Employment Law 2014 Preview: another year over and a new one just begun

42 minute read
05 February 2014

2013 was a year of change and 2014 looks set to follow suit. It brings a raft of legislative change with more pieces of the employment reform jigsaw falling into place. Only a month in and some items on the government's indicative timetable published in December are already slipping, such as the extension of the right to request flexible working. For a summary chart of the key employment law reforms and latest on the expected implementation dates, please see our updated 'Employment law reform snapshot'.

2013 was a year of change and 2014 looks set to follow suit. It brings a raft of legislative change with more pieces of the employment reform jigsaw falling into place. Only a month in and some items on the government's indicative timetable published in December are already slipping, such as the extension of the right to request flexible working.

While the legislative reforms continue full steam ahead, the tribunals and courts will also be busy refining the interpretation of old and new employment laws. Some highly significant decisions are expected this year on holiday pay calculations, agency workers and collective redundancy triggers.

So what is in store? Here we take a look at the anticipated legislative and judicial trends for 2014.

  • Redundancy: Collective consultation trigger - numbers and meaning of proposals
  • TUPE: TUPE 'regeneration', and ETO or no ETO
  • Holiday pay: What is 'normal remuneration'?
  • Health: Is obesity a 'disability'?, Health & work service and Statutory sick pay records
  • Discrimination: Discrimination questionnaires, enforcement, equal pay, and post-employment victimisation
  • Family friendly: flexible working, shared parental leave, surrogacy and statutory pay rates
  • Tribunal reform: pre-claim conciliation, penalties, tribunal fees and compensation rates
  • Unfair dismissal: gross misconduct and fundamental right?
  • Whistleblowing: more change to come
  • Atypical workers: loophole in protection for agency workers and zero hour contracts

Redundancy

Collective consultation trigger - numbers

We begin 2014 with a fresh reference to the Court of Justice of the European Union (CJEU) on whether UK law correctly implements the European Collective Redundancies Directive. Is the duty triggered where the employer is proposing to dismiss as redundant 20 or more employees 'at one establishment' as provided in section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992? Or is it triggered when proposing to dismiss 20 or more employees across the employer's business as a whole as held by the Employment Appeal Tribunal (EAT)?

In a historic and controversial decision last year, the EAT - in the combined cases of USDAW v Ethel Austin Ltd (in administration) and USDAW v WW Realisation 1 Ltd (commonly referred to as the Woolworths litigation)- held that section 188 does not correctly implement the underlying EU Directive. The words 'at one establishment' are to be disregarded for the purposes of any collective redundancy involving 20 or more employees. This means that employers will have to consult employee representatives in many more situations.

While the tribunals and parties to the case recognised early on the potential significance of this case, the government did not. Despite being requested to take part in the proceedings - as the Insolvency Service will be picking up the tab on this one - the government refused to make any representations before the tribunal or EAT. Following an unprecedented apology to the EAT, the government is now taking part in the further appeal of this significant judgment to the Court of Appeal.

While the case was given an expedited hearing date of 22 January, we will not get a quick answer. Unbeknown to the EAT back in May, the same question had already arisen in the Northern Irish case of Lyttle v Bluebird UK Bidco 2 Ltd, concerning the Bonmarche chain of stores. Like the EAT, the Belfast Industrial Tribunal also noted the apparent discrepancy between section 188 and the underlying Directive. Taking a cautious approach, it simply referred the question directly to the CJEU in April last year. In light of this, unsurprisingly, the Court of Appeal is now also referring the question as it arises in the Woolworths litigation to the CJEU as well.

The additional reference to the CJEU in this case is needed as the questions already referred to the CJEU in Lyttle may not fully resolve the issue, and the employees in the Lyttle case are unrepresented. As the issue is highly significant to employers in the UK, the Court of Appeal would like the benefit of both sides legally represented.

