employment law update, january 2017, london

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Annual employment law update 2017London


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Today’s session

Looking back over the last 12 months, there weresignificant developments in relation to:-

1. Working time regulations2. Equal pay3. Restrictive covenants4. Discrimination5. Immigration Act 2016


Today’s session

Looking forward over the next 12 months (and beyond);

1. Whistleblowing2. Gender Pay Reporting3. Employment status4. Data protection5. Discrimination


Looking forward…

6. Apprenticeship levy7. Trade Union Act 20168. Tribunal update9. Autumn statement10. Brexit


1. Working Time Regulations1998 (WTR) Update


WTR - Topics

a) Holiday pay calculations(commission, voluntaryovertime and increasedworking hours)

b) Entitlement to restbreaks


WTR – Brief recap

• Implements European Working Time Directive• Directive aims to protect the health of workers• Contains legislation governing holiday entitlement, pay and

rest periods

Significant cases:– Fulton v Bear Scotland– Paterson v Castlereagh Borough Council– Plumb v Duncan Print Group Ltd


a) Holiday Pay: Commission

British Gas Trading Ltd v Lock (CA) – October 2016– Mr Lock’s results based commission should have been

factored in to holiday pay calculations– BUT Court emphasised that each case should be decided

on its own facts– Bankers’ bonuses (and different established commission

schemes) may be decided differently– Court of Appeal refused to go into further detail– British Gas requested leave to appeal to Supreme Court


a) Holiday Pay: Voluntary overtime

Brettle v Dudley MBC (ET)– Voluntary overtime, out of hours standby, and call-out

allowances to be included in holiday pay calculation– Non-binding decision– BUT illustration of how tribunals may interpret existing case

law in the future– The normal rule = elements of pay need to be intrinsically

linked to the required performance under the contract– Even though the extra shifts were voluntary in this case, once

the employee put their name forward, they were committed tocarrying out the work


a) Holiday Pay: Increased workinghours

Greenfield v The Care Bureau Ltd (ECJ)

– Where a part time or variable hours contract employee increases theirhours, annual leave that has already accrued does not need to berecalculated retrospectively

– Going forward, leave entitlement should be recalculated to reflect thenew working pattern

– Any leave taken in excess of the entitlement that applied under theprevious working pattern should be deducted from the leave goingforward

– The calculation of leave entitlement is the same, regardless ofwhether employment has terminated or is continuing


b) Rest breaksGrange v Abellio London Ltd (EAT)• “Working time” is defined as:

– any period during which a worker is working, at his employer'sdisposal and carrying out his activity or duties;

– any period during which he is receiving relevant training;– any additional period which is to be treated as working time for

the purpose of these Regulations under a relevant agreement.

• “Rest period” – any period that is not working time• Decision: an employer has a duty to afford a worker the right to a

rest break, regardless of whether it has been requested by theemployee


So what?

• Review risk areas in light of most recent decisions – do you have alot of employees who:– Undertake voluntary overtime; or– Work on results based commission?

• Consider reviewing working arrangements and reviewing holidaypay calculation formulae

• Any audit would therefore require a close comparison of workingarrangements to the arrangements in these cases


Next steps: Rest breaks• Consider policies and procedures

for rest breaks– 48 hour working week– 20 minute rest break for shifts

over 6 hours– 11 hours between shifts– 24 hours rest each week

• Check that policy reflects reality!Is it always possible foremployees to take their restbreaks?


2. Equal Pay


Equal pay: Overview

• Equality Act 2010• Employers must give men and women equal treatment

in the terms and conditions of their employmentcontract

• Employees can compare any terms in the contract ofemployment with the equivalent terms in acomparator’s contract. A comparator, broadly, is anemployee working for the same employer (and who haspay set by the same source) doing like work, workrated as equivalent or work of equal value.


