DSC Employment Law Update

MAY 2014

Content

• A summary of the Coalition’s reforms

• Employment Status

• Zero hours contracts

• Flexible working& parental leave

• Whistleblowing

• Early conciliation

A brief look back…



Context (1)

On 20 May 2010, the Coalition Government issued its programme for government which contained the stated aim to:

“review employment and workplace law… to ensure they maximise flexibility for both parties… and [provide] the

competitive environment for enterprise to thrive...”

The Enterprise and Regulatory Reform Act (ERRA) was introduced in 2012 and received Royal Assent on 25 April 2013.

Context



Means of reform

The primary means by which the Coalition have sought to reduce red tape / litigation is by:

• Restricting the number of people who can bring claims (by increasing the continuous service requirements for u/d claims to two years)

• Discouraging opportunistic claims (through the introduction of fees and penalties)

• Recasting public interest legislation, which had been the subject of (perceived) exploitation.

• Allowing employers (in some cases) to hold frank, private conversations

• Limiting the value of u/d claims

Status

A hierarchy (of sorts)

Employees

Workers

The difference between employees and workers

• Worker status has a lower “pass mark”

• Fewer rights (e.g. unfair dismissal, redundancy payments etc.)

• Typically more transient/ less integrated

• Mutuality still exists – but with (limited) scope for substitution

• Still subordinate

Self-employed

Zero hours contracts

Zero hours contracts

•Not legally defined so open to broad interpretation

•Subject of 2013 government consultation

•Contract for casual working with no guarantee of work

•The employee is only paid for work done

Zero hours contracts

Advantages

•Flexible

•Employees maintain protection from unfair dismissal, redundancy entitlement etc.

•In practice (sometimes) employees have a say in their hours

Disadvantages

•Seen as exploitative – some employees are unable to work for other employers in between shifts

•Alternative: a bank of casual workers?

Flexible Working

The Right to Request itself is very limited in nature. It consists of:

•A right to request to work flexibly

•A statutory request procedure

•An obligation on the employer to consider the request properly

•A limited number of grounds on which the employer can refuse the request

•BUT – INDIRECT DISCRIMINATION IS THE REAL ISSUE

Flexible Working

Who can make a request?

The eligibility criteria are scattered in different parts of the Right to Request Legislation, but drawn together below. Some of these are common to both those caring for children and those caring for adults. These are to:

•Be employed.

•Have 26 weeks' continuous employment at the date the request is made.

•Not be an agency worker or a member of the armed forces.

•Not have made another request to work flexibly under the Right to Request Legislation in the preceding twelve months.

Flexible Working

Refusal of request following initial meeting

There are eight specific grounds for rejecting a request, which are set out in s. 80(g) of ERA 1996:

•The burden of additional costs

•Detrimental effect on ability to meet customer demand

•Inability to re-organise work among existing staff

•Inability to recruit additional staff

•Detrimental impact on quality

•Detrimental impact on performance.

•Insufficiency of work during the periods the employee proposes to work

•Planned structural changes

Parental Leave

•Parental leave is a form of statutory unpaid leave available to some working parents in addition to statutory maternity, paternity and adoption leave.

•On 8 March 2013, the total amount of unpaid leave that can be taken per child increased from 13 to 18 weeks.

•It can be flexible in terms of the time at which it is taken and the way in which the total leave entitlement may be split up into a number of shorter periods (unlike current arrangements for maternity, paternity or adoption leave).

Parental Leave

In summary, all eligible employees may:

•Take a total of up to 18 weeks' unpaid parental leave for each child for the purpose of caring for that child.

•Take the parental leave at any time:

– before the child's fifth birthday;

– before the fifth anniversary of the date of placement in the case of an adopted child; or

– before the child's 18th birthday in the case of a child entitled to a disability living allowance.

New system of shared parental leave: 2015

•On 5 April 2015, the Children and Families Act 2014 will introduce a new system of "shared parental leave”.

•However, despite the similar terminology, the two concepts are unrelated, and "shared parental leave" will not have any impact on the existing unpaid parental leave provisions.

•The new statutory shared parental leave scheme will effectively allow parents to share the statutory maternity leave and pay that is currently available only to mothers (and adoptive parents to share the adoption leave and pay currently only available to the primary adopter).  

