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.

When an employer is considering dismissing an employee for conduct issues, it must ensure that it has carried out a reasonable investigation, and then it must show that the decision to dismiss was in the band of reasonable responses open to it.

Where employers lose unfair dismissal claims at Tribunal, it is often because of failings in the investigation stage.  This was perfectly demonstrated in the recent case of Smith v Teleperformance Limited, which all started with a miserly portion of chicken nuggets.

Facts

The issues at hand in the disciplinary were very narrow.  The Claimant, who had just finished a long shift, went to the canteen and ordered chicken nuggets, chips and beans (with a pot of cheese on the side) – don’t mind if I do…..  He was then presented with the meal, which contained just three chicken nuggets.  The Claimant was not happy with this and rejected the meal – saying that he was not a kid and that if he wanted a happy meal he would go to McDonald’s.  The Canteen Assistant, unhappy with the Claimant’s conduct in turning the nuggets away, made a complaint which was then investigated under the Respondent’s disciplinary policy.

The investigation

Whilst the investigation in this case was a poor one, there are lots of good examples that employers can learn from to make sure that they don’t fall fowl of the same mistakes:

Witnesses:

    • The Respondent only took statements from the two Canteen Assistants and the Claimant.
    • The Claimant referred to a lady with purple hair behind him in the queue, but the Respondent made no effort to ascertain who this was.
    • There was a security guard nearby – he was not interviewed.
    • There was a pool table by the canteen, no effort was made to see if anyone playing pool witnessed the incident.
    • The canteen was accessed by swipe card, but the Respondent did not check the records to see who was in the canteen at the time.

Failure to question evidence:

    • Canteen Assistant A alleged the Claimant swore, saying ‘I am not a f*****g kid’. Canteen Assistant B made no reference to swearing and the Claimant denied it.   Rather than checking the inconsistency with Canteen Assistant B, the investigator concluded that the Claimant did swear and that Canteen Assistant B was too shy to refer to bad language.
    • There was a dispute as to whether the Claimant ‘forcefully’ returned his meal, or simply slid it back. The investigator failed to ask sufficient questions to ascertain the level of aggression the Claimant applied when returning the meal.
    • The Tribunal held that the Respondent acted unreasonably in relying on the limited statements that were taken, rather than taking additional steps to verify the detail.

Too much emphasis on demeanour and failure to consider Claimant’s evidence:

    • The Canteen Assistants referred to the Claimant’s face going red as evidence of his rage. The Claimant explained that he had a medical condition which may have caused his face to colour, but this was not considered by the Respondent, who concluded that his face went red with anger.

The Employment Tribunal Judge was keen to emphasise the impact of a poor investigation, stating:  ‘Given the Claimant’s livelihood was at stake, it was unreasonable to rely on the evidence presented without further enquiries being made’ and held that the shortfalls in the investigation rendered the dismissal unfair.

Other elements of unfairness

The finding of unfair dismissal did not rest solely on the investigation.

Other procedural unfairness

The Claimant’s invitation to the disciplinary hearing referred to:

‘Acting violently. Including fighting or physical assault, using rude and abusive language or behaving immorally or obscenely towards other employees or our clients and customers’.

The Tribunal concluded that the Claimant was not given sufficient information about the precise allegations against him, and that this too rendered the dismissal unfair.  The Judge also criticised the categorisation of the allegations, which exaggerated the incident.

Too severe sanction

Another common mistake employers make is to determine that if someone has done something wrong, they should be dismissed.  This is fundamentally wrong, and all disciplinary policies should include sanctions short of dismissal, including warnings or final written warnings.

The Judge was not satisfied that the allegations made against the Claimant were as serious as the Canteen Assistants suggested, and held that a reasonable employer would not have dismissed the Claimant in the circumstances.

Lessons learned

Even if an employee has committed an act of gross misconduct, a poor investigation can result in a finding of unfair dismissal, which will come with side dishes of compensation and legal costs.   Anyone investigating a disciplinary matter, or chairing a disciplinary hearing, needs to carefully apply their mind to what evidence may be available and what questions need to be asked to establish the facts of the case.

Talk to us!

Investigating and probing doesn’t come naturally to everyone, but its what we do every day!  We encourage our clients to contact us at the start of an investigation, so we can work together to ensure that the investigation will stand the scrutiny of the Tribunal and, hopefully, avoid cases being brought altogether.  In the long run, this approach should save time and money. If you need help with a disciplinary case, please do not hesitate to contact Paul, Neal, Vicky or Sarah on 0161 832 2500.

Employment Law Review

Welcome to the third edition of our employment newsletter, where we focus on new developments, case law updates and hot topics in Employment Law.

