Employment law updates 2018: important changes for employers

The latest UK employment law changes for employers, HR professionals and in-house lawyers.

08 October 2018

Employment law is constantly on the move. We keep track of the latest employment law changes so you don't have to. Below you'll find our regular round-up of legislation, case updates and helpful guides. For a list of key dates for 2018 and 2019, see our employment law timeline.

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Employment law updates

Update posted 8 October 2018

Companions

(Talon Engineering Ltd v Smith)

The EAT has held that an employer acted unreasonably by refusing to postpone a rescheduled disciplinary hearing by 10 days so that the employee’s chosen trade union representative could attend.

This refusal to postpone for a short time rendered the subsequent dismissal procedurally unfair even though it was not in breach of the right to be accompanied provisions in s10 Employment Relations Act 1999 (which only require an employer to agree to a request to postpone a hearing if the suggested rescheduled date is within five working days of the original date).

This does not mean that an employer should always agree to a postponement in such circumstances but it is important to note that an employer’s overriding obligation is to act reasonably and this may involve a degree of flexibility in the process.

Corporate governance

The FRC has published the new 2018 UK Corporate Governance Code, which will apply to all premium listed companies for accounting periods beginning on or after 1 January 2019.

The key employment related changes include requirements for:

  • a board-monitored whistleblowing mechanism
  • a mechanism for workforce engagement
  • additional diversity reporting, covering senior managers
  • greater focus on gender, social and ethnic diversity in succession planning for both the board and senior managers
  • additional executive remuneration reporting.

Employment tribunal statistics

The latest quarterly statistics published by the Ministry of Justice for the period April to June 2018 show:

  • there has been an increase of 165% in the number of single employment tribunal claims lodged compared to the same period in 2017 (the last quarter when fees were in force)
  • there has been an increase of 344% in the number of multiple claims lodged compared to the same period in 2017.

Parental bereavement leave

The Parental Bereavement (Leave and Pay) Act 2018 has received Royal Assent and is expected to come into force in 2020.

The Act will give all employed parents who lose a child under the age of 18, or suffer a stillbirth from 24 weeks of pregnancy, a right to two weeks' leave and statutory parental bereavement pay, if they meet the eligibility criteria. Details of how and when the leave may be taken will be set out in regulations in due course.


Update posted 21 September 2018

Legal privilege

The Director of the SFO v Eurasian Natural Resources Corporation Limited

Case: The Court of Appeal has held that documents, prepared during the course of an internal investigation by lawyers and a firm of forensic accountants, for the purpose of resisting or avoiding contemplated legal proceedings or criminal prosecution, were protected by litigation privilege.

This important decision overturns the previous High Court decision and will be welcome news for any organisation faced with conducting an internal investigation into allegations of wrongdoing but it will be important to note that the application of legal privilege is fact-sensitive and will depend on the circumstances of each case. For more details see our briefing.

TUPE transfers

HMRC has changed its enforcement of national minimum wage (NMW) liabilities where there has been a TUPE transfer. With effect from 2 July 2018, all NMW liabilities will be enforced against the transferee employer. Penalties triggered by arrears that accrued before employees transferred under TUPE will also be enforced against the transferee rather than against the transferor (as was previously the case).

Calculating the correct NMW is notoriously difficult and the penalties for getting it wrong can be substantial (currently 200% of the total NMW underpayment, with an overall maximum penalty of £20,000 per underpaid worker), so organisations taking on employees under TUPE should undertake thorough due diligence to determine whether the correct NMW has been paid and, if not, what the likely liability may be.

Migrant workers

The government has announced a new pilot scheme to allow 2,500 workers from outside the EU to come to the UK to undertake seasonal work for up to 6 months on fruit and vegetable farms in order to alleviate labour shortages during peak production periods.

The pilot scheme will run for 2 years and the results of the pilot will be reviewed by the government to decide how best to support the longer-term needs of the farming industry outside the EU.

Acas guidance

Acas has published new guidance for employers and employees on employment references.


Update posted 03 September 2018

Victimisation

Saad v Southampton University Hospitals NHS Trust

Case: The EAT has held that an employee will be protected from victimisation if they wrongly but honestly believed the allegations they made to be true, even if they had an ulterior motive for making those allegations.

