2021 Employment Law Round-Up

Welcome to our end of year round-up, where we  cover some of the key developments in employment law over the last 12 months and look at what is happening moving forward 

In keeping with the festive spirit, we promise not to mention Covid, Furlough or lockdowns, and to stick to the fun stuff like National Minimum Wage, the Working Time Regulations and discrimination.

Round up

National Minimum Wage (NMW)

All employers should be aware of the obligation to pay their workers at least the NMW.   Ensuring that the headline hourly rate of pay in a contract complies with the NMW Regulations is easy.  There are however several areas of risk for employers, such as where overtime is not properly captured, understanding what actually constitutes working time for NMW purposes, and whether certain deductions from pay take the hourly rate below the NMW rate.

One of the most significant cases of the year, with potentially far-reaching consequences for employers, was the case of Augustine v Data Cars Ltd (Augustine), which dealt with deductions from pay.

Regulation 13(1)(b) of the NMW Regulations says, in simple terms, that where a worker has to pay for something in connection with their employment, and this is not reimbursed by the employer, this can be taken into account when assessing if the worker has been paid NMW.  This topic has received a lot of press attention over the last few years, in particular in respect of uniforms, where workers’ pay at large employers such as Wagamama and TGI Fridays fell below NMW by virtue of them having to buy certain types of clothing or uniform.

Whilst the decisions in the Wagamama and TGI Fridays cases surprised some, the Augustine case has taken the interpretation of the law to the next level.  Mr Augustine was employed as a taxi driver.  He had to provide his own vehicle, which he could own outright or rent.  He was not compelled to wear a particular uniform, but if he wanted to get the ‘gold level’ jobs (which commanded better rates) he could rent a uniform.   Mr Augustine chose to rent a vehicle and a uniform.  In addition to these costs, Data Cars made various deductions from his pay, including insurance costs and equipment rental, which the Employment Tribunal (ET) held did reduce his pay for NMW purposes.

The ET held that the car and uniform rental should not be taken into account for NMW purposes.  Mr Augustine took this point to the Employment Appeal Tribunal (EAT) and succeeded.   The EAT concluded that the car and uniform rental, whilst optional, were clearly expenses ‘in connection with the employment’.  With that, Mr Augustine’s expenses for those costs took his pay below NMW.    The EAT went further, and said that expenses ‘did not, in fact, have to be a requirement of the employment. It neither had to be necessarily incurred nor wholly or exclusively incurred (for that employment)’.  

It is difficult to argue with the EAT’s literal interpretation of the legislation and the decision throws up all manner of practical problems and hypothetical scenarios in respect of NMW:

• What if Mr Augustine rented a Rolls Royce?
• What if Data Cars had their own vehicles to rent free of charge, but Mr Augustine leased a Lamborghini instead?
• If your staff have to wear suits to work, what if one week they get giddy in Gucci?
• If someone works for several employers with the same dress code (as is common in the hospitality sector, for example), which employer is liable to pay for the clothing?

The EAT has remitted the case back to the ET to determine the appropriate compensation, and it is unlikely that Data Cars, a relatively small employer, will appeal the decision.

Where does this leave us?

The decision in this case does appear to be illogical.  To fix this issue will either take a change in legislation or a case being taken to the Court of Appeal
(CA); neither of which appear to be on the radar any time soon.

For now, employers should look for areas of risk in their business and take steps to minimise those risks, such as tightening up expenses policies, requiring approval before certain employment related expenses are incurred and setting limits on such expenditure.

Discrimination

Defining disability

To qualify as a disabled person under the Equality Act (EQA), a person needs to show that they have a physical or mental impairment:

• which has an adverse effect on their ability to carry out normal day to day activities; and
• that the adverse effect is substantial; and
• that the substantial adverse effect is long term.

It is normally easy to identify the physical or mental impairment and whether a condition qualifies as a disability tends to turn on the above points.

In Sullivan v Bury Street Capital, the Claimant had paranoid delusions that he was being followed by a Russian gang.   The CA held that whilst this mental impairment did have a substantial adverse effect on the Claimant’s ability to carry out normal day to day activities between May and September 2013 and again between April and July 2017, on neither occasion was it likely that the substantial adverse effect would continue for 12 months or be likely to recur for such a period to make the condition ‘long term’.

