Employment litigation in review – 2023

In this insight we provide:

• our top 10 employment litigation trends / developments of 2023;
• our predictions for 2024: our top 5 trends to watch in the year ahead

Top 10 case law developments of 2023

1. Gender critical beliefs

Protection of employees with ¨gender critical¨ beliefs and in particular potential conflicts between differing beliefs/views in this regard seems set to remain challenging for employers. Alongside the remedy judgments in the high-profile cases of Maya Forstater v CGD Europe & ors and Bailey v Stonewall and others, in 2023 we have also had the decisions in Fahmy v Arts Council England and Higgs v Farmor's School & the Archbishops' Council of the Church of England. In the former the ET was required to consider a series of all-staff emails criticising the expression of the Claimant's gender critical views and determine whether these had crossed the threshold for harassment - one email which also attached a petition under the guise of an "allies support sheet" was held to cross the line. In the latter, the EAT held that the Employment Tribunal erred in rejecting outright claims of direct religion or belief discrimination brought by a teacher following posts made on Facebook (which were described as homophobic and prejudiced against the LGBT community), and rather found that the teacher's beliefs were protected. The case has been remitted for redetermination. The EAT gave a helpful recap of the law in relation to freedom to express one´s beliefs and how employers should approach such issues.

2. Privilege

University of Dundee v Chakraborty gave cause for concern when the judgment was published earlier this year. The Scottish Court of Session held that there was probably a waiver of privilege over legal advice sought in connection with a grievance investigation report when that legal advice was shared with the investigator, and even if it wasn't waived then, it certainly was when it became known that the investigation report had been changed as a result of that advice. Importantly, the final version of the report sent to the Claimant was noted to have been "amended and reissued" following legal advice. The position is yet to be tested in the EAT.  In the meantime, it would be prudent to think carefully about how and when legal advice will be sought in connection with an investigation at the outset, and to be mindful of the risks of evidencing that a report has been influenced by legal advice. The fact pattern in this case in terms of the legal advice sought is slightly unusual but the case is a helpful reminder that privilege could be lost where documents evidence that a report has been influenced by legal advice.

3. Waiver of claims

The effective settlement of claims has remained in the spotlight this year, in the wake of the decision at the end of 2022 in Bathgate v Technip UK Ltd and ors, in which the EAT held that section 147 of the Equality Act 2020 (which allows claims to be settled under a settlement agreement), does not allow for the settlement of a future claim which an employee does not know about at the time an agreement is entered into. Bathgate served as an important reminder that whilst broad waiver provision in settlement agreements are unlikely to prevent an employee from bringing a future claim which had not arisen and was not in contemplation at the time at which the settlement agreement was entered into.   The position in relation to existing but unknown claims was not addressed specifically so employers may wish to consider  the drafting of settlement agreements to cover such matters (noting that in Clifford v IBM (2023) this scenario was found to be covered]). Alongside this development relating to settlement agreements, in 2023 we have seen the courts willing to adopt a broader interpretation to the waiver of claims under a COT3. In Arvunescu v Quick Release Ltd 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", and in Ajaz v Homerton University Hospital NHS Foundation Trust it was held that it was an abuse of process for the Claimant, who had settled a whistleblowing detriment claim using a COT3, to bring a new claim relying on the same protected disclosures, albeit with new detriments.

4. Disciplinary processes

2023 has seen two key decisions to be welcomed by employers faced with the challenge of managing the demands which an individual might seek to assert in the face of disciplinary proceedings. In Charalambous v National Bank of Greece the Claimant sought to challenge disciplinary process on the basis that the decision maker was passed notes of the investigation and disciplinary hearing but did not attend in person. The EAT noted that it is "desirable" for a meeting between the employee and decision maker to take place but that direct personal communication is not a requirement. In a similar vein, in Colbert v Royal United Hospitals Bath NHS Foundation Trust the High Court held that the Claimant had no right to insist upon a "management witness" attending a disciplinary hearing. Both cases helpfully send 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.