So what next? The wording of the questions to be referred is to be agreed between the parties and an expedited hearing by the CJEU then requested. It will be for the CJEU to decide if the case is joined with Lyttle and/or expedited. Fingers crossed that the issue is resolved sometime later this year.

Collective consultation trigger - meaning of 'proposing'

When is the duty to collectively consult triggered? The obligation is triggered when the employer first proposes that redundancies be made. But when does an employer first propose to make redundancies? A question which often vexes practitioners and the courts alike.

In 2009, the CJEU in the Fujitsu case purported to answer the question. But was the CJEU saying that the consultation obligation arises

  1. when the employer is proposing, but has not yet made, a strategic business or operational decision that will foreseeably or inevitably lead to collective redundancies; or
  2. only when that decision has actually been made and he is then proposing consequential redundancies?

The Court of Appeal in The United States of America v Nolan has been unable to fathom what the CJEU was actually saying in Fujitsu, as some parts of the CJEU judgment favour scenario (i), but others favour scenario (ii). As such, the Court of Appeal passed the question back to the CJEU. Twenty-two months later and the CJEU simply declined to answer the question stating it did not have jurisdiction to hear the case as the EU Directive does not apply to 'public administrative bodies'

The case went back to the Court of Appeal for a further hearing last November. The USA argued that the UK collective redundancies provisions too should not apply to it. However, the Court of Appeal has rejected this. A further hearing will now be scheduled to determine the outstanding 'Fujitsu' point as to when the duty to collective consult is triggered without the help of the CJEU.

TUPE

TUPE 'regeneration'

We begin the year with the long-trailed changes to the Transfer of Undertakings (Protection of Employment) Regulations, which came into force on 31 January (subject to a couple of provisions which will not take effect immediately).

We also have updated government guidance, 'A guide to the 2006 TUPE Regulations (as amended by the Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 2014) for employees, employers and representatives' - what a snappy title!

While less radical than originally proposed, the changes allow for a bit more flexibility removing some legal obstacles to the everyday operation of TUPE, such as the changes on redundancy consultation. We also have some helpful changes: post-transfer changes to location can amount to an "economic, technical or organisational reason entailing changes in the workforce" (an ETO reason) so that redundancies due to a simple change of location will not be automatically unfair.

However, the impact of other changes is not fully apparent at present. For transfers before 31 January 2014, the protective provisions for dismissals or changes to terms apply if the sole or principal reason for the relevant action is either the transfer itself or in connection with the transfer (unless, in the latter case, it is an economic, technical or organisational reason entailing changes in the workforce). Now, the two distinct concepts of the 'transfer itself' and 'in connection with the transfer' have been replaced by a new single concept of 'the transfer'.

At first glance, this appears to be a narrower test providing greater flexibility when managing employees who have been transferred. But the government had indicated that the new test would entail some overlap between the two previous concepts, so this change may not prove as significant as it first seems. Unfortunately, only time will tell how the tribunals and courts interpret the new test.

The changes businesses need to be aware of include:

For transfers on or after 31 January 2014:

  • clarification that for there to be a 'service provision change', the activities which transfer must be 'fundamentally' the same as the activities carried out by the person who has ceased to carry them out;
  • there will be new tests for making fair dismissals or valid contractual changes -
    • the revised Regulations will not prevent a variation of contract if the sole or principal reason for the variation is an economic, technical, or organisational reason entailing changes in the workforce, provided that the employer and employee agree that variation. Nor will they prevent variations that are permitted under the terms of that contract.
    • changes to the location of a workforce will be within the scope of 'economic, technical or organisational reason entailing changes in the workforce';
  • transferees can renegotiate employees' contractual terms incorporated from collective agreements, provided it is more than one year after the transfer, the changes are agreed and the rights and obligations under the employees' contract are no less favourable to the employees (when considered together) than those which applied immediately before the transfer;
  • confirmation that where contracts of employment incorporate provisions of collective agreements which may be agreed from time to time (e.g. future pay rises), the transferee is not bound by any future changes agreed after the transfer where the transferee is not a party to the collective bargaining for that provision;
  • a transferee can 'elect' to conduct (or to start to conduct) collective consultation for redundancy purposes pre-transfer (where 20 or more redundancy dismissals are proposed). However, the transferor must agree and there are certain notification requirements. The transferee can subsequently 'cancel' this 'election' and any consultation taken so far will not count.