The claimant had made an allegation of racial or religious discrimination. The tribunal found that the allegation had been made in order to postpone an assessment of his skills and that the allegation itself was false, but because the claimant subjectively (albeit unreasonably) believed his allegation to be true, the tribunal concluded that it had not been made in bad faith. The claimant was therefore entitled to protection from victimisation.

Employment contracts and resignation

Brown & another v Neon Management & another

Case: The High Court has held that resignation on a lengthy notice period could constitute affirmation of an employment contract. The claimants in this case had resigned in response to breaches of their employment contracts, but did so on notice periods of six months and 12 months respectively.

The High Court found that it would be unconscionable to keep one’s right to discharge a repudiated contract for that length of time – in the face of a repudiatory breach of contract, the employee must not leave it too long before resigning. By resigning on such lengthy notice periods, the claimants in this case had affirmed their contracts.

Agency workers

Brooknight Guarding Ltd v Matei

Case: The EAT has held that an employee on a zero hours contract was an agency worker due to the temporary nature of his assignment.

Mr Matei was employed by the respondent on a zero hours contract and was assigned to work as a security guard for different clients, but mainly worked for one client. Mr Matei claimed he was an agency worker, but the respondent argued that he worked permanently for one client and was therefore not an agency worker.

The EAT said that the question of whether Mr Matei was an agency worker came down to whether he was working temporarily and concluded that he was – the position was not indefinite. Mr Matei was therefore an agency worker and entitled, after 12 weeks service, to the same terms and conditions as someone employed directly by the client.

Brexit update

The government has published a technical notice on workplace rights in the event of a no-deal Brexit. The notice states that there will be minimal change to UK legislation derived from EU law and existing employment rights would not be changed.

However, there may be changes in relation to employee rights on an employer’s insolvency and in respect of European Works Councils. In that regard, the notice recommends that:

  • UK and EU employees working in an EU country should make themselves aware of the relevant implementing legislation in that country to confirm whether they will still be protected in the event of their employer's insolvency under the national guarantee fund established in that country
  • UK businesses with EWCs may need to review those agreements in light of there no longer being reciprocal arrangements between the UK and the EU.

Update posted 20 August 2018

Employment status and personal service companies

Sprint Electric Ltd v Buyer’s Dream Ltd and another

Case: The High Court has expressed concern about the level of artificiality involved with the use of personal service companies for tax avoidance reasons in an employment context.

In this case neither party had questioned the status of their relationship, which was governed by a service company arrangement. However, the High Court said that where a court had concerns that labels chosen by the parties to apply to their relationship were untrue and had been applied as a tax avoidance scheme, it could and should consider the issue of its own motion.

The dispute in this case primarily concerned the ownership of intellectual property. The High Court determined that the relationship was really an employer-employee relationship, and decided the intellectual property dispute accordingly. The case illustrates that courts are prepared to challenge the use of personal service companies of their own volition and in wide-ranging contexts.

EU settlement scheme

The Home Office has published an employer toolkit  to help guide employers through the new EU settlement scheme.

The toolkit includes a briefing pack for communicating key facts to employees, a leaflet with important info for EU citizens in the UK, a leaflet with steps to apply for settled status, a leaflet with key terminology, and various posters with important dates, the benefits of applying and steps to apply.

Read article: Settled status: the Home Office announces further details of the EU Settlement Scheme

Gender pay gap reporting

The House of Commons’ BEIS Committee has published a report which includes a number of recommendations for strengthening gender pay gap reporting and closing the gender pay gap, including:

  • reporting obligations to extend to companies with 50 or more employees
  • reporting to include a narrative explanation for pay disparity and an action plan to tackle the gender pay gap
  • partner remuneration to be include in reported figures
  • salary quartiles to be replaced by deciles (to allow a more nuanced analysis)
  • further guidance to be provided to clarify areas of ambiguity (e.g. how bonus figures are calculated)
  • giving the EHRC specific enforcement powers to levy fines for non-compliance.

It is now up to the government to consider these recommendations and decide which, if any, to implement.

Meanwhile, the Government Equalities Office has also published guidance setting out recommendations on how employers can close the gender pay gap.

Enforcement of the Equality Act 2010

The Women and Equalities Committee has launched an inquiry into the enforcement of the Equality Act 2010.