5. Redundancy processes

The recent EAT decision in Haycocks v ADP RPO considers the relevance of "workforce consultation" even where there is not a statutory requirement for collective consultation  Good industrial relations practice will vary depending on the type of employment, workforce and specific circumstances giving rise to the redundancy situation. On the facts, the EAT found that in circumstances where there was no workforce consultation at the formative stage of a redundancy exercise involving less than 20 people, the Claimant's dismissal was unfair. Despite the fact that on appeal, the Claimant was provided with his redundancy selection score, which he could not evidence should have been any higher, the EAT still found that the process was unfair. Although what is reasonable in a redundancy process will vary depending on the employer and the circumstances giving rise to the redundancy, there are certain key requirements, which include that an employer will seek to avoid dismissals by engaging in consultation at a formative stage where an employee or representative is given adequate information and time to respond, and where genuine consideration is given to the response. In this case the EAT found that there were no good reasons for the Respondent failing to engage in meaningful consultation with the workforce as well as with the individual.  Whilst the comments in relation to workforce consultation have given rise to concerns, employers should note that fairness is fact-specific and there may well be good reasons for not engaging in broad workforce consultation.  If only carrying out individual consultation, ensure sufficient information is provided for that consultation to be meaningful.  It is also worth noting the decision of Teixeira v Zaike Restaurants from earlier in 2023 in which it was held that a redundancy pool of one did not mean that dismissal was inevitable and the requirement for meaningful consultation disappeared and Mid and South Essex NHS Foundation Trust v Stevenson & ors where the Claimant's refusal of alternative unemployment was not deemed to be unreasonable.

6. Holiday pay

In the long-awaited decision of Chief Constable of the Police Service of Northern Ireland v Agnew the Supreme Court clarified the approach which should be taken in claims for a series of unlawful deductions. The Supreme Court clarified that although an unlawful deductions claim must be brought within three months of the date of the last payment made, it was not right (as had previously been understood from Bear Scotland v Fulton) that a gap of three months within a series of deductions would break the chain in the series. Instead a series is determined by a "common fault or unifying or central vice", even if the gap between unlawful deductions is more than three months.

7. Whatsapp and social media

Navigating the line between personal and professional, particularly in the context of the use of messaging apps and social media remains challenging. In FKJ v RVT & ors we saw a Respondent seek to rely on 18,000 of the Claimant's private Whatsapp messages in connection with Employment Tribunal proceedings. The High Court  found that the WhatsApp messages were private messages about the Claimant's 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 irrespective of whether they had been downloaded to the Claimant's work laptop. As a result the High Court allowed the Claimant's claim for misuse of private information to continue. Perhaps unsurprisingly, given the differences between the platforms, the Employment Tribunal reached a different view in relation to Facebook posts in Ms T Webb v London Underground, despite the Claimant seeking to argue that these were private. Here the Employment Tribunal found that it was reasonable for the Respondent to rely upon the content of the Claimant's Facebook posts and that the Respondent's restrictions on the use of social media pursued a legitimate aim and were exercised proportionately. These sorts of challenges are only likely to become more prevalent as we move into 2024. Both cases highlight the importance of a carefully considered social media policy which sets clear expectations for employees and the complexity of the analysis between personal and professional communications in this context.

8. Disability & reasonable adjustments

In September two key decision of the EAT emphasised the high standards which are expected both in the workplace and in the court room when it comes to making appropriate adjustments for neurodiverse individuals. In Mr C Mallon v Aecom Limited the EAT found that the Respondent's online application form put a job applicant with dyspraxia at a substantial disadvantage. The Employment Tribunal found that a reasonable employer in that situation would have called the applicant to better understand their situation, and had it done so it would have had the requisite knowledge of the Claimant's disadvantage. The commentary of the EAT acts as an important reminder of the importance of showing flexibility in recruitment processes, particularly where the process is automated with technology - both to ensure the process is inclusive, and to manage legal risk of disability discrimination claims. Employment Tribunal proceedings were the focus of Habib v Dave Whelan Sports Ltd t/a DW Fitness First. In that case the EAT found that the Claimant with dyslexia had not been given a fair hearing given that the ET had relied on potential symptoms of the Claimant's dyslexia as giving reasons to doubt her evidence without having due regard to the Equal Treatment Bench Book and Presidential Guidance. In particular, the ET had been aware of a condition which may affect the Claimant's demeanour, and relied on the very matters which might arise from that condition to doubt the Claimant's evidence without appropriate analysis and explanation. 

9. Non-compete clauses

Non-compete clauses have been under scrutiny in 2023, especially in light of the government response to the consultation on the reform of non-compete clauses published in May 2023, which proposing capping non-compete clauses at 3 months. For the time being though, the courts have not demonstrated the same reticence towards these clauses. In Boydell v NZP Ltd and others the Court of Appeal upheld the decision of the High Court that it was permissible to sever part of a 12 month non-compete clause (to remove the benefit to companies in the group), and that after this severance, the clause was not too wide to be enforceable. The Court of Appeal held that the non-compete clause was clearly directed towards the specialist activities of the Respondent and that the clause was not incapable of severance - severing part of the restriction did not change the overall effect of the post-termination restriction in circumstances where the restriction was primarily aimed at the specialist activities of the Respondent. It also held that the clause was not too wide to be enforceable after severance given the nature of the Respondent's business.