For transfers on or after 1 May 2014:

  • the transferor must provide employee liability information 28 days (rather than the current 14 days) before the transfer.

For transfers on or after 31 July 2014:

  • 'micro-businesses' (fewer than 10 employees) can directly inform and consult with employees for the purposes of TUPE in certain circumstances where there is neither a recognised union nor existing appropriate representatives.

ETO or no ETO

At the end of 2013, the Court of Appeal heard a case which highlights the difficulties employers face when seeking to make efficiency savings where they have employees previously transferred across under TUPE.

In Manchester College v Hazel, six months after a TUPE transfer and as a result of the difficult economic situation facing the higher education sector, the employer undertook a redundancy exercise together with a separate exercise to change terms for the remaining staff to avoid further redundancies. The employees who failed to agree the contractual changes were dismissed. Was there one on-going exercise of economic changes or two separate exercises?

The EAT held that because the redundancy process was completed before the contractual changes, they were two separate processes. So although the dismissals were potentially for an economic, technical or organisational reason, they did not entail changes in workforce numbers or functions (the numbers had already been cut before the contractual changes exercise completed). This meant those transferred employees who refused to sign new contracts were automatically unfairly dismissed.

The Court of Appeal decision in the appeal is expected sometime in the next couple of months. We wait to see if the Court of Appeal takes a more 'holistic' approach.

Holiday pay

What is 'normal remuneration'

Calculating the correct amount of holiday pay owed to a worker can prove to be a tricky task for an employer as it is dependent upon various factors. Does the worker have normal working hours or not? If they do, does their pay vary with the amount of work done? Do they work overtime and is that overtime guaranteed or non-guaranteed?

Traditionally, UK legislation has been interpreted so that guaranteed contractual overtime (obligatory on the part of the employer and the worker) was considered to count towards 'normal working hours'. However, non-guaranteed overtime did not count for workers with normal contractual hours: instead statutory holiday pay was calculated with reference to the contractual hours only.

But in 2012 the Court of Justice of the European Union (CJEU) and subsequent Supreme Court judgment in British Airways plc v Williams cast doubt on this. The Williams litigation established that a worker must be no worse off financially during annual leave than if he/she had continued working. So, workers are entitled to receive their 'normal remuneration' when taking statutory holiday leave. This includes not only basic salary but also remuneration 'intrinsically linked to the performance of the tasks'. Has Williams opened another holiday pay floodgate? The short answer is yes.

Last year, the tribunals received several claims concerning whether overtime arrangements, commission and various supplements formed part of 'normal remuneration' for holiday pay purposes. The claims have had varying success. Unsurprisingly, a number of appeals are now due to be heard this year.

On commission payments, the Leicester tribunal in Lock v British Gas Trading Limited opted for a direct reference to the CJEU for clarification. While we await the judgment of the court, the opinion of the Advocate General (who advises the full court) is that where commission payments have a sufficient degree of permanence, they do form part of 'normal pay' and need to be taken into account for holiday pay calculations. Hopefully we should have an answer early to mid-year.

As to overtime and pay supplements, the Employment Appeal Tribunal (EAT) sitting in both England and in Scotland will give their views. On 25 February, the EAT for England and Wales will hear the appeal in Elms v Balfour Beatty Utilities Solutions Ltd. All other similar appeals, notably Neal v Freightliner Limited, before it have been 'stayed' (put on hold) pending the EAT's decision in Elms. A case pending before the Scottish EAT, of Fulton v Bear Scotland Ltd, is at the time of writing, due to be heard on 19 March (possible stay under consideration).