Whistleblwoing

Background

Background

• In 1988 35 people died in the Clapham rail disaster as result of faulty wiring.

• In the Maxwell publishing empire, £400 million was misappropriated from the pension fund affecting 30,000 people.

• In 1987 the MS Herald of Free Enterprise capsized minutes after setting sale with her bow doors still open, killing 193 people. In the run up to the disaster the ship had set sale on 5 occasions with it bow or stern doors open.

Background

• Political consensus

• PIDA attracted the support of the business community and the trade union movement

• A public interest measure – not perceived to be individual employment right

• During the passage of the Bill in the House of Lords, Lord Nolan commended those behind it “for so skilfully achieving the essential but delicate balance in this measure between the public interest and the interests of employers”. Fifteen years on, the verdict is less effusive.

Trends & Statistics (1)

Trends & Statistics (1)

• In the period since 1999, the number of claims has increased by 1170 %.

• 75% of whistleblowing claims are settled

• Of the remainder, 78% were lost and 22% were won

• Highest tribunal award £5 million

• Average award £113,667

Trends & Statistics (2)

YEAR NUMBER OF CLAIMS

1999/ 2000 157

2000/ 2001 416

2001/ 2002 528

2002/ 2003 661

2003/ 2004 756

2004/ 2005 869

2005/ 2006 1,034

2006/ 2007 1,356

2007/ 2008 1,497

2008/ 2009 1,761

2009/ 2010 2,000

2010/ 2011 2,200

2011/ 2012 2,500

Context (3)

• 68% of cases were from the private sector, 26% from the public sector and the remainder from the voluntary sector

• 83% of workers blow the whistle (at least) twice internally

• 60% of whistleblowers received no (negative or positive) response from management

• Newer employees are most likely to blow the whistle (39% have less than 2 years’ service)

The law relating to disclosures before 25 June 2013

The law relating to disclosures before 25 June 2013

• Who qualifies for protection?

• What type of conduct is protected?

– What must the disclosure relate to (does it need to be in the public interest)?

– What form must a disclosure take and to whom should it be made?

– Has the discloser acted in good faith?

• How does the statutory protection work?

Who is protected?

Employees

Contractors (but not the genuinely self-employed)

Agency staff

NHS practitioners

Trainees (and work experience candidates)

Police officers

Who is NOT protected?

✕The self-employed

✕Volunteers

✕Workers in the intelligence services

✕Workers in the army

What is protected?

“… a 'qualifying disclosure' means any disclosure of information which, in the reasonable belief of the worker making the disclosure, tends to show one or more of the following:

a.that a criminal offence has been committed, is being committed or is likely to be committed,

b.that a person has failed, is failing or is likely to fail to comply with any legal obligation to which he is subject,

c.that a miscarriage of justice has occurred, is occurring or is likely to occur,

d.that the health or safety of any individual has been, is being or is likely to be endangered,

e.that the environment has been, is being or is likely to be damaged, or

f.that information tending to show [concealment of any of the above]…”

[Section 43B(1) of the Employment Rights Act 1996] (prior to the ERRA 2013 amendments)

What is protected?

The disclosure of information

•The disclosure can be made in writing, verbally or in the form of recorded information.

•It must however “convey facts”, not mere allegations (Cavendish Munro -v- Geduld).

•Gathering information is insufficient (Aspinal v MSI Forge Limited and Bolton School v Evans).

Subject Matter of the Disclosure

The wrongdoing can be:

• Past, present, or prospective.

• Merely alleged.

• Relate to the conduct of the employer, an employee or a third party.

•-

Subject matter of the disclosure

Subject matter of the disclosure

Subject matter of the disclosure

• In Parkins v Sodexho, the EAT held that the disclosure of information tending to show a failure to comply with a contractual obligation under the employee’s own contract of employment was covered.

• Many whistleblowing claims have, at their core, such disclosures.

Reasonable belief

Reasonable belief

The worker must have a reasonable belief that the information tends to show one of the relevant failures. A worker does not have to prove that the facts or allegations disclosed are true, or that they are capable in law of amounting to one of the categories of wrongdoing listed in the legislation.

