Employment Law 2015 Preview Part 1: ...and a new one just begun

02 February 2015


As the next General Election fast approaches, we begin 2015 with a flurry of legislative amendments. The current Coalition Government is busy putting into place the remaining pieces to the employment law reform jigsaw, following its Employment Law Review launched back in 2011. Some new pieces have attracted urgent attention, such as historic holiday pay claims.

We are in the dawn of the most extensive reshaping of the existing maternity, paternity and adoption leave provisions for decades, beginning with a flagship change: the introduction of shared parental leave. Sitting alongside existing family leave rights, eligible parents will be able to share the care of their child during the first year after birth or adoption by the mother/adopter returning to work or curtailing maternity/adoption leave. Will this prove to be an important push in changing social attitudes towards the sharing of childcare responsibilities? Time and take up will tell.

The courts are expected to hand down significant judgments this year concerning collective redundancy consultation, sickness absence and agency workers. We also expect to see more case law and legislative developments on the current 'hot topics' of holiday pay, zero hours contracts and tribunal fees.

In part 1 of our Employment Law 2015 preview, "and a new one just begun" we look at the anticipated legislative and judicial trends for 2015. In part 2, "election year look ahead", we will add into the mix the uncertainty of the General Election and look at some of the political party proposals.

Employment Law Reform Jigsaw 2015: at a glance

5 January: Ban of "overseas only" recruitment by employment agencies
8 January: The Deduction from Wages (Limitation) Regulations 2014 (SI 2014/3322) in force
5 April:

Statutory maternity, paternity, adoption and shared parental leave pay rates increase from £138.18 to £139.58

Shared parental leave fully in force for parents of children born or matched for adoption on or after 5 April 2015

Abolition of Additional Paternity Leave

Removal of 26 week qualifying service period for adoption leave

Revision of Statutory Adoption Pay to mirror Statutory Maternity Pay

Right to attend 'adoption appointments'

Extension of adoption leave and pay to surrogacy, 'foster to adopt' arrangements and overseas adoptions

The period for taking unpaid parental leave extended until child's 18th birthday

6 April:

Statutory sick pay rate increase from £87.55 to £88.45

National Minimum Wage (Consolidation) Regulations in force

Annual revision of tribunal statutory compensation limits

Removal of Employment Tribunal's power to make wider recommendations in successful discrimination claims*

Student nurses and student midwives to have whistleblowing protection

May: Fit for Work service to be fully in operation
1 July: Two-year cap on back pay claims for most unlawful deduction of wages claim
Sept/Oct 2015: Employer-supported childcare voucher schemes closed to new participants and new tax free childcare scheme introduced
1 October:

Regulation of zero hours contracts with ban on exclusivity clauses*

Penalties for non-payment of tribunal awards and limits placed on tribunal postponements*

Increased penalty for underpayment of national minimum wage*

Whistleblowing annual reporting by 'prescribed persons'*

*Subject to legislation being passed before the end of Parliament and being implemented by the new government.

2015 Cases to look out for: at a glance

Holiday Pay:

  • Lock v British Gas Trading Ltd (commission payments)
  • Sash Window Workshop Ltd v King (loss for untaken leave where right to leave denied)

Collective redundancy consultation

  • Usdaw v Ethel Austin Ltd (number of redundancies for triggering collective consultation)
  • Lyttle and others v Bluebird (number of redundancies for triggering collective consultation)
  • Rabal Cañas v Nexea Gestión Documental (meaning of 'redundancy')
  • USA v Nolan (meaning of 'proposing to dismiss')

Trade unions

  • R (on the application of Boots Management Services Ltd) v CAC (statutory recognition)

Tribunal fees

  • R (on the application of Unison) v Lord Chancellor and another (legality of fees)

Agency Workers

  • Moran v Ideal Cleaning Services Ltd and another (scope of protection)
  • Coles v Ministry of Defence (opportunity to find permanent employment)

Disability discrimination

  • Houghton v Land Registry (sickness absence policy triggers)
  • Griffiths v Secretary of State for Work and Pensions (sickness absence policy triggers)

TUPE

  • Rynda v Rhijinsbuger (temporary assignment)
  • BT Managed Services Ltd v Edwards (employees on permanent sick leave)

Equal pay

  • Brierley and others v Asda Stores Ltd (work of equal value claim)

Age discrimination

  • Harrod and others v Chief Constable of West Midlands Police and others (objective justification)

Unfair dismissal

  • Shrestha v Genesis Housing Association (reasonable investigation)
  • Ngwenya v Cardinal Newman Catholic School (consistency of treatment)

Working time

Holiday pay

The hot topic of what constitutes 'normal remuneration' for calculating holiday pay continues to feature in 2015.