Hopefully we will get some useful EAT guidance.

Health

Is obesity a 'disability'?

Does the fact that a person is obese mean they are, or could be, 'disabled'?

The Court of Justice of the European Union (CJEU) has been asked by Denmark whether discrimination on the grounds of obesity is contrary to EU law, specifically: whether obesity can be deemed to be a handicap covered by the relevant Council Directive (which the EA 2010 implements in the UK).

It will be interesting to see whether the CJEU takes a restrictive approach, or takes note of the recent decision of the American Medical Association to categorise obesity as a 'disease' rather than a condition, which may make it more likely that the US Courts consider obese workers to be covered by the Americans with Disabilities Act.

If obesity itself can give rise to discrimination claims, rather than impairments which are a consequence of being obese, what difference will this make? It will mean that in addition to having a duty of care to make reasonable adjustments for those who suffer from physical or mental impairments as a result of being obese, employers are required to make adjustments where workers have difficulty carrying out normal day to day activities simply because they are obese. In practical terms, this could mean requests for adjustments to workers' jobs to minimise walking, travelling or working machinery.

The other issue is the potential for claims of 'perceived' disability, already permitted under the EA 2010. If the scope was widened by the CJEU, if an employer is found to have discriminated against them because they believed them to be disabled because of their obesity, this could give rise to a discrimination claim.

Widening the scope of protection could increase the burden on employers in managing the varying needs of the workforce. Hopefully the CJEU will give us some clarity.

Health & work service

The 2011 report, "Health at work: an independent review of sickness absence" by Dame Carol Black and David Frost CBE, made a number of recommendations aimed at ways of minimising loss of work due to ill health.

As a result of the report, the Department for Work & Pensions (DWP) is establishing a new 'Health and Work Service'. The new service will:

  1. Provide telephone and web-based general advice on health and work. Available to employers, employees and GPs, the advice will be aimed at reducing length of sickness absence and supporting employment.
  2. Provide an occupational health assessment for employees who have been, or are likely to be, on a period of sickness absence lasting four weeks. The focus will be on the production of a 'return to work plan' setting out the obstacles preventing a return to work, recommending temporary adjustments/interventions to address the obstacles and a timetable for return to work. The normal referral route will be via a GP, although an employer route will be available if the GP has not referred after four weeks, and it has the employee's consent.

The service is now due to 'go live' with a staged approach from Autumn 2014, with a full national service in place by April 2015.

Statutory sick pay records

The new 'Health and Work Service' will be funded through the abolition of the Statutory Sick Pay Percentage Threshold Scheme (PTS), which currently compensates employers for higher than average sickness absence. PTS will be abolished from 6 April, but employers will still be able to make claims for reimbursement of SSP (paid for sickness periods up to 5 April 2014) under PTS until the end of the 2015/16 tax year.

The associated SSP record-keeping requirements will also be abolished from 6 April. However, employers will still be required to keep sickness records for PAYE purposes.

Also from 6 April, the SSP rate will increase from £86.70 to £87.55.

Discrimination

Discrimination questionnaires

The Equality Act 2010 sets out the questionnaire procedure that enables an individual who thinks he or she has been discriminated against to gather information from his or her employer. Employers are not legally obliged to respond to discrimination questionnaires, but a tribunal may draw adverse inferences from a failure to reply within eight weeks, or if the answers are evasive or equivocal. Described by the government as failing to increase pre-hearing settlements and instead creating burdens and risks, this will be abolished from 6 April.

In theory, employers should be in a stronger position to take a more robust approach towards requests for information, but will that in fact be the case?

Just because the statutory procedure is going, does not mean that individuals will not be allowed to ask questions of their employer. In its place, Acas has issued new guidance, 'Asking and responding to questions of discrimination in the workplace' containing a questioner's template letter. It will still be open to a tribunal to look at whether and how an employer has answered questions as a contributory factor in making their overall decision in a discrimination claim. Also, individuals will still be able to seek such information either through pre-action requests, or applications to the tribunal for orders for information or disclosure.

