and possible outcomes from the case, with the hope that agreement may be reached between the parties without the need for a hearing, or failing that, that there will be a shorter or more focussed hearing.