Also on the issue of what is ‘long term’, in All Answers Ltd v W and Another, the CA confirmed that determining if the substantial adverse effect is ‘long term’ needs to be assessed on the facts and circumstances at the time of the alleged discrimination.    So even if the adverse effect continues after the event, this should not determine whether or not the condition qualifies (although it will of course be persuasive).

Finally on this topic, the case of Rooney v Leicester City Council considered whether the Claimant’s menopause qualified as a disability.   The EAT in this case held that the ET failed to properly take into account relevant information when deciding the Claimant was not disabled.  In particular, the ET failed to scrutinise the extent to which the symptoms impacted on her ability to perform day to day activities, such as forgetting to attend events, meetings and appointments, losing personal possessions, forgetting to use the handbrake on her car and forgetting to lock it, leaving the cooker and iron on and leaving the house without locking doors and windows, spending long periods in bed due to fatigue and exhaustion, and experiencing dizziness, incontinence and joint pain.  There was also no explanation as to how the ET did not conclude that the impairments were long term, given that they had last between August 2017 and 29 October 2018.

Age discrimination – retirement age

In 2011 the default retirement age in the UK was removed.  Since then, any employer seeking to impose a retirement age has had to show that the retirement was justified.

In order to prove justification, the employer needs to be able to establish a ‘legitimate aim’, and then show that dismissal by reason of retirement is a ‘proportionate means’ of achieving that legitimate aim.

In 2021 the EAT considered 2 cases brought against the same employer, the University of Oxford, in respect of the same default retirement age of 67.  Same employer, same policy, same conclusion……? No!

The University relied on 3 main legitimate aims to justify the retirement age:

• Inter-generational fairness (by improving opportunities for career progression);
• Succession planning (by maintaining predictable retirement dates)
• Promoting equality and diversity (new recruits being more likely to be from diverse backgrounds)

In the case of Pitcher, the EAT upheld the decision that the compulsory retirement was justified, whereas in Ewart the EAT upheld the decision that it was discriminatory.  So how can the EAT reach a different decision in respect of the same policy?   The answer is that it came down to the evidence presented in each case.   In Ewart, the Claimant produced evidence to show that the retirement age had little to no impact on the number of vacancies that arose, so the retirement age was not justified.   This evidence was lacking in Pitcher and the EAT concluded that there was no error in law from the ET in concluding that the policy was not discriminatory based on the evidence presented in the case.

What can employers learn from this?   It is not easy to justify a retirement age.  If employers do want to impose a compulsory retirement age, they need to consider what ‘legitimate aims’ they are trying to achieve, and then test those legitimate aims by analysing data to see if the legitimate aims are justified.  The results of such analysis may change over time so should be kept under review.

Religious discrimination – dress codes

In 2021 the European Court of Justice (ECJ) considered two cases in which Muslim employees were told that they could not wear headscarves in work.

In the case of Wabe, the employer ran a non-denomination day care centre, and had a policy under which staff were not permitted to wear any signs of their political, philosophical or religious beliefs that would be visible to parents, children or co-workers.   The employer had information sheets which expressly stated that a Christian cross, Islamic headscarf or Jewish kippah could not be worn as ‘children should not be influenced by the teachers with regard to religion’.   The Claimant was suspended and issued with a warning as she refused to remove her headscarf.   Around the same time, a Christian teacher was asked to remove a cross.

In Muller, the employer instructed the Claimant not to wear any conspicuous, large-size political, philosophical or religious signs.

The ECJ held that whilst bans on certain types of religious dress may be discriminatory, it will not be directly discriminatory if the ban is applied in a general and undifferentiated way.

On the more complicated question as to whether these policies amounted to indirect discrimination, the ECJ held that whilst such policies could be indirectly discriminatory, they could be justified if there was a genuine need, as opposed to a desire, for the policy.   To that end, employers can take into account the legitimate wishes of customers or users, such as parents’ wishes to have their children supervised by persons who do not manifest their religion or belief when they are in contact with the children.   The ECJ added that the policy must be applied consistently and systematically and must be limited to what is strictly necessary, taking into account the adverse consequences that the employer is seeking to avoid.

Working time

What amounts to ‘working time’ is an important concept in establishing statutory rights under the Working Time Regulations (WTR), such as rest breaks.  There were two key decisions from the ECJ in 2021 on this issue.  Although the UK is no longer bound by the ECJ, their rulings can be taken into account in the UK Courts and are likely to be persuasive.