Enforcement

In October 2010, employment tribunals were given new powers to make recommendations in discrimination cases, for the benefit of the whole workforce and not just the claimant. Although an enforcement action, it was in fact an attempt at prevention rather than cure. Where an employer was found to have discriminatory practices in a particular case, recommendations could be made to prevent such discrimination occurring in the future in relation to others.

The Government Equality Office has had a change of heart and now considers this power does not serve a practical purpose nor to be an effective legal remedy. The Deregulation Bill currently now making its way through Parliament will remove this power. Subject to the Bill being passed, this change could be made in late 2014.

While the wider recommendations provision is to be abolished, the more long-standing power to make recommendations for the benefit of the individual claimant will remain. This can apply in the minority of discrimination claims where the individual continues to be employed by the organisation following their claim.

Equal pay

Private sector gender pay gap information: voluntary reporting or statutory requirement? This has been the debate for years. Equality campaigners have long argued that to tackle the gender pay gap, employers should be required to undertake internal gender pay audits and publish their findings.

1 October will bring a limited step towards required reporting. An employment tribunal which finds that an employer has discriminated on grounds of sex in contractual or non-contractual pay will have the power to order the employer to conduct a pay audit "in cases where it considers there may be continuing or likely discrimination".

An audit will not be ordered if one has been completed in the last three years, the employer has transparent pay practices or it can show a good reason why the audit would not be useful. Employers who do not comply with an order for a pay audit will be subject to a civil financial penalty.

Post-employment victimisation

Does the Equality Act 2010 protect individuals from post-employment victimisation? For example, can an individual bring a victimisation claim after receiving an unfavourable reference from their former employer in consequence of a prior discrimination claim?

This has been a debate since the Equality Act came into force. Is there a drafting error that precludes making a claim for post-employment victimisation? On the face of the statutory wording, described by the Equality and Human Rights Commission a 'legislative blunder', it appears that it may not be covered.

We currently have conflicting Employment Appeal Tribunal (EAT) decisions. One division of the EAT held the Equality Act provisions should be interpreted as providing protection against such victimisation owing to the requirements of EU law. However, another division held the wording of the provisions could not be interpreted as permitting post-employment victimisation claims.

The conflicting EAT decisions have now been combined in an appeal heard before the Court of Appeal at the end of last year. Hopefully we will soon have clarification.

Family friendly

Flexible working

All employees who have worked for their employer for 26 weeks or more will have the right to request flexible working, rather than just parents or carers. As a result, employers may see a rise in the number of requests. In addition, the current statutory procedure which governs the right to request flexible working will be replaced by a less prescriptive duty to consider requests for flexible working 'in a reasonable manner'.

The extension was originally scheduled to come into effect from 6 April this year. However, it is now being delayed to "an appropriate date as soon as possible this year" due to delays over the passage of the Children and Families Bill. The target date of the wide ranging Bill has been pushed back to 21 March, which will not allow enough time for the requisite secondary legislation to be brought into force to actually implement the flexible working request change by 6 April.

The new regime is intended to be much simpler and to give employers the freedom to operate their own procedures. However, employers should note that all requests, including any appeals, must be considered and decided on within a period of three months from first receipt, unless the employee has agreed to extend this period. Also, employers will still only be able to reject a request for flexible working based on one of the statutory grounds (as in the current regime). A new brief Acas statutory code of practice will also be issued to assist employer in handling requests.

The aim is to encourage the use of flexible working arrangements. As the draft Acas code advises employers, "you should always approach requests to work flexibly from the presumption that you will grant them unless there is a business reason for not doing so".

A possible 'problem' area is prioritisation of requests. What does the employer do if it receives two similar requests, but for business reasons only one can be accommodated? Employers will be left to do their best in such a scenario, but will need to bear in mind the interaction of discrimination law issues.