10. Employment status

Welcome commentary on the analysis of worker status was provided by the Supreme Court this year in the case of Independent Workers Union of Great Britain v Central Arbitration Committee and anor. The case itself focussed on whether Article 11 ECHR (freedom of assembly and association) requires section 296(1) TULR(C)A and the personal service obligation to be interpreted so as not to exclude a group of Deliveroo riders from union recognition. The Supreme Court was clear that the right to form a trade union only arises in the context of an employment relationship. Deciding whether there was an employment relationship for the purposes of Article 11 ECHR required careful consideration of a number of different factors. Of particular note, the delivery riders had a clear unfettered right of substitution, were allowed to work with competitors and contracts were not terminated for riders not being available enough.

Our top 5 trends to watch in the year ahead:

1. Boost to workers' rights?

It seems highly likely that there will be a general election during 2024, and if polling indications at the time of writing are accurate, that may mean a new Labour government. Labour's "new deal" for working people published in September 2023 establishes a clear drive to strengthen workers' rights. Amongst Labour's proposals are : turning employment status on its head with a single "worker" status for all bar the genuinely self-employed; ending  qualifying periods for basic employment rights; extending times for bringing claims and the removal of cap on compensation; banning zero hours contracts  and a drive towards stronger family-friendly rights . The introduction of a socio-economic duty in the Equality Act 2010 has also been floated. Whilst Labour have pledged to introduce legislation within the first 100 days if elected, it remains to be seen whether they are in fact elected, and even if they are, whether their employment agenda does in fact take front and centre stage in the short to medium term.

2. Impact of technology

AI is inevitably going to play an increasingly significant role in the world of work. The challenge for all will be harnessing this change in a positive and constructive way, and successfully navigating the risks and challenges it poses. As its use increases, it seems inevitable that we will see more questions and challenges arise, particularly in relation to data protection and employee monitoring practices.  The final text of the EU AI Act, expected in the first half of 2024, will place requirements on supplier and users of AI (with extensive extra-territorial scope).

Alongside AI, we anticipate that employers are increasingly going to be required to deal with the consequences of the "online" actions and presence of their workforces. The term "he said, she said" may soon fail to fairly summarise the myriad of "he posted", "she messaged", "the blog said", spread across a range of media. Correctly handling the boundaries between private and professional, particularly in challenging contexts, such as where there has been a complaint of sexual harassment is likely to be a challenge coming across many employers' desks as we head into 2024.  Issues around privacy and freedom of expression (as mentioned above) will also be important.

3. Employee activism

In September two Shell employees wrote an open letter addressed to Shell CEO Wael Sawan expressing concern that the company was moving its attention away from the progression of renewable sources of energy. The letter was posted on Shell's internal website, was viewed 80,000 times and received 1,000 "likes" from colleagues and prompted a direct response from their CEO. Aside from the renewables debate itself, the incident was a key illustration of the potential significance of employee activism and engagement, especially in circumstances where internal platforms allow for widespread publication and debate, and is probably indicative of the direction of travel in this space.

Engagement with environmental issues seems set to grow in all areas. In April 2023 we saw the Law Society publish guidance on the impact of climate change on solicitors, a key focus of which is a new concept of "advised emissions" asking lawyers to consider to what extent the matters which they advise on contribute to climate change.

4. Positive action

Whilst environmental issues are likely to be a prevalent part of ESG agendas for 2024, it is likely we will also see a heavy focus on D&I, particularly in light of the FCA & PRA consultation papers on Diversity and inclusion in the financial sector. As well as including significant new guidance around non-financial misconduct, the regulators are proposing that firms do more to articulate their strategy and targets.   There has been a great deal of interest in these proposals and the final rules may look different to the current proposals.  However, employers contemplating progressive initiatives which seek to accelerate change will need to carefully consider the boundaries between lawful positive action and unlawful positive discrimination, particularly in the recruitment context.

We will await publication of the final Policy Statement during 2024, after which firms will have one year before the new rules come into effect.

5. Sexual harassment & reasonable steps

Taking appropriate steps to deal with allegations of sexual harassment has been a key concern for employers since #MeToo. Moving into 2024 we are going to see the focus shift from how matters are addressed after the event, to a positive duty on employers to take reasonable steps to prevent sexual harassment from happening in the first place. In October 2024 the long-debated Worker Protection (Amendment of Equality At 2010) Act will come into force. Although the Act does not go as far as the first draft of the Bill (which proposed that employers take "all" reasonable steps) it will still impose a new duty on employers to take reasonable steps to prevent the harassment of their employees. The Act will also introduce the right for Employment Tribunals to increase compensation by up to 25% where employers have breached this duty. We anticipate that grappling with what "reasonable" steps means in practice will be the source of much discussion and debate over the coming months. It is anticipated that the EHRC may update its guidance on sexual harassment at work in light of the new legislation, although we do not yet have an expected date for this.