As long as the worker subjectively belives that the relevant failure has occurred or is likely to occur and their belief is, in the tribunal's view, objectively reasonable, it does not matter that the belief subsequently turns out to be wrong, or that the facts alleged would not amount in law to the relevant failure (Babula v Walthan Forest College [2007] IRLR 346 CA).

Reasonable belief

Reasonable belief therefore turns on two questions:

•At the time the disclosure was made, did the Claimant actually believe that the disclosure tended to show a relevant failure (i.e. one of the 6 items listed at s.43B(1).

•Looked at objectively, was the worker’s actual belief reasonable?

To whom can information be disclosed?

To whom can information be disclosed?

Internal Disclosure

•PIDA encourages disclosure to the worker's employer as the primary method of whistleblowing.

•If the employer has a whistleblowing procedure, or any similar procedure, which authorises disclosure to a third party (for example, an external hotline or a regulator), disclosure under that procedure to the third party is treated the same as disclosure by the worker to the employer.

•Such a disclosure is protected provided that it was made in good faith (see below).

•-

To whom can information be disclosed?

External Disclosure – Disclosure to third parties may be protected if more stringent conditions are met:

•Responsible third party – Disclosure to a responsible third party will be a protected disclosure only where the worker reasonably believes the malpractice relates solely or mainly to the conduct of that person or a matter which is the legal responsibility of that person and not the employer.

•Prescribed person – For a qualifying disclosure to be protected in these circumstances, the worker must reasonably believe that the default falls within the remit of the prescribed person in question and the information disclosed and any allegation contained in it are substantially true. (Prior disclosure to the employer is not required)

•-

To whom can information be disclosed?

•Ministers of the Crown – This will be protected if the worker is employed by an individual or body appointed under any enactment, including a statute or statutory instrument (eg an NHS body). Prior disclosure to the employer is not required.

•Wider disclosures – There is no list of the identity of those to whom wider disclosure can be made. However, identity will be key to the question of whether disclosure was reasonable. The worker must reasonably believe that the information disclosed, and any allegation contained in it, are substantially true and must not make the disclosure for the purposes of personal gain.

•-

Good Faith / Bad Faith

Qualifying Disclosure

Has the disclosure been made in good faith?

• Good faith is not the same as truth. A disclosure that turns out to be false will still be protected if the worker acted in good faith. Good faith is acting with honest motives.

• A tribunals will look at the predominant purpose of the disclosure in determining whether a disclosure was made in good faith. Where the "predominant motivation... was not directed to remedying the wrongs identified in s43B but was an ulterior motive unrelated to the statutory objectives", the disclosure was unlikely to be in good faith – Street v Derbyshire.

• Where motives are mixed, it is ultimately a question of fact for the Tribunal.

•-

How does the statutory protection work?

The public interest

Unfair dismissal (s103A ERA)

•The dismissal (including constructive dismissal) of an employee will be automatically unfair if the reason, or principal reason, is that they have made a protected disclosure. The same applies to selection for redundancy.

Unlawful detriment (s47B(1)(ERA)

•It is unlawful for an employer to subject one of its workers to a detriment (including threats, disciplinary action, loss of work or pay, or damage to career prospects) on the ground that they have made a protected disclosure.

•-

The law relating to disclosures after 25 June 2013

The public interest - post 25 June 2013

Five key changes were introduced by the Enterprise and Regulatory Reform Act 2013 (“ERRA”):

•The addition of an overarching public interest test.

•The removal of the requirement that a disclosure be made in good faith.

•The ability to reduce compensation in instances of bad faith.

•The extension of the of the meaning of worker.

•The introduction of primary liability.

The public interest

The public interest - post 25 June 2013

“… a ‘qualifying disclosure’ means any disclosure of information which, in the reasonable belief of the worker making the disclosure, is made in the public interest and tends to show one or more of the following:

a.that a criminal offence has been committed, is being committed or is likely to be committed,

b.that a person has failed, is failing or is likely to fail to comply with any legal obligation to which he is subject,

c.that a miscarriage of justice has occurred, is occurring or is likely to occur,

d.that the health or safety of any individual has been, is being or is likely to be endangered,

e.that the environment has been, is being or is likely to be damaged, or

f.that information tending to show [concealment of any of the above]…”

[Section 17 of the Enterprise and Regulatory Reform Act 2013 (“ERRA”)]]

•-

The public interest

A number of points immediately stand out:

• There is no definition of “public interest”

• The disclosure does not have to be in the public interest, rather the disclosure must “in the reasonable belief of the worker” be in the public interest

• There has been no other amendment to s43B(1). A complaint about a breach of one’s own contract of employment is still covered, subject to the public interest test;

• As such, this is not a reversal of Parkins v Sodexho per se.