Shared parental leave

Although not coming into force until 2015, employers need to start considering the reshaping of the existing maternity, paternity, adoption and parental leave systems. In particular, employers should consider terms of any existing enhanced contractual maternity schemes.

While retaining the existing maternity leave and ordinary paternity leave systems, the additional paternity leave introduced in 2010 will be abolished. Instead, mothers will be able to elect to replace their maternity leave (other than the compulsory maternity leave period) with a new system of shared parental leave, shared between the mother and the father/mother's partner which may even be taken concurrently. The cut-off point for taking SPL will be 52 weeks from the birth of the child, rather than from the start of the mother's maternity leave.

The precise details of how the new system will operate - notice requirements, information to be provided, time limits on using leave, keeping in touch days (KIT days), rights on return etc - are expected to be finalised and published sometime in early 2014.

Parents will be able to take the leave in blocks of one week (not blocks of one day as originally proposed) in a pattern of their choice provided the employer agrees. If no agreement is reached, the default position will be one continuous block.

While the leave must be taken in week blocks, use of KIT days may allow for, in effect, a return on a part-time basis, although this would still require the employers' agreement. While we still await final confirmation, the government has stated that it intends to "create a provision for parents to have up to 20 [KIT] days per parent to use whilst on shared parental leave additional to the 10 KIT days ... available to a woman whilst she is on maternity leave". That is a potential trebling of KIT days for women!

Fathers/mothers' partners will also be given a new right to take unpaid time off work to attend two antenatal appointments. The current adoption leave system will remain but with some significant enhancements and extension to cover surrogacy arrangements.

Surrogacy

The government plans to extend the scope of adoption leave and pay to include parents of children born via a surrogacy arrangement. However, a decision of the Court of Justice of the European Union (CJEU) expected in 2014 may require a late adjustment to this plan.

Two separate cases concerning whether the 'intended' mother who receives a baby via a surrogacy arrangement is entitled to maternity leave and pay are awaiting a ruling from the CJEU. In cases before the CJEU, an Advocate General will issue an Opinion advising the full Court. While frequently followed, it is up to the full Court to decide whether or not to accept the advice. In the cases C D v S T and Z v A Government Department, different Advocates General have reached two very different conclusions - one favouring entitlement to paid leave and the other not. We await the CJEU's ruling.

Statutory pay rates

From 6 April, the statutory maternity, paternity and adoption pay rates will increase from £136.78 to £138.18.

Tribunal reform

Pre-claim conciliation

In an effort to get more workplace disputes resolved without the need for judicial intervention, from 6 April 2014, the majority of prospective claimants will be required to contact Acas before they can lodge proceedings at the employment tribunal.

While the aim is conciliation not litigation, the new requirement is merely to contact Acas, rather than actually take part in pre-claim conciliation. Once Acas has been contacted, the decision to participate in early conciliation will be entirely voluntary for both the employee and the employer.

Under the proposed two-stage process, a potential claimant will simply need to provide basic contact details. Details of the claim itself are not required. An Early Conciliation Support Officer (ECSO) will then make 'reasonable efforts' to contact the potential claimant to obtain basic information and outline the conciliation process. If the claimant does not wish to participate in early conciliation after being contacted or cannot be contacted (deemed refusal), Acas will issue a certificate confirming the claimant complied with their duty to contact Acas. They will then be able to present a claim to a tribunal.

Where the claimant does wish to participate in early conciliation, the ECSO will pass the matter to a conciliator, who will then contact both parties. If the respondent does not wish to participate, the conciliator will immediately issue the compliance certificate. If the respondent does agree, the conciliator will have up to one calendar month (which can be extended by a further two weeks) to facilitate a settlement.

Will this see a decrease in claims going to a tribunal? The theory of encouraging early resolution of disputes is laudable. Whether this is feasible in practice is more questionable. Resourcing of the increased role for an already stretched Acas is a concern. When unveiling the plans for the new process, Vince Cable indicated that the government had no plans to allocate additional funds to Acas for its expanded conciliation role. Mr Cable stated that "it is important that it is properly resourced... but we have had no warnings that it cannot handle the processes that we propose to introduce". A bit of wishful thinking perhaps?