Our third issue comes at a time where the Furlough Scheme has been withdrawn and put to bed. As we enter a ‘post-Covid world’, we are seeing more Covid related cased being heard in the Tribunals and discussions around compulsory vaccinations.

Contents

  1. End of Furlough – Consider your options
  2. Compulsory Vaccinations and Care Homes
  3. New duty proposed for employers to prevent sexual harassment
  4. Menopause in the workplace
  5. Case law update
  6. Talk to us!

End of Furlough – Consider your options

The furlough scheme ended on 30 September 2021, and the scheme was completely withdrawn on 1 October 2021.

With the winding down of the furlough scheme and relaxation of Covid-19 restrictions, employers should be considering their options for staff returning to the workplace. No doubt employers will be looking forward to re-welcoming employees who have been furloughed and bringing staff back to work, but unfortunately this will not be an option for all employers.   Many employers are considering changing employees’ terms and conditions or making redundancies.

If employers are considering making changes to employment terms, they need to consider whether notice needs to be given to effect the change, and even if formal consultation is required.   Employers also need to be aware of the risk of claims for unfair dismissal or constructive unfair dismissal if the changes are not agreed.

If an employer needs to make redundancies, it is important that a fair process is followed before effecting the dismissal.   If this is not done, the employer will be at risk of claims for unfair dismissal.  If 20 or more redundancies are proposed there are also strict statutory consultation procedures that must be followed and the risk of costly group litigation if this is not done correctly.

If you are considering making redundancies or changing terms and conditions, we recommend that you contact us for advice and guidance on what steps need to be taken and the risks of not following a fair process.

Compulsory vaccinations and Care Homes

On 11 November 2021 new Regulations come into force which will require Care Quality Commission registered care homes to only permit access to workers who are fully vaccinated against Covid-19, unless medically exempt. The Government has said its decision was made after extensive public consultation, and that compulsory vaccination is to promote the protection of care home residents from the risk of death or serious illness that can arise from contracting Covid-19.

The legislation has faced harsh criticism from those working in care homes, unions, and professional bodies alike and the legislation opens questions about the approach care homes will take with staff who have not had the vaccine and are not medically exempt.

There are many reasons why a person may refuse to take the vaccine, such as religious or health based, but employers should be careful in hastily dismissing staff. Employers need to seriously consider their staff’s reasons and will need to demonstrate they have acted reasonably before dismissing employees who refuse to be vaccinated.

UK Government proposes new duty for employers to prevent sexual harassment

In August the Government published its response to its 2019 consultation on measures to combat sexual harassment in the workplace and reinforce existing legal protections. As part of its response, the Government has proposed a new proactive duty on employers to prevent sexual harassment in the workplace, pledged to strengthen existing protections against third-party harassment (such as by clients or suppliers), and considered extending the time limit to bring sexual harassment claims.

The response contains very little detail about how this duty will be implemented, although we do expect the Equality and Human Right Commission to issue a code of practice in the near future.

Proactive Duty

At present, employers are under no proactive duty to prevent sexual harassment in the workplace. If a member of staff reports an incident of sexual harassment an employer can be held liable unless it can show that it took all reasonable steps to prevent the sexual harassment form occurring. Under the new proposed duty, employers will still be required to take reasonable steps, but they could also be held accountable for failing to take preventative steps to stop harassment, even if no incident has occurred.

Protections against third-party harassment

Similar to the above, the Government has not provided any clear indication as to how this will be introduced, although it has confirmed that it will introduce a defence of having taken all reasonable steps to prevent third party harassment. There is no clarification if this will be a proactive duty. It is also unclear as to whether this will extend to all forms of harassment, or if it will only apply to sexual harassment.

Extending time limits to bring a claim

Currently, claims brought under the Equality Act must be made within three months of the act, or most recent act, complained of. The Government is considering extending the time limit to six months in relation to all claims made under the Equality Act, not just sexual harassment.

Menopause in the workplace

Women over the age of 50 are the fastest growing group in the workforce. In 2019 BUPA and the Chartered Institute for Personnel and Development conducted a survey which found that three in five women of menopause age were negatively affected at work.

With such a large portion of the work force experiencing the menopause during their working life, it is an increasingly pressing topic for employers. There is also a rise in number of women being dismissed or treated unfairly for reasons related to the menopause.

The Government has opened an inquiry into menopause-based discrimination experienced in the workplace.

Currently, women who are treated unfairly for reasons related to the menopause have to bring claims under the sex or disability discrimination legislation in the Equality Act.  The menopause is not a disability unless the individual concerned meets the statutory requirements in their particular circumstances, which is rarely the case, and neither type of claim is easy to pursue.  The purpose of the inquiry is to examine whether or not current equality laws need to be strengthened and if the menopause should be added as a protected characteristic under the Equality Act.

