Employment Law Alert UK - October 2024

Worker’s rights

Supreme Court restores injunction to stop Tesco from “firing and rehiring” employees to avoid paying “retained pay”. In March 2022, the High Court granted an injunction against Tesco to prevent the use of termination and re-engagement as a means of withdrawing an additional contractual benefit (which had been agreed as a retention incentive in the context of a restructuring exercise). In this significant final decision the Supreme Court has overturned the findings of the Court of Appeal, and instead reinstated the decision of the High Court and determined that Tesco could not terminate employees' contracts to avoid paying a contractual entitlement known as "retained pay," which was agreed upon as an inducement for employees to relocate rather than be made redundant, and which was referred to as “permanent” in the contracts. In reaching this conclusion the Supreme Court found that an implied term prevented Tesco from terminating the relevant employees on notice for the purpose of removing or diminishing the employees’ entitlement to that benefit. The Supreme Court found that the contracts should function as the parties reasonably intended, and the promise of retained pay was intended to be a significant inducement for employees to relocate. The Supreme Court also held that it was appropriate for the High Court to have granted an injunction in circumstances where there had been no breakdown of mutual trust and confidence and where damages would not have been an adequate remedy. (Tesco Stores Ltd (Respondent) v Union of Shop, Distributive and Allied Workers and others (Appellants))

EHRC updates guidance and publishes new 8 step guide on preventing sexual harassment at work. On 26 October 2024 the Worker Protection (Amendment of Equality Act 2010) Act 2023 will come into force, introducing a new obligation on employers to take reasonable steps to prevent sexual harassment by their own workers and by workers of third parties (such as clients and customers). On 26 September 2024 the EHRC published an updated version of its final technical guidance, together with an 8 step guide. Significantly, the final guidance now makes clear that a worker cannot bring a stand-alone claim in the employment tribunal for third party harassment. It also expressly states that an employer is unlikely to be able to show that they have complied with the duty if they have not carried out a risk assessment. The guidance includes additional factors which should be taken into account when determining whether a step is reasonable for an employer to take, which include compliance with relevant regulatory standards includes more examples of what constitutes reasonable steps.

Diversity, Equity & Inclusion

Beliefs that are disdainful, prejudiced and target a specific religious group are not protected characteristics under the Equality Act. The EAT has dismissed the appeal of the Claimant who sought to argue that he held a protected belief in English Nationalism, which was the reason why his NHS assignment was terminated. The Claimant was engaged through an employment agency to provide consultancy services to an NHS Trust, but his employment was terminated after a couple of months. The Respondent said that this was because the Claimant had failed to disclose a spent conviction. The Claimant claimed that this was because of his beliefs. A Preliminary Hearing was listed to determine whether the Claimant’s beliefs were protected under the Equality Act. The ET, and later the EAT, both agreed that the Claimant’s belief failed to meet the fifth Grainger criterion, which requires beliefs to be worthy of respect in a democratic society, not incompatible with human dignity, and not in conflict with others' fundamental rights. It was noted that although English Nationalism could theoretically constitute a protected belief, the Claimant’s beliefs (as shown through his social media posts) included a disdainful and prejudiced focus on Islam. The Claimant sought to argue that the Forstater decision had lowered the threshold for satisfying the Grainger criteria, but the EAT disagreed, emphasising that beliefs espousing intolerance or discrimination, and specifically in this case including a desire to forcibly remove Muslims from the UK, do not qualify for protection. (Thomas v Surrey and Borders Partnership)

Hybrid working guidance for disabled workers. On 5 September the EHRC published new guidance for employers on hybrid working for disabled workers. The guidance is aimed at managers who are supporting disabled workers with establishing a successful hybrid working model. The guidance includes sections on identifying when a worker or job applicant may need reasonable adjustments and identifying barriers to hybrid working and includes tips, discussion points and case studies.

Employment status

Supreme Court considers mutuality of obligation and control. The Supreme Court has considered the factors of mutuality and control in determining whether an employment contract exists in connection with the activities of part-time referees. The decision contains important guidance on the application of significant aspects of the legal analysis as to whether an employment contract exists for tax purposes such that income tax and NICs obligations fall on the employer. Our tax experts provide further insight on this judgment here. (HMRC v Professional Game Match Officials Ltd)

AI

UK signs first legally-binding international treaty on AI risks. On 5 September, the UK signed a new legally binding international treaty governing the safe use of AI. The treaty aims to safeguard human rights, democracy, and the rule of law against the potential threats posed by AI. The treaty emphasises the importance of monitoring AI development, ensuring technology management within strict parameters, and tackling activities that misuse AI, posing risks to public services and society. It also encourages global participation, inviting countries outside the Council of Europe, like the USA and Australia, to join.

Financial Regulation

Consultation on new conduct framework for insurance employers. Lloyds have announced a consultation on a proposed New Conduct Framework, including Enforcement Byelaw amendments. The proposed new framework seeks to enhance alignment with firms' internal HR and disciplinary processes, allowing firms to more effectively investigate and address issues internally. It also aims to provide clearer guidance on what behaviours are deemed unacceptable by Lloyd’s, detailing when and how it will intervene. The changes include integrating Lloyd’s Enforcement and Oversight functions for a more unified approach to handling cases, and improving internal decision-making processes for timelier and more consistent outcomes, while maintaining necessary procedural safeguards. The consultation is open until 16 December 2024.

Whistleblowing

FCA internal review of handling of whistleblowing communications. On 23 September 2024 the FCA set out the outcome of a review by their Senior Independent Director of the handling of internal whistleblowing communications by the FCA Chair (specifically addressing allegations that the confidentiality of whistleblowers was not being maintained.) The review, which included consultation with the whistleblowing charity Protect and external legal advice, found that while the Chair did not strictly adhere to the policy, his actions aimed to ensure appropriate measures were taken regarding the whistleblowers' concerns without causing them harm. The FCA have advised that they will soon publish a revised version of their internal whistleblowing policy.