Penalties

Under the Enterprise and Regulatory Reform Act 2013 (ERRA 2013), the government has the power to introduce financial penalties for employers who lose a tribunal claim. The penalty will be payable to the Exchequer not the claimant. The penalty will be half of the total award made by the tribunal, with a minimum threshold of £100 and a maximum ceiling of £5,000. A 50% reduction will be applied if paid within 21 days. It will be within a tribunal's discretion to waive the penalty in appropriate cases of inadvertent errors.

While there has been no official announcement, Jo Swinson (Minister for Employment Relations) has tweeted that this will be brought into force from 6 April 2014.

Tribunal fees

Tribunal fees became a reality on 29 July 2013. A historic change to the system that until then had been free for end-users. Basically, under the new fees regime, there are two main charging points: the first on issue of the claim; and the second prior to the hearing. The level of the fee depends on the nature of the claim.

Level 1 claims, covering disputes over matters such as unauthorised deductions from wages and unpaid redundancy payments, are now subject to a £160 issue fee and £230 hearing fee. Level 2 claims, which include claims for unfair dismissal, discrimination, equal pay claims and whistleblowing, will be subject to a £250 issue fee and £950 hearing fee. Additional fees also apply for some specific applications.

Even before fees were introduced, UNISON launched a judicial challenge to the legality of tribunal fees. UNISON argue:

  1. it is unlawful to introduce fees which make it prohibitively difficult to enforce European Community law; and
  2. the fees indirectly discriminate against women, who (typically) earn less than men.

We await the High Court's verdict, expected in early 2014.

Compensation rates

While there are exceptions, the most significant of which are discrimination and whistleblowing claims, for the most part the level of compensation that tribunals may award is subject to statutory limits. For instance, the maximum unfair dismissal basic award/statutory redundancy payment is currently £13,500 and the maximum unfair dismissal compensatory award is currently £74,200 with a new secondary 'individual' cap of 52 weeks' pay introduced in July 2013.

The rates are subject to an annual revision subject to a statutory formula. For years the date for the annual revision has been 1 February. However, changes contained in the Enterprise and Regulatory Reform Act 2013 change this. The date for the annual increase has been pushed back to 6 April, with a one off no revision for 2014. So no change until 6 April 2015.

Unfair dismissal

Gross misconduct

Will dismissal always fall within the range of reasonable responses where gross misconduct is found? In Brito-Babapulle v Ealing Hospital NHS Trust, the tribunal found the employee had been guilty of gross misconduct and the consequential dismissal therefore fair.

However, the EAT held the tribunal was wrong to go from a finding of gross misconduct to the proposition that dismissal must then inevitably fall within the range of reasonable responses as this gave no room for considering whether, though the misconduct was gross and dismissal almost inevitable, mitigating factors might mean that dismissal was not reasonable.

The Court of Appeal will consider this case later this year.

A fundamental right?

Is protection against unjustified dismissal a fundamental right of EU law? Article 30 of the Charter of Fundamental Rights of the EU provides "every worker has the right to protection against unjustified dismissal, in accordance with Union law and national laws and practices." How is this to be interpreted?

In a Hungarian reference, Sajtos v Budapest Fovaros, the CJEU has been asked "Does the right to protection against unjustified dismissal constitute a fundamental right ...to be regarded as a rule of primary law?"; the outcome may have consequences as to the scope of UK unfair dismissal protection.

Whistleblowing

More change to come

Public interest disclosures will continue to make headlines this year.

On the legislative front, the changes that came into force last summer marked a shift in emphasis away from the whistleblower's motivation towards the importance of public interest. Now we have a new 'public interest' requirement, removal of the good faith requirement (though still relevant to compensation awarded), vicarious liability for employers and a wider definition of 'worker'. But more change is likely to be announced this year.