The inquiry closed submissions for evidence on 17 September 2021. We will update you when the findings are released.

Case law update

Covid Case Law

In our last update, we discussed the case of Accattatis v Fortuna Group (London) Ltd. Since then the Tribunals have heard a number of Covid-19 related cases

In Gibson v Lothian Leisure, Ham v ESL BBSW Ltd and Monanaro v Lansafe the Tribunal found that Covid-19 was a serious and imminent threat, and that the Claimant’s dismissal was automatically unfair after he was dismissed for raising concerns about the lack of Covid-related safety measure at his workplace.

Gibson and Accattatis relate to the first lockdown so the same might not be said for subsequent lockdowns or the situation following mass vaccination.

In Mhindurwa v Lovingangels Care Ltd the Employment Tribunal held that there was a duty to consider furloughing employees as an alternative to redundancy. Whilst furlough should be considered (or should have been when the scheme was running), that does not mean that is has to be offered. This approach was also upheld in Handley v Tatenhill Aviation Ltd.   This will not apply now that the furlough scheme has ended, but these cases serve as a reminder that employers do need to consider alternatives to redundancy before effecting the dismissals.

Pay for zero-hours workers when suspended

This was considered by the Employment Appeal Tribunal (EAT) in Agbeze v Barnet Enfield and Haringey Mental Health NHS Trust Mr Agbeze was a healthcare assistant who provided his services as a ‘bank’ worker. Under the terms of Mr Agbeze’s contract, he was only paid for the hours he worked. There was no obligation on the NHS Trust to offer him work, nor was there an obligation for him to accept work. In essence, he was employed under a zero-hours contract.

Following an allegation of misconduct, the Trust suspended Mr Agbeze, meaning he was not eligible to be offered any work and he was not paid whilst the case was investigated.

Mr Agbeze asserted that there was an implied term in his contract which meant that he was entitled to be paid average wages during the suspension period.  The EAT upheld the Tribunal’s decision, that there was no obligation for the Trust to offer work, nor for Mr Agbeze to accept work, and that there was no express or implied term that required the Trust to pay Mr Agbeze during his suspension.

You can see other updates on other topics  in our earlier blogs here  disability discrimination and rights of appeal.

Talk to us!

We want to encourage our clients to pick up the phone whenever they need help with employment law matters.  We offer a variety of services to our clients, including helplines, insurance backed products for Employment Tribunal claims and other fixed fee services.   If you would like to discuss how we can help you and your business deal with Employment Law matters, please contact either Paul Stedman, Vicky Beattie, Neal Mellor or Sarah O’Brien on 0161 832 2500.

The start of October heralds a gentle resumption of winding up petitions against companies being available but not if you are a landlord!

The most notable change to the pre-Covid position is that there is a temporary increase in the amount that must be owed from £750 to £10,000.  In addition you will not be able to present a petition before you have sought proposal proposals for payment from the debtor and given them 21 days for a response. The government clearly is seeking to protect small businesses by giving them every opportunity to negotiate their way out of financial trouble.  The Government has made clear its intention to continue protecting the two types of debtors that have been hit particularly hard by Covid-19, small businesses and tenants.

As a result, unfortunately, landlords will not yet in reality benefit from the re-introduction of winding up petitions. This is in line with the continuing suspension of forfeiture and the effective suspension of Commercial Rent Arrears Recovery (“CRAR”), by requiring that the minimum net unpaid rent that must be outstanding before CRAR can be used is 554 days.

Landlords need to be particularly aware of the new concept of an “excluded debt” – one for rent that a tenant is liable to pay under a relevant business tenancy in England and Wales, which is unpaid by reason of the financial effect of coronavirus.  It would seem the only chance a landlord has of bringing a successful winding up claim against a tenant (or corporate guarantor) would be if the landlord can prove that the rent is unpaid because the tenant is taking advantage of UK Government policy to help with its cash flow (remembering arrears still must be more than £10,000 and the debtor must be given 21 days to offer a payment plan). Seemingly landlords face an impossible task of proving that Covid has not caused a tenant’s financial difficulties. Good luck with that one!

It is worth noting that the restrictions do not, though, give protection to individual debtors from personal statutory demands and subsequent bankruptcy proceedings.  However, with the current backlog for hearing petitions, this solution may be not as efficient as it once was.

Avi Barr is a partner at BBS Law specialising in Commercial Property and Property Finance and is head of the London office.  Avi can be contacted by email here.

Redundancy – Do employers have to offer a right of appeal?