Following much highly publicised case law, workers are entitled to receive 'normal pay' when on the first four weeks of holiday leave. "Normal pay is that which is normally received". This includes guaranteed and regularly worked non-guaranteed overtime. In the case of non-guaranteed overtime, focusing on whether overtime is or isn't 'voluntary' is unhelpful. The key is regular receipt. Likewise, commission that is regularly earned must also be included.

As it was previously believed that commission and non-guaranteed overtime did not need to be included, employers face potential back claims which, depending on the size and nature of the workforce, could amount to very significant sums.

Recognising the potential cost employers face for back claims, the Government quickly introduced the Deduction from Wages (Limitation) Regulations 2014, which came into force on 8 January. These regulations will impose a two-year backstop period on most unlawful deduction of wages claims presented on or after 1 July 2015, including claims for holiday pay.

The new regulations also clarify that the Working Time Regulations 1998 do not confer a contractual right to paid holiday leave. This severely limits the possibility of bringing holiday pay claims as breach of contract claims in the civil courts, where a six-year limitation period instead applies.

A point to bear in mind is that the new regulations affect deduction of wages claims generally, not only holiday pay cases, with the exception of statutory sick pay, statutory maternity pay (and other similar family leave payments), guarantee payments or protective awards.

As the new backstop period does not kick in until 1 July, claims for underpayment of holiday pay are expected to peak during the first half of 2015. We also anticipate satellite litigation on how underpayments should be calculated. We await the next instalment in Lock v British Gas Trading Ltd.

In that case, the Court of Justice of the European Union (CJEU) ruled that commission, which couldn't be earned due to a worker being on holiday, must be taken into account in the subsequent pay period. But how you actually work out what the commission sum would have been where commission fluctuates from month to month is not easy. We await the employment tribunal's determination on this point later this year.

While the issue of back claims for underpayment of holiday pay has attracted swift legislative reform, reform on the carry over provisions remains in the "too tricky" pile. In 2011 the Coalition Government set out plans to make the much needed reform which arose following European case law on the inter-relationship between annual leave and sickness absence leave.

The proposals also addressed a default order for the taking of regulation 13 v regulation 13A leave - an important distinction for not only the sickness absence cases but also the overtime/commission pay cases. Perhaps 2015 will see the revival of the still-needed 2011 proposed reforms.

Holiday pay underpayment claims also arise where employers have wrongly classed an individual as an independent contractor, therefore denying any right to take paid holiday. If the individual continues to work rather than take unpaid holiday leave, what is the breach and loss? Arguably, the breach is refusal to permit the exercise of a statutory right rather than unpaid wages. The tribunal in Sash Window Workshop Ltd v King will be reconsidering this question later this year, subject to a pending appeal to the Court of Appeal.

Working Time Directive

The European Commission is making another attempt to revise the Working Time Directive this year. Like the 2003 hard-fought attempt scuppered by the European Parliament in 2009 and the failed 2010 attempt, the reforms centre on restricting the 48 hour working week opt out, the definition of "on-call" working time and reference periods for calculating average time.

Will it be third lucky for the persistent European Commission? We wait and see. The online public consultation runs until 15 March.

Family-friendly leave

Shared parental leave

The reshaping of family-friendly leave is here! Parents of children due to be born/adopted on or after 5 April can choose to opt into the new system of shared parental leave (SPL). Will this prove to be the start of a historic shift in social attitudes to the sharing of childcare responsibilities?

A survey published in January by the Department for Business, Innovation and Skills (BIS) suggests maybe. Of the 2,100 people surveyed, 53% of respondents thought that childcare should be shared equally between parents with a higher percentage of men than women (56% compared with 50%) taking this view. Of those considering parenthood in the future, 83% said they would consider taking SPL.

While the new system has complex notification requirements, it also has potentially wide eligibility criteria. Eligibility is not limited to where both parents are employees. For example, an employed father may, in some circumstances, qualify for SPL where the mother is self-employed and in receipt of maternity allowance. The potential flexibility of when the leave may be taken, including concurrently, may make the leave an attractive choice for many.

Will SPL take up rates prove higher than under the outgoing additional paternity leave system? The key will no doubt be financial viability for the family. As more employers offer enhanced contractual pay to those taking SPL, mirroring enhancements already offered in respect of maternity leave, we may indeed see increased take up. Only time will tell if we are at the dawn of a new social era.