We should soon have the government's response to last summer's further call for evidence on extending protection to cover 'blacklisting' of whistleblowers, extending the categories and methods of disclosure, and more controversially, the possible introduction of US style financial incentives to encourage whistleblowing. Add to this the Public Concern at Work recommendations which include calling for a statutory code of practice and for clarity that so called 'gagging clauses', whether made before, during or after employment has ended, do not preclude a worker from making a protected disclosure. So more to come!

On a case law front, it will be sometime before the first cases under the revised provisions make their way through the tribunal system. However, we anticipate that the removal of the 'good faith' requirement is likely to see a rise in arguments over causation. Will employers succeed in the argument that the worker had been dismissed not because of the disclosure itself, but because of the offensive, provocative or inappropriate manner in which it was made?

We also hope to get some judicial guidance on what 'public interest' actually means as it is not defined in the legislation.

Atypical workers

Loophole in protection for agency workers?

The Agency Workers Regulations (AWR) define an 'agency worker' as someone who is 'supplied by a temporary work agency to work temporarily for and under the supervision and direction of a hirer'. But what is the significance of the phrase 'to work temporarily'. At the end of last year the EAT in Moran and others v Ideal Cleaning Services Ltd held that the AWR only apply to workers supplied by a temporary work agency to work 'temporarily' for the end user. A temporary contract will be terminable upon a condition being satisfied, for example the expiry of a fixed period or the completion of a specific project. Therefore, those placed indefinitely (meaning open-ended in duration), are not placed 'temporarily' and are outside the scope of the AWR?

At the same time, it is now well established in case law that simply because an agency worker has worked for the same hirer for several years, this does not inevitably lead to an implied contract of employment being found. The question is one of necessity: is it necessary to imply a contract of employment to give effect to the business reality of the relationship between the worker and the hirer? Establishing 'necessity' is a very high hurdle to overcome. Outside of situations where the contractual arrangements are a sham, it is difficult to envisage situations in which it would be necessary to imply a contract where clear contractual documentation between the worker/agency and agency/hirer exists.

Leave to appeal is currently being sought from the Court of Appeal. Hopefully, we will get some clear guidance as to whether, once again, we have a significant proportion of agency workers without employment rights.

Zero hour contracts

You would be forgiven for thinking that zero-hour contracts were a new type of contract that place employees at the mercy of their unscrupulous employers, given the controversy they have caused in the news this month. But it is potential 'misuse' rather than 'use' of such contracts which has led to the current controversy.

The recent publicity over potential abuses has led to a government consultation which runs to 13 March. The consultation identifies the two main concerns posed by zero hour contracts:

Firstly, exclusivity clauses. Some, but not all, zero hour contracts include an exclusivity clause preventing the worker from working for another employer while engaged under the zero hours contract. The government recognises that some exclusivity clauses may be justifiable, but the reason for it is not always made clear. As such the government is seeking views on whether to:

  • ban the use of exclusivity clauses in contracts that offer no guarantee of work;
  • issue guidance on the fair use of exclusivity clauses;
  • produce an employer-led code of practice on best practice, with possible government endorsement; or
  • rely on workers' existing common law rights to challenge restrictive covenants in the courts.

Another issue is a general lack of transparency. To improve transparency, the government is seeking views on whether to:

  • improve the content and accessibility of government information and guidance on employment rights and benefits for zero hours workers;
  • encourage an employer-led code of practice on the fair use of zero hour contracts, with possible government endorsement; or
  • produce model clauses for zero hour contracts.

NOT LEGAL ADVICE. Information made available on this website in any form is for information purposes only. It is not, and should not be taken as, legal advice. You should not rely on, or take or fail to take any action based upon this information. Never disregard professional legal advice or delay in seeking legal advice because of something you have read on this website. Gowling WLG professionals will be pleased to discuss resolutions to specific legal concerns you may have.