Among other things, it has invited evidence on how easy it is for the public to understand and enforce their statutory rights, and whether enforcement of the Equality Act 2010 succeeds in securing change.


Update posted 02 August 2018

Implied term of trust and confidence

James-Bowen v Commissioner of Police of the Metropolis

Case: The Supreme Court has found that an employer does not owe a duty of care to conduct litigation in a manner which protects its employees from economic or reputational harm.

This case arose from the arrest of a suspected terrorist who made allegations of serious assault against the arresting officers and argued that the Commissioner of Police was vicariously liable for their actions. As part of a settlement, the Commissioner made an admission of liability and apologised for the officers’ actions.

The officers then claimed that, in entering such a settlement, the Commissioner was in breach of an implied duty owed to the officers to protect them from economic or reputational harm. The Supreme Court said it would not be fair, just and reasonable to impose such a duty.

Read article: Police commissioner owed no duty of care to officers when conducting litigation

Sexual harassment

The Women and Equalities Commission has produced its report on Sexual Harassment in the Workplace. Its recommendations include:

  • a mandatory duty on employers to protect employees from sexual harassment in the workplace
  • a duty for public sector employers to conduct risk assessments for sexual harassment and then mitigate risks
  • reintroducing employer liability for third party harassment
  • extending sexual harassment protection to interns and volunteers
  • extending the time limit for bringing a claim to 6 months
  • enabling tribunals to award punitive damages
  • limiting the use of confidentiality clauses in settlement agreements to government approved standard clauses.

It is now up to the government to consider these recommendations and decide which, if any, to implement.

Caste discrimination

The government has decided not to add ‘caste’ as a protected characteristic under the Equality Act 2010.

The government expects that emerging caselaw, such as Chandok v Tirkey in which the EAT held that caste could be protected under the Equality Act 2010 to the extent that it is bound up with ethnic origin, will continue to provide some measure of protection against caste discrimination.

Philosophical belief discrimination

Gray v Mulberry

Case: The EAT has held that a belief in the sanctity of copyright law was not sufficiently cogent to qualify as a protected belief under the Equality Act 2010.

Even if it was a protected belief, the EAT held that an indirect discrimination claim could not succeed since the claimant was the only person known to hold such a belief. As a result there could be no ‘group disadvantage’, which is required for a successful indirect discrimination claim.


Update posted 23 July 2018

Holiday pay and voluntary overtime

Flowers and others v East of England Ambulance Trust

Case: Following its earlier decision in Dudley Metropolitan Borough Council v Willetts, the EAT has confirmed that voluntary overtime can qualify as “normal remuneration” for the purposes of calculating holiday pay under the Working Time Directive, if it is paid over a sufficient period of time on a regular basis.

In this case, the EAT also held that a clause in the NHS Terms and Conditions of Service, which stipulates that holiday pay is calculated on the basis of what an employee would have received had he/she been at work, gives the employees a contractual entitlement to have non-guaranteed and voluntary overtime included in the calculation of holiday pay.

Brexit update

The government has published its White Paper "The Future Relationship between the United Kingdom and the European Union" (PDF), in which it proposes that there be no regression in employment laws.

This would mean that EU based laws (such as TUPE, the Working Time Regulations and collective consultation requirements) would not be repealed. However, the eventual outcome remains subject to the terms of any Brexit deal reached with the EU.

Discrimination arising from disability

Ali v Torrosian and others t/a Bedford Hill Family Practice

Case: The EAT has provided a reminder that employers should always ensure that there is not a less discriminatory way of achieving a legitimate aim before taking action such as dismissal.

In this case, for example, the employer should have considered whether its aims could have been achieved by permitting Dr Ali – who had been absent on long-term sick leave following a heart attack – to return to work on a part time basis.

Minimum wage for on-call carers

MenCap v Tomlinson-Blake

Case: The Court of Appeal has held that carers who are required to sleep-in at work are not entitled to the national minimum wage while they are asleep.

Overturning the previous EAT decision, the Court of Appeal held that only time spent awake and working should be included in the calculation of national minimum wage entitlements, even if facilities for sleeping are provided by the employer.

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Adrian Martin

Adrian Martin Partner

  • Head of Employment
  • TUPE: Business Transfers and Outsourcing
  • Restructuring and Redundancy

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