The public interest

• The public interest is is a difficult concept. It can mean:

• of demonstrable benefit to the public generally; or

• of interest to some members of the public.

• See for example: AAA v Associated Newspapers Ltd [2013]

• -

Good Faith / Bad Faith (revisited)

Good Faith / Bad Faith (revisited)

•Good faith was (prior to 25 June 2013) a pre-condition for a claim.

•Now, someone acting in bad faith (even someone acting maliciously) can bring an successful claim.

•Good faith does not fall completely out of the picture. It remains relevant to the question of remedy. As such there are new provisions contained at s49(6A) and s123(6A) which enable a tribunal to reduce an award by up to 25%.

Good Faith / Bad Faith (revisited)

• Dame Janet Smith’s 2004 “Fifth Report on the Shipman Inquiry” recommended the removal of the words “in good faith”. She did not regard them as necessary given the other “Exacting requirements” of the statutory scheme.

• “The public interest would be served, even in cases where the motives of the messenger might not have been entirely altruistic”.

Practical tips

• Adopt a policy

• Ensure that the policy is drawn to workers’ attention

• Nominate a designated key contact

• Remember that employees may want to raise concerns about their own manager (ensure that there is a mechanism that allows this).

• Permit a broad range of workers to invoke the policy

ACAS Early Conciliation

ACAS Early Conciliation

• With effect from 6 May 2014 early conciliation is mandatory

• A prospective Claimant will need EC certificate in order to pursue a claim.

• It applies to all “relevant proceedings”

• There are very few exceptions, e.g:

– Joining a claim to existing claims;

– Cases concerning the Security Service, the Secret Intelligence Service and GCHQ

The Procedure

• Step 1: BEFORE a prospective Claimant submits a claim, he / she MUST do one of the following:

– Complete and submit a EC from to ACAS (online or by post); or

– Telephone ACAS.

• Prospective claimants do not have to explain the nature of their claim.

• Step 2: ACAS must then make “reasonable attempts” to contact the Claimant to discuss the process. If ACAS are unable to contact the Claimant or the Claimant is unwilling to conciliate an EC certificate will be issued.

The Procedure

• Step 3: if the prospective claimant is willing to conciliate, ACAS will pass the case to a conciliation Officer (“CO”). The following steps are then likely:

– The CO will confirm with the Claimant that he / she is willing to conciliate;

– The CO will then make reasonable attempts to contact the prospective Respondent;

– Where both parties agree to try and conciliate the CO will have one calendar month in order to promote settlement (with the possibility of a 14 day extension);

– Any resulting agreement will be completed by way of COT3.

Time Limits

• The vast majority of employment claims must be submitted with 3 months (less one day) or the act or omission that forms the substance of the complaint. The new procedure introduces a number of changes.

• The basic idea is that the time limit clock stops ticking during the early conciliation period. However, if the time limit for issuing proceedings would otherwise have run out during this period, the claimant benefits from a month’s extension of the time limit, counting from the end of that period.

• The early conciliation period starts when the claimant supplies the required contact details to ACAS, and ends on the date the EC certificate is received by the claimant.

Consequences for employers

• Employers are likely to notice two immediate differences when the scheme comes into effect. First, they are likely to be have more frequent contact from ACAS, and at an earlier stage in the dispute.

• Secondly there is likely to be a longer time lag between the incident giving rise to a potential claim and the issue of proceedings. The extension of the time limits mean that in many cases claimants will have at least a month longer to institute proceedings, even when there has been no active conciliation via ACAS.

• Only time will tell whether the introduction of the scheme will lead to a significant increase in the number of pre-issue settlements.

Questions

Contacts

Paul Jennings – Senior Associate

E-mail: p.jennings@bwbllp.com: 020 7551 7694

Bates Wells Braithwaite

2-6 Cannon Street

London EC4M 6YH