Anyone who has been through a redundancy process, whether as an employer or employee, will understand the importance of following a fair procedure.

Unlike conduct or capability dismissals, there is no statutory right of appeal following a dismissal by reason of redundancy, and some employers chose not to offer an appeal in order to avoid the associated time and cost.

In Gwynedd Council v Barratt & others, the Court of Appeal considered whether the failure to offer an appeal in a redundancy process rendered the dismissal of two employees unfair.

The Claimants won their cases for unfair dismissal at the Employment Tribunal.   One of the findings of unfairness was the failure to offer the right of appeal.

The Claimants were teachers who were dismissed when the School they were working at closed. A new School subsequently opened on the same site, and they were not rehired. The Tribunal heard that there was no consultation over the closure of the School and no appeal was offered to the Claimants. The Claimants also applied for new jobs at the new school, but their applications were unsuccessful.

Gwynedd Council lodged their appeal on several grounds, all of which were dismissed by the Court of Appeal. The Court made it clear that the absence of any appeal or review procedure does not of itself make the dismissal unfair, so long as the original selection for redundancy came after a fair procedure (which it didn’t in this case). The Court added that the absence of an appeal is not fatal to an employer’s defence, but it is one of the many factors to be considered in determining the overall fairness of a dismissal by reason of redundancy.

Talk to us!

There are lots of factors to consider when carrying out a redundancy process. Employers should be careful to ensure that procedure they follow is fair and reasonable in order to minimise the risk of litigation. If you are considering making redundancies, please do not hesitate to contact Paul, Vicky, Neal or Sarah on 0161 832 25000

The Equality Act 2010 sets out various types of discrimination which most employers are aware of (direct, indirect, harassment and victimisation).  When it comes to disability discrimination however, there are additional protections for disabled workers, and certain less well understood obligations are placed on employers.

In this article, we look at two recent cases which dealt with the duty on employers to make reasonable adjustments and what constitutes a ‘reasonable adjustment’.

When does the duty arise?

The duty to make reasonable adjustments arises where a worker or an applicant is placed at a substantial disadvantage, compared to people who are not disabled, by:

  • A “provision, criterion or practice” (PCP) operated by the employer (this can be many things, such as the application of a particular policy or working practices).
  • A physical feature at the employer’s premises (such as access to a building).
  • A failure to provide an auxiliary aid (such as a special screen for the partially sighted).

When the duty arises, the employer is required to take such steps as are reasonable to alleviate the disadvantage (or provide the auxiliary aid where applicable).

What is a “reasonable” adjustment?

Not all adjustments are reasonable.  There are a variety of factors to take into account, including:

  • Will the adjustment alleviate the disadvantage?
  • Is the adjustment practicable?
  • What are the costs, and the financial situation of the business?
  • How will the adjustment disrupt the employer’s activities?
  • Is there any external funding available?
  • How big is the business?

In two recent cases, the Employment Appeal Tribunal (EAT) considered whether the adjustments already put in place by the employers were sufficient to offset the disadvantages suffered by the employee, and whether the adjustments the Claimant sought were reasonable.

In Martin -v- Swansea the Claimant was unable to perform her role by reason of a disability and went on long term sickness absence.  Despite being placed on the employer’s redeployment register for an extended time, the Claimant did not find a new role and was ultimately dismissed.

The application of the employer’s sickness absence policy placed Ms Martin as a substantial disadvantage (dismissal). The EAT considered whether the employer took reasonable steps to alleviate that disadvantage.  The Claimant contended that her employer should have made a reasonable adjustment by placing her in a different role.  The EAT disagreed, finding that the role would have to be suitable based on the Claimant’s skills, rather than simply giving her a job.

The EAT was also satisfied that the employer had already made reasonable adjustments, by placing the Claimant on its redeployment register for an extended period.  It concluded that extending the redeployment period further would not have led to a different result and would not have alleviated the disadvantage of being dismissed.

In Aleem -v- E-Act Academy, the Claimant was unable to continue in her role due to disability.  She was redeployed to a lower paid role as an alternative, with a three-month protected period on her original higher salary.  The period on the higher salary was extended to six months as the employer considered the Claimant’s grievance about reducing her pay.  After the grievance process concluded, the Claimant’s salary was reduced.  The Claimant brought a claim, that her employer had failed to make a reasonable adjustment by not retaining her on her full salary in the new role.

The EAT held that it was not a reasonable to require the employer to keep paying the Claimant at her higher salary indefinitely, for a lower graded role.

Summary

There are lots of factors to consider when it comes to making reasonable adjustments:

  • Is the individual disabled?
  • Is there something at work that is putting them at a substantial disadvantage?
  • What steps are reasonable for us to take to remove that disadvantage?