Vocational training (WTR)

In BX v Unitatea Administrativ Teritoriala D, the ECJ held that time spent on vocational training, provided by a third party, offsite and outside of working hours was ‘working time’.  This was on the basis that the training was mandatory, the worker had to be physically present at a place determined by the employer and had to be available to the employer to provide services immediately.    This decision is however contrary to the WTR in the UK, which specifically exclude time spent training with third parties from the definition of working time.

Standby (WTR)

In Ville de Nivelles v Matzak (Case C-518/15) the ECJ considered time spent by firefighters on standby, during which time they could be expected to report to work within 8 minutes.  The ECJ held that this was working time, as the firefighters were required to be at a location determined by their employer (in this case their homes) and faced significant limitations in what they could do in their private lives in that time.

What’s coming

• Increase to statutory payments in April 2022.

It is expected that maternity, paternity, adoption, shared parental and parental bereavement  pay and maternity allowance will increase from £151.97 to up to £156.66 per week statutory Sick Pay will  increase from £96.35 to £99.35 per week. NMW rates will also increase to £9.50 for workers 23 years old and over, £9.18 for ages 21 -22, £6.83 for ages 18 – 20 and £4.81 for ages 16 – 17 and apprentices.

• Menopause

We covered this in our October Employment Law Review. Whilst there have not yet been any legislative changes since we last wrote about it, this could change and employers need to be aware of the impact of the menopause upon its employees, particularly in light of Rooney.

• Sexual harassment bill

Another topic covered in our October Employment Law Review. To recap, the Government plans to introduce a duty on employers to prevent sexual harassment in the workplace and protections against third party harassment. Draft legislation is expected in 2022.

In the meantime, the Equality and Human Rights Commission have published guidance for employers on how to prevent sexual harassment, which can be found here

• Carer’s leave

In September 2021, the Government published its findings in response to the 2020 consultation on carer’s leave. As a result of the consultation, the Government plans to legislate for an entitlement to carer’s leave for employees as a ‘day one’ right. The leave will consist of 5 working days of unpaid leave for employees who have long-term caring responsibilities but has not announced when they plan for this to come into effect. The date when this will come into force is currently awaited.

• Neonatal leave and pay

The Government will, on a date to be confirmed, introduce statutory neonatal leave and pay for parents of babies requiring neonatal care. Parents will have the right to take an additional week of leave for every week that their baby is in neonatal care, up to a maximum of 12 weeks.

• Extending redundancy protection to women and new parents

The Government has promised legislation to extend the period of redundancy protection from the point an employee notifies their employer of their pregnancy until 6 months after a mother has returned to work. If passed, the additional protection will also apply to those taking adoption and shared parental leave. We are currently awaiting to hear when these new protections are due to become effective.

How not to do it

Sacking 900 over Zoom – Vishal Garg: US boss fires 900 employees over Zoom – BBC News

Here today, gone tomorrow

The CEO of a US firm has recently come under fire for sacking around 900 of his employees over Zoom. Thankfully in England and Wales, employees have stronger legal protections where an employer is making mass redundancies, as they will have to enter into a consultation process with the employees.

It pays to moan!

We all have a moan about work from time to time, but does that mean we should be fired for it? The Employment Tribunal in McMahon v Heron Financial Services seemed to think not.

Heron Financial Services was not favoured by the Employment Tribunal earlier this year for dismissing one of its highest performing employees because “she was always moaning”. The Employment Tribunal ruled that Mrs McMahon had been unfairly and wrongful dismissed and had suffered an unauthorised deduction of wages. Damages of £23,127.93 were awarded.

Heron Financial Services has appealed to the EAT.

Whistleblowing from the squash courts

Earlier this year we heard how Mr Thomas, a former PE and maths teacher at Berwick Academy in Northumberland, took to social media to allege that his former workplace hid poorly behaved pupils on a squash court during an Ofsted inspection.

Mr Thomas was dismissed, and the Tribunal held that he was unfairly and wrongfully dismissed after the school had undertaken an unfair investigation into Mr Thomas’ whistleblowing. Mr Thomas had exhausted other official avenues to raise his concerned, but “the frustration of not being listened to had led him use social media as no one was listening.”

This highlights the need for a thorough investigation in dealing with whistleblowing complaints.