Equal pay – Brierley v Asda Stores Ltd

• 7,000 (mainly female) equal pay claims fromcurrent and former retail employees

• Arguing that the (mainly male) employees in thedistribution depots were paid substantially more

• ET preliminary hearing on whether the retail staffcan use the distribution staff as comparators when,on the face of it, they do different work


Equal pay – Brierley v Asda Stores Ltd

• Asda argued that there was not a ‘single paysource’ (the employees were split between Retailand Distribution) and that the two groups were noton common terms or carrying out like work

• ET thought differently, deciding that the executiveboard was the single pay source and, whilst specificterms were different, the ET found theemployment terms were broadly similar


So what?• Watch this space – only a preliminary hearing, the full

claim may yet be unsuccessful• BUT take note if you employ staff on broadly similar

terms who carry out different roles• Are they of equal importance to the business?• If they are paid unequally – a risk assessment may need

to be carried out• Court is willing to look beyond corporate structures and

determine who has the power to create pay equality


3. Restrictive Covenants


Restrictive covenants: Overview

• Contractual term that can place post terminationrestrictions on an employee in relation to:– Employment with competitors– Poaching colleagues– Poaching clients/customers

• To be enforceable they must be reasonable induration and geography, not going beyond what isreasonably necessary in order to protect legitimateinterests of the employer’s business


Bartholomews Agri Food v Thornton

• Employee began work with the employer as a traineeagronomist in 1997

• At this time he had no experience or customer base• At the time of termination, the employee’s customer

base made up for 2% of the employer’s overall turnover• Employee challenged the enforceability of a non-

compete clause which prevented him from workingwith the whole of the employer’s customer base for 6months


Bartholomews Agri Food v Thornton

• High Court rejected the covenant on two grounds:• If a covenant is unenforceable when it is first imposed

(it was imposed when the employee was a trainee,meaning, at that time, it was wholly unreasonable dueto his lack of client base), it will remainunenforceable regardless of experience gained orpromotions

• Preventing an employee from dealing with anycustomer regardless of previous dealings is too wide,even after a 20 year career


So what?

• Don’t just get off the shelf covenants drafted up –think about it!

• When was the covenant agreed? The question iswhether it was reasonable then, not whether it isreasonable now

• Is the covenant limited?• Many covenants in employment contracts are

outdated and too wide – check them every timeyour employees are promoted – do they still work?


4. Discrimination Case Update


Recent developments – agediscriminationGorka Salaberria Sorondo v Academia Vasca dePolicia y Emergencias (ECJ)• Article 2 Equal Treatment Framework Directive & Equality

Act 2010• Police force entitled to set an upper age limit of 35• The difference in treatment was not based on age itself, but

a characteristic related to age• Must be a ‘genuine occupational requirement’• Treat with caution – good health and fitness may have

been a more appropriate requirement


Recent developments – sham jobapplications (1)

Kratzer v R+V Allgemeine Verischerung AG, (ECJ)• C application for graduate trainee position rejected,

forming the basis of a complaint for age discrimination• C later found out that the four positions were all

offered to women, leading to a subsequent sexdiscrimination claim

• Employer explained to C that the rejection had beenautomatically generated and did not reflect itsintentions


Recent developments – sham jobapplications (2)• ECJ held that European discrimination law does

not protect those who are only applying for ajob to enable them to bring a discriminationclaim

• Whether or not the application is genuine willbe a question of fact in each case


Recent developments – sham jobapplications (3)

• A sham applicant isoften a recruiter’s worstnightmare and this caseis very welcome

• It also reflects the ECJ’swillingness to stamp outthe abuse ofemployment rights


Reasonable adjustments (1)G4S Cash Solutions v Powell (EAT)

• Engineer developed back problems and could nolonger carry out his role

• Classed as disabled under the Equality Act 2010• Moved to junior ‘key runner’ role – salary protected• Employer later tried to reduce salary to reflect less

skilled role• Held that pay protection can be a reasonable

adjustment in appropriate circumstances


So what?