Each of these questions is fact sensitive and can be legally complex, as well as being delicate to deal with from a HR perspective.  If you want to find out more about this topic, or need advice on a similar situation with any of your staff, please do not hesitate to contact Paul, Neal, Vicky or Sarah on 0161 832 2500. 

Welcome to the second edition of our newsletter, where we focus on new developments, case law updates and hot topics in Employment Law.

Our first issue marked the anniversary of the first lockdown and we considered the impact of the pandemic.  The Government has just announced that all restrictions in place in England have been lifted as of Monday 19 July 2021.  The easing and lifting of lockdown measures will vary in the other home nations but it is hoped that a return to something that resembles the ‘pre-pandemic normal’ is on the horizon.  

The past 15 months have been a difficult and testing time for both employers and employees and with restrictions now lifting/easing many employers have been and will continue to take stock on how the past year has affected and may continue to impact their operations.  For some answers to the most common questions, we have faced from business owners in recent weeks please see our blog post https://bbslaw.co.uk/returning-to-the-office-post-lockdown/  

Keeping with the theme of the pandemic here is a quick Covid-19 related update

Travel restrictions   there are currently conditions in place which are attached to foreign travel from England.  Foreign destinations are classified as Green, Amber or Red with the list being subject to frequent change. 

The latest government update is that unless individuals are fully vaccinated there is a mandatory requirement to quarantine for 10 days following foreign travel to Amber list countries, although the rule for fully vaccinated individuals will not apply to France (on the Amber list) and individuals returning from France must quarantine for 10 days upon arrival in England. For those returning from Red list countries, they must quarantine for 10 days in a managed hotel.   

The requirement for individuals to quarantine is likely to impact businesses and we recommend that employers are mindful of the mandatory requirements when authorising holiday requests.  Thought should be given to how operations will be affected if there is a reduced workforce due to quarantine.    Employers may want to consider adopting the following approach for employees returning from holiday who then need to quarantine.  This is subject to ongoing government guidance, and we would recommend any such requirements are confirmed to employees in writing;

i. If a role permits home working, employees may work from home for the duration of the  period of quarantine, however, all usual terms of employment will apply, including  usual hours of work. ii. If an employee has enough remaining annual leave they may choose to take a further period of leave to cover all or part of their quarantine period.

iii. If home working cannot be accommodated or the employee does not wish to take/does not have enough remaining annual leave, any period of quarantine must be taken as unpaid leave.  

Furlough – as of 1 July 2021 the Furlough Scheme has seen some changes which mean that employers are required to take on more of the costs relating to furloughed employees.  The below table sets out how the scheme has begun to, and will further taper down between June and September 2021.   

June

July

August

September

Government contribution: wages for hours not worked

80% up to £2,500

70% up to £2,187.50

60% up to £1,875

60% up to £1,875

Employer contribution: employer National Insurance contributions and pension contributions

Yes

Yes

Yes

Yes

Employer contribution wages for hours not worked

No

10% up to £312.50

20% up to £625

20% up to £625

For hours not worked employee receives

80% up to £2,500 per month

80% up to £2,500 per month

80% up to £2,500 per month

80% up to £2,500 per month

(Source:  https://www.gov.uk/government/publications/changes-to-the-coronavirus-job-retention-scheme/changes-to-the-coronavirus-job-retention-scheme)

What else is and has been happening?

The new Employment Bill

The long-awaited Employment Bill, which was expected to come in to force following the Queen’s Speech in May 2021, has been put on hold.  Whilst the bill has been delayed it is expected to come in to force at a future date. Some reforms which are expected include; 

    • The introduction of a single labour market enforcement body to ensure that vulnerable workers are better informed of their rights, and to support businesses in compliance.
    • Plans to ensure that all tips and service charges go to workers in the hospitality, leisure and service sectors.  
    • Extending redundancy protection to cover pregnant employees, so that they are given priority for suitable alternative employment.
    • Extended leave for parents of children in neonatal care.

Some of these areas were subject to consultation, the outcome of which is still awaited. 

Gender pay gap reporting

Employers with 250 or more employees are required to publish their gender pay gap report by 4 April (30 March for public-sector employers).

Due to the impact of the pandemic, the Equality and Human Rights Commission (EHRC) have announced that employers will have an additional six months after the current deadline to report their gender pay gap information – therefore, 5 October 2021, meaning that no enforcement action would be taken before this date.  The EHRC is however encouraging employers to report their data before October 2021, if possible.