• Joins the body of case law that suggests that just aboutanything can be considered a reasonable adjustment

• Unions may use this case as a basis to start suggestingpay protection as the normal response to disability

• Remember that each case turns on its own facts, andthat indefinite pay protection as a reasonableadjustment depends on all kinds of factors, not leastthe size and resources of the employer

• Remind unions of this and seek advice


Reasonable adjustments (2)McFarlane v EasyJet (ET)

• Air stewardesses, on medical advice, requestedadjustments to working hours to allow them toexpress milk

• EasyJet refused to accommodate• Held that this indirectly discriminated against

women


Reasonable adjustments (3)Analysis:• ET decision = not binding• BUT reflects general trend towards support for family

life• Consider alternative working arrangements for

returning maternity leavers carefully• If alternative working arrangements are refused, ensure

you have very good reasons and solid evidence -particularly if this conflicts with medical advice


Other interesting cases in 2016…

“Pulling a sickie” - Dismissals• Employees that make up, or exaggerate the effects of, an injury or

illness to take sick leave fundamentally breaches the implied termof trust and confidence which can result in dismissal formisconduct.

Assault at a Christmas party – Vicarious liability• Company not vicariously liable for an assault on an employee by

another employee which occurred at 3am after the Christmasparty. BUT, they could have been liable had it occurred during theparty…


5. Immigration Act 2016 (IA 2016)


IA 2016 - topics

a) Immigration overview

b) Public sector fluency duty

c) Other changes


a) Immigration: Overview

• It is unlawful to employ a person who does nothave a right to live and work in the UK or who isworking in breach of their conditions of staying inthe UK

• Initial and, sometimes, follow up checks required• Failure to do so can lead to civil or criminal

penalties• Enforced by the Home Office (via immigration

officers)


b) Public Sector Fluency Duty

• Introduced under the Immigration Act 2016• Came into force on 21 November 2016• Applies to public authorities (including NHS Trusts)• Public authorities• Code of practice will come into force on 22

December 2016 – gives guidance and examples foremployers


b) What is it?

• The fluency duty applies to those persons workingin roles which have, as a regular and intrinsic partof that role, a requirement to speak to members ofthe public in English.

• This could be in face to face discussions or over thetelephone.

• It covers employees, apprentices, workers andagency workers


b) Steps to take

• Assess what standards are required for particularroles and whether those standards are being met.

• If not, consider training / methods of support• Review existing policies and procedures to include

reference to the fluency duty• Review employment contract to include reference

to required fluency standard• Ensure members of the public are aware of the

complaints procedure and how they can access it


c) IA 2016: Other changes (1)• It used to be a criminal offence to knowingly employ

an individual who does not have the appropriatepermission to undertake the work for which they areemployed

• From 12 July 2016, the offence was widened to includeemploying an illegal worker where the employer has“reasonable cause to believe” the employee does nothave the appropriate immigration status.

• Increased conviction on indictment from 2 to 5 years


c) IA 2016: Other changes (2)

• A power of immigration officers to close businesses thatcontinue to employ illegal workers

• Increased powers for immigration officers to enterbusinesses and seize/retain evidence

• A requirement that public authorities ensure public sectorworkers in customer-facing roles speak fluent English

• April 2017 - Provisions giving the secretary of state thepower to introduce an ‘immigration skills charge’ on certainemployers who sponsor skilled workers from outside the EEA


Looking ahead


1. Whistleblowing


Whistleblowing - recap

• Cannot dismiss or subjectan employee to a detrimentfor making a protecteddisclosure

• To gain protection fromregulations, employee mustmake a qualifyingdisclosure of information

• Disclosure must be “in thepublic interest”


Who is covered? (1)McTigue v University Hospital Bristol (EAT)• C was a nurse supplied to UHB by an employment

agency• C made protected disclosures and was dismissed by

UHB• C believed her dismissal was a result of the

protected disclosures• C brought a whistleblowing claim against UHB


Who is covered? (2)

• Only those classed as ‘workers’ are covered• C’s main contract was with TMS Ltd, not UHB• Employment Tribunal decided that, for this reason,