Right to Work

The EU Settlement Scheme, which allowed EEA nationals who were in the UK at the end 2020 to formalise their status, closed to most applications on 30 June 2021. On 18 June 2021 the Home Office released new guidance for employers on carrying out right to work checks.  Up until 30 June 2021, EEA nationals could present their passport or national ID card as evidence of their right to work in the UK, however, as of 1 July 2021 EEA citizens and their family members will need an immigration status in the UK and will no longer be able to rely on their passport/national ID card.

Due to COVID-19 restrictions the new guidance confirms that the temporary adjustments to right to work checks made to assist remote working arrangements and social distancing, will now be extended to 31 August 2021.  From 1 September 2021 employers will be required to either check their prospective employees’ original documents or check the prospective employees’ right to work status online.

Since our last update the following important increases have also come into force

As at 1 April 2021 

The national living wage increased £8.91 per hour and the age threshold for the national living wage was altered so it now applies to 23 and 24 year olds (previously it was only available only to those aged 25 and over).

  • Other national minimum wage rates increased as follows:
    • £8.36 per hour for workers aged 21 and 22;
    • £6.56 per hour for workers aged 18 to 20; 
    • £4.62 per hour for workers aged 16 and 17;
    • £4.30 per hour for apprentices under 19 and those in the first year of their apprenticeship.

As at 4 April 2021

  • The weekly rate of statutory maternity, paternity, adoption, shared parental and parental bereavement pay increased to £151.97.

As at 6 April 2021

  • The weekly rate of statutory sick pay increased to £96.35.

All employers should be mindful of the above increases and if any of your policies and documents refer to precise rates (such as a sickness absence procedure) this should be updated.

  • New limit on the weekly capped sum for statutory redundancy pay, this is now £544 per week.   

Where an employer dismisses an employee by reason of redundancy (if they have two years’ service) a sum is calculated based on the employee’s weekly pay, length of service and age. 

Case law update

Covid-19 related dismissal – this is an interesting case that has arisen as a result of the pandemic.

Accattatis v Fortuna Group (London) Ltd 

The Claimant made repeated requests during March and April 2020 to work from home or to be furloughed as he said that he felt uncomfortable commuting and attending the office during lockdown.  The Claimant was told that his job could not be done from home and that furlough was not possible due to how busy the employer was.  The Claimant was told that he could take holiday or unpaid leave. He declined these options, repeated his requests and was later dismissed.

Employees usually require 2 years continuous service in order to pursue a claim for unfair dismissal.  In this case the Claimant did not have the requisite length of service, however, he claimed automatic unfair dismissal under section 100(1)(e) of the Employment Rights Act 1996.  Section 100(1)(e) states that employees may refuse to work if they consider that there is “serious and imminent danger”.

The Employment Tribunal accepted that based on public health guidance available at the time, the Claimant had a reasonable believe that commuting during the lockdown could amount to serious and imminent danger. However, under section 100(1)(e) the Claimant was required to take appropriate steps to protect himself. The employer was unable to offer home working but did provide a possible alternative (holiday or unpaid leave), which the Claimant refused stating he wanted to be furloughed or to work at home on full pay. The Tribunal found that the Claimant’s requests were not appropriate steps to protect himself, and his claim failed.

Whilst the decision is not binding on other Tribunals it is a reminder that the pandemic may not on its own be a reasonable justification for an employee to refuse to attend work under section 100(1)(e), if an employer has tried to reasonably consider an employee’s concerns.   The case is also a helpful reminder that the Tribunal will consider the public health guidance that was available at the time, so as more and more people are vaccinated and restrictions are eased, claims of this nature will be less likely to succeed.

Protection from discrimination – gender-critical views 

Forstater v CGD Europe

The Employment Appeal Tribunal (EAT) has handed down a significant judgment which can protect individuals who hold gender critical beliefs from discrimination.

Ms Forstater worked as a consultant for CGD Europe. After expressing a number of gender critical beliefs via social media her consultancy contract with the business was not renewed.  Ms Forstater presented a claim for discrimination on the basis of her philosophical belief, which is one of the protected characteristics listed within the Equality Act.  The claim failed in the Employment Tribunal and the judgment stated that the way in which Ms Forstater expressed her gender critical beliefs was not “worthy of respect in a democratic society” and was therefore, not protected. 

The decision was appealed, and the appeal was upheld.  This outcome means that beliefs will be capable of protection even if they are expressed in a way that may offend or create a hostile and degrading environment, as such it is unlawful to discriminate on this basis. 

Employment Tribunal makes a record discrimination award

Barrow v Kellogg Brown and Root (UK) Ltd

An Employment Tribunal has given the second highest award ever made in an Employment Tribunal, amounting to over £2.5 million. 

After 36 years of service the Claimant presented claims against his former employer for unfair dismissal, direct disability discrimination, harassment related to a disability, discrimination arising from disability, failure to make reasonable adjustments and victimisation.