C was not a ‘worker’ of UHB – claim struck out• Employment Appeal Tribunal decided that she was

a worker because UHB had substantiallydetermined terms of C’s work, regardless ofwhether this was to a lesser extent than the agency


What to look out for this year

Chesterton Global Ltd v Nurmohamed; Underwood v Wincanton Plc:– Contractual disputes can be in the public interest– “Public” can be small section of society– Public interest test is subjective– Appeal was due November 2016, now to float on 8 June 2017

Royal Mail Group Ltd v Jhuti:– An employee can be automatically unfairly dismissed for making a

protected disclosure, even where the person dismissing them isunaware of those disclosures

– Court of Appeal: To float on 28 or 29 June 2017


Whistleblowing – what you needto do• Ensure policies are clear and up to date• Ensure management understand their obligations

under such policies• When dealing with dismissals take a broad

approach to spotting a potential whistleblowingsituation and seek legal advice if unsure

• Don’t assume agency staff are not protected – ifyou exercise a degree of control over contractterms, they could be ‘workers’


2. Gender Pay Gap Reporting


Gender Pay Reporting

• Final draft Government regulations published 6December 2016

• All relevant employers with more than 250employees will be required to publishinformation about their gender pay gap

• Includes bonus information• Government has pledged to work with

businesses to eliminate all-male boards in top350 companies


Gender Pay Reporting – nextsteps• carry out a pay audit to identify what your likely

gender pay gap will be and the reasons for this;• benchmark your gender pay gap within your industry;• consider what information you will want to add to any

report to set your figures in context;• start to plan a strategy to address your gender pay gap• Consider communication strategy ahead of publication

date• We can help you!


3. Employment Status


The ‘gig economy’

Aslam & Farrar v Uber• Uber drivers are 'workers' and not self-employed,

according to the Employment Tribunal in a testcase brought by two claimants

• Judgment strongly critical of Uber for attemptingto argue that it was “technology platform”, ratherthan a transport company


The “gig economy” continued…

Dewhurst v CitySprint Uk Ltd (ET decision)Bicycle courier was expected to:• Smile• Wear a uniform• Work when they said they would• Follow directionsResult – “worker” and not self employed


So what?

• These cases are limited in factual scope (unless you’re acompany named Deliveroo…)

• BUT there is a trend emerging which undermines anyattempt to introduce flexible working with little liability orsecurity (the so-called ‘gig economy’)

• Coincidentally, an inquiry by a Commons Select Committeeinto the issues affecting workers, zero hour contracts andthe self-employed has been launched

• Be aware of the complexity of determining employmentstatus, and the risks of getting it wrong


4. Data Protection


Data protection• Criminal records checks

– Enforced subject access requests illegal for mostjobs since 10 March 2015

– What about enhanced criminal records checks?

• Can a subject access request be refused on groundsof disproportionality or improper purpose?– Potentially yes. Awaiting Court of Appeal judgment

to provide answer/guidance soon


General Data ProtectionRegulation 2016• EU regulation made April 2016 with direct effect as of

May 2018• How will its provisions affect employers?

– SAR fee of £10 to be removed– Any request to be completed in 1 month rather than 40

days– Purposive approach means employers will likely have to

provide more detailed information

• Policies and handbooks may need revision in light ofthis


5. Discrimination

Home Office (UK Border Agency) v Essop and others

• Claimants must demonstrate the reason why they suffera disadvantage in indirect discrimination claims

• Supreme Court judgment awaited…


6. Apprenticeship levy recap• Expected to come into force in April 2017

• All employers will pay 0.5% of their pay bill butwill receive £15,000 annual allowance againstthe levy

• In effect only employers whose pay bill exceeds£3m per year will contribute (fewer than 2% ofemployers)