The Claimant was excluded from work following an email exchange with his manager. At this time the Claimant was taking steroids to assist his cancer symptoms, which at the time had not been diagnosed, and was suffering from adverse side effects which affected his mental health and behaviour.

The Claimant was called to a meeting and dismissed, without any formal procedure being followed and without being given any detail as to the reasons for his dismissal.   Following his dismissal, the Claimant was diagnosed with a rare form of cancer and he informed the employer of this.  The employer attempted to rectify the dismissal procedure followed and instigated a retrospective dismissal process.  The outcome was to dismiss due to a breakdown in the implied term of trust and confidence.  

The Employment Tribunal considered the original dismissal, and the later dismissal which was labelled a ‘sham’.  The Tribunal considered that the dismissal was predetermined, and faults/defects were found in the process. The Tribunal pointed criticism at the attempts made by the employer to make the decision to dismiss appear credible.  The Tribunal concluded that no reasonable employer would have acted in the way the employer did in dismissing an employee who had spent 36 years working for the company.

The claims of unfair dismissal, harassment and discrimination arising from disability succeeded.  The employee was awarded a career-long loss award, aggravated damages and a further £25,000 for pain, suffering and loss of amenity.

This case demonstrates that discrimination awards are not subject to a cap, unlike unfair dismissal claims, and it highlights the importance of employers following a fair dismissal process and not predetermining the outcome. 

Talk to us!

We want to encourage our clients to pick up the phone whenever they need help with employment law matters.  We offer a variety of services to our clients, including helplines, insurance backed products for Employment Tribunal claims and other fixed fee services.   If you would like to discuss how we can help you and your business deal with Employment Law matters, please contact either Paul Stedman, Vicky Beattie, Neal Mellor or Sarah O’Brien on 0161 832 2500.

BBS Law are delighted to congratulate our clients, the shareholders of Forge (We Are Forge) on its acquisition by Yardi. Dov Black advised together with Rebecca Mills in our corporate team.

Forge is a UK based provider of visitor management and access control solutions to the commercial real estate, retail and higher education industries.

Yardi develops and supports industry-leading investment and property management software for all types and sizes of real estate companies. Yardi is based in Santa Barbara, Calif., and serves clients worldwide from offices in Australia, Asia, the Middle East, Europe and North America.

Dov Black commented,

“this deal showcased the quality of our corporate team and our work was appreciated by clients and brokers alike. We are delighted to have played a part in an exciting move for the international Proptech sector”.

Should you require any further information or have a specific query you can contact BBS Law on 0161 832 2500.

By the BBS Employment Team, June 2021

It has been almost 15 months since the UK first went into a national lockdown and there is now some light at the end of the tunnel…the vaccine programme is being successfully rolled out and the government roadmap aims for all social distancing restrictions to be lifted from 21 June 2021.  Currently, the government guidance remains that people who can work from home should do so, and where working from home is not possible businesses should ensure that any return to the workplace is in line with Covid-secure workplace guidance.

“It is hoped that we can begin to return to some sort of pre-pandemic ‘normal’ in the coming weeks and with that in mind many businesses are now taking stock and considering how the past 12 months have impacted and will reshape their operations in the months ahead.”

Over the past year the majority of office-based businesses were forced to alter their working practices, with home/remote working becoming the norm.  With the correct checks and I.T infrastructure in place many of our clients have drawn positives from the new working style, including a better work/life balance, cost savings, more flexibility and agility.  However, along with the positives many clients also agree that working in a traditional office environment still has its advantages, including the collaborative nature of being with colleagues and the importance of social interaction, face to face and not via Zoom!  As the possibility of returning to the office is now on the horizon many of our clients have raised questions around their employees return, and we address some of the common queries here:

Can we introduce a hybrid policy (a mix of home and remote working) and do we need to change our employee’s contracts of employment?

Yes, you can introduce a hybrid working policy, this may include a structure of 3 days in the office and 2 days working remotely for example.   We would not advise making formal contractual changes to contracts of employment immediately as over the coming months the working world is likely to continue to change and businesses may need to make further adjustments in the short to medium term as they adapt.  We recommend that a hybrid way of working can be implemented with an initial trial period (for example 6 months), following which a business can reassess if the hybrid approach is working successfully, and if any alterations need to be made.

Can we insist that all our employees have the vaccine when it is made available to them?

Businesses should be mindful that making vaccinations compulsory is likely to give rise to arguments over human rights violations and potential litigation involving discrimination for employees with protected characteristics.  There are very few examples where an employer would be able to fairly dismiss an employee who refuses to be vaccinated.   We would advise against any policies making vaccinations mandatory and recommend that employers consider whether insisting on the vaccine is proportionate and necessary.