7. Trade Union Act 2016

• Royal assent 4 May 2016 – provisions expected to comeinto force early 2017

• Ballot thresholds and results• Notice of industrial action increased• Expiry date of industrial action• Supervision of picketing• Facility time• Restricts most aspects of strike action and will come as

a relief to employers


Trade Union Act 2016: Next stepsR E L A X

• The upcoming changes generally make it moredifficult for unions to organise and carry out strikeaction


8. Tribunal updateR (Unison) v Lord Chancellor and another [2015] EWCA Civ935• Court of Appeal rejected the arguments that Tribunal fees

regime:– prevented claimants from having access to justice– was indirectly discriminatory; and– Lord Chancellor had failed to satisfy the public sector duty

• Unison has sought permission to appeal to the SupremeCourt

• A decrease in fees will probably lead to an increase inlitigation


New process for judicialassessment at Tribunal• Presidential Guidance creating a process of judicial

assessment• intended to be a confidential and voluntary process

whereby a judge will make an initial assessment ofthe strengths and weaknesses of the parties' cases,to take place at a Preliminary Hearing

• Requires both parties to consent• Process is free (but risky) – may either deter or

encourage litigants in person


9. Autumn Statement

Implications for employers and employees:- NMW and NLW increase- Income tax threshold increase- Salary sacrifice: restricted to certain benefits- Employee-shareholder status tax advantage

abolished- Termination payment – taxation over £30k now

includes NI, this generally make terminationpayments more expensive for employers


And finally, this annual updatewould not be complete without…


Employment law to change?

• Perhaps but not just yet• Once Article 50 is triggered (at the end of March 2017 –

according to the government timetable), there will bea 2-year negotiation period (extensions can be agreedwith EU) during which EU law will still apply.

• On leaving the EU, it is expected that The Great RepealBill will come into force, automatically transferring allEU Law into UK law

• The Bill will be officially announced in the nextQueen’s Speech (April or May 2017)


Government pledges

• In theory, this would allow existing employmentlaw to be stripped back after March 2019,particularly those employment rights (agencyworker protection, working time regulations etc.)contained in secondary legislation

• However, Theresa May and David Davis (Secretaryof State for Brexit) have made assurances that thiswill not be the case, and UK employment law willremain untouched


What about EU staff?• Currently around 3 million citizens of other EU

countries living in the UK• Still have the right to live and work freely in the UK• Right of permanent residency?• Rights of non-EU skilled workers

– Refusal to hire EU candidates is grounds fordiscrimination before Brexit implementation date


What about UK workers?

• Over 1.3 million UK nationals also live abroad in EUcountries

• British expats could lose right to visa-freeemployment in EU/EEA countries

• Employers may find they have to comply with morerestrictive rules for employees based outside UK


The future

• The assurances of the prime minister does not bind hergovernment, even less so future governments

• Long term, there is a possibility that some of the moreunpopular EU derived regulations, such as agencyworker regulations or holiday pay, may be amended

• In the short term, it is important to remember thatfreedom of movement is by no means guaranteed,particularly if a ‘hard-Brexit’ occurs in March 2019


Practical Advice

• Uncertainty about extent/concessions to maintain free movement• Continued compliance with EU regulations to preserve

competiveness (data protection)• Time to apply for a sponsorship licence?• Employers should prepare by undertaking an audit to assess how

many of their employees rely on membership of the EU for theirability to work in the UK, in order to assess areas of vulnerability

• Current costs:– £1,236 for naturalisation– £85 for permanent residence card + biometric data– Up to £1,476 for sponsorship licence


Speak to us…

Ray [email protected]+44 (0)20 7337 1021

Elish [email protected]+44 (0)20 7337 1033


All information correct at time of production.

The information and opinions expressed within thisdocument are no substitute for full legal advice. It is forguidance only and illustrates the law as at the publisheddate. If in doubt, please telephone us on 0370 2706000.

© Browne Jacobson LLP 2017 – The informationcontained within this document is and shall remain theproperty of Browne Jacobson. This document may notbe reproduced without the prior consent of BrowneJacobson.