Do we need to provide employees with equipment to work from home and do we need to pay employee’s remote working expenses?

Generally, we would advise that a business should provide employees with the essential tools that they need to carry out their day-to-day duties. For office-based employees this would usually include a computer and or telephone. There is no legal requirement for a company to provide employees with equipment such as desks and chairs.  If a business opts to continue with home/remote working post 21 June 2021, business leaders should consider and discuss with employees their individual home set ups, in order to ensure that it is conducive to effective and safe working.  It is also recommended that risk assessments and Display Screen Equipment (DSE) assessments are carried out for employees in order to comply with health and safety legislation.

With regards to expenses, employers do not need to cover the costs of electricity and broadband for example, unless there is an express contractual provision for them to do so.  Employees can apply to HMRC to claim a tax allowance in circumstances where their employer requests that they work from home.

Can employees request to continue to work from home when the business wants a full return to the office?

Yes. Employees with 26 weeks’ service are entitled to make flexible working requests. This was the case pre-pandemic and remains the position.  If a business receives a flexible working request, it should consider the request fully and if it cannot be reasonably accommodated a business can refuse the request if it falls within one of the following 8 reasons;

  • extra costs that will damage the business
  • the work cannot be reorganised among other staff
  • people cannot be recruited to do the work
  • flexible working will affect quality and performance
  • the business will not be able to meet customer demand
  • there’s a lack of work to do during the proposed working times
  • the business is planning changes to the workforce

The difficulty that some businesses may face when considering flexible working requests following the pandemic will be that many of the reasons given for refusing a request historically, for example flexible/home working will affect quality and performance, could be challenged by an employee following a year of successful homeworking.  As such businesses should consider any requests carefully and seek specialist guidance on the correct process to follow.

We envisage that many businesses will choose to adopt a more flexible approach to working in the coming months, including hybrid working.  Moving forward all businesses will need to review their workplaces and operations and the employment team at BBS Law are available to discuss any questions that you may have in relation to returning to the office, including drafting and implementing new policies.

Should you require any further information or have a specific query you can contact Paul, Vicky, Neal or Sarah in the BBS Law Employment team on 0161 832 2500.

An employee ownership trust (commonly called an EOT) is an ownership structure for private companies introduced by legislation in 2014 which offers generous tax benefits where companies are owned by their employees.

As well as enabling the incentivisation and engagement of employees and providing the benefits of employee ownership not just for the employees but also for the business and the wider economy, EOTs also offer significant tax advantages both to employees and to existing shareholders.

How does an EOT structure work?

Under an EOT scheme, the existing shareholders of a company sell a controlling stake in the business (at least 51%) to a newly established trust (the employee ownership trust) which then holds the shares for the benefit of the company’s employees.

The employee ownership trust is often established with a sole corporate trustee which may be a subsidiary of the trading company with a mixture of independent and internal trustee directors, or it may be established with an independent professional trustee.

What are the tax advantages?

Whilst BBS Law are not tax advisers and would recommend that anyone interested in the detail of the tax advantages of an EOT seek specialist advice in this respect, we would note the following as a high-level summary:

  1. A sale of shares to an EOT is free from Capital Gains Tax so any consideration paid to the selling shareholders is receivable by them in full.
  2. Contributions from the trading company to the EOT once it holds the shares can be made on a tax-free basis.
  3. Employees of the company are entitled to receive annual bonus payments (up to a capped amount) from the EOT which will be free from Income Tax.

Who might benefit from using an EOT structure?

As well as businesses looking to incentivise their employees and keen to move to a shared-ownership structure, EOTs may also be attractive to controlling shareholders looking for an exit which does not involve a sale to a third party, and which also allows them to reward the existing employees of the company.

There are a number of criteria which need to be met for a company to utilise an EOT scheme and we would recommend that anyone interested in finding out more about this type of structure seek specialist advice in this respect.

How can BBS Law help?

Here at BBS Law, we have assisted a number of clients in the sale of their businesses to EOTs and have considerable experience in the legal issues which commonly arise on the implementation of an EOT structure, and the preparation of the legal documentation required in this respect.

We work in a collaborative manner with the tax advisers on the transaction to ensure that the scheme is implemented in accordance with the tax legislation and also offer practical commercial advice to clients in terms of the operation of the business once this is owned by the EOT.

We advise from the start to the finish of the transaction and offer a commercial and client-led service on a fixed fee basis.

Note: This guide is for general information purposes only. If you require any further information or have a specific query you can contact our Corporate team. Our Partner, Dov Black (dov@bbslaw.co.uk) will be happy to assist.