Adoption leave and pay

Also moving with the times, from 5 April statutory adoption leave pay will be increased to mirror statutory maternity pay. This means that those on statutory adoption leave will receive 90 per cent of their average weekly earnings (with no upper limit) for the first six weeks, with the remaining 33 weeks paid at the statutory rate. The eligibility requirements for statutory adoption leave are being amended to mirror those for maternity leave, with the removal of the 26-week qualifying service period. In addition, eligibility for adoption leave and pay will be extended to 'foster to adopt' arrangements, intended parents of children born via a surrogacy arrangement, and overseas adoptions.

Unpaid parental leave

Not to be overlooked, the time period within which each parent can take up to 18 weeks' unpaid parental leave is being extended. From 5 April, it may be taken any time up to the child's 18th, rather than 5th, birthday. It remains the case that no more than four weeks' leave can be taken in any one year and leave must be taken in one-week blocks, unless the child is disabled.

Statutory pay rates

From 5 April, the statutory maternity, paternity, shared parental and adoption pay rates will be £139.58 per week.

Collectivism

Collective redundancy consultation

Hopefully, 2015 will bring the answer to two important questions on collective redundancy consultation triggers.

Question 1 concerns the number of redundancies required to trigger collective consultation. Is it 20 or more redundancies at one establishment or 20 or more across the employer's business as a whole? We should have an indication of the answer in early February.

The Advocate General's Opinion in the Woolworths litigation and Lyttle v Bluebird will be handed down on 5 February on this very question. The Advocate General's role within the CJEU is only advisory. We shall have to wait for the Court's judgment for a definitive view as, while the full judgment is likely to be largely in line with that of the Advocate General, it is by no means a certainty.

Question 2 concerns the point in the decision-making process at which collective consultation obligations are triggered. At what point does the employer "propose" redundancies? The Supreme Court will hear the long-running jurisdictional challenge in the case of USA v Nolan in mid-July. Should the Supreme Court agree with the Court of Appeal that the UK courts do have jurisdiction to hear this particular case, we will take a step closer to finally resolving the substantive issue around trigger points for site closures.

The CJEU is also expected to give guidance as to the meaning of "dismissals effected by an employer for one or more reasons not related to the individual worker concerned" in Rabal Cañas v Nexea Gestión Documental.

Trade unions

Whether we will see new restrictions on industrial action proposed by the Conservatives is dependent on the outcome of the General Election. What we will have this year is Court of Appeal guidance on the use of so-called '"sweetheart" unions.

Last year in R (on the application of Boots Management Services Ltd) v CAC, the Employment Appeal Tribunal (EAT) held that an existing agreement with a union to collectively consult over facilities for union officials and consultation machinery blocked another union's application for statutory recognition. It made no difference that the existing agreement expressly excluded bargaining on matters to do with working conditions, terms of employment, hours, pay and holiday. The Court of Appeal is due to consider an appeal in this case later this year.

Employment tribunals

Tribunal fees

Following the introduction of tribunal fees at the end of July 2013, we have seen a very significant decrease in the number of tribunal claims. Unison has now failed in its challenge to the introduction of fees in the High Court twice. However, an appeal to the Court of Appeal is currently pending and so the story is not over yet.

While claims have fallen, a new feature of every case is now who ultimately pays the fees. The general expectation is that a successful party will be entitled to recover fees paid. This is not always straightforward. What happens where a party is only partially successful? Where an appeal to the EAT is involved, is remission back to the tribunal for clarification a successful appeal? In such cases, only partial recovery of fees is likely with the proportion varying on a case by case basis.

Tribunal penalties

Last year, the tribunals were given the power to impose a financial penalty on employers where it is found that they have breached a worker's rights and that breach has "one or more aggravating features. Penalties are payable to the Exchequer and largely viewed as a way to get employers who breach employment laws to contribute to the financial cost of running the tribunal service. However, in the eight months following their introduction, no such penalties have been ordered.

This year employers who fail to pay employment tribunal awards or sums due under a settlement agreement following ACAS conciliation, may have a non-payment penalty imposed upon them.

Subject to the Small Business, Enterprise and Employment Bill being passed before Parliament dissolves, an enforcement officer will be able to impose a financial penalty of 50% of the unpaid award subject to a minimum of £100 and maximum of £5,000. Again, penalties will be payable to the Exchequer.

The new non-payment penalties are expected to be brought into force in October. It is anticipated that enforcement officers will be far less reluctant to exercise their new power than the employment judges appear to have been.

Acas Code of Practice on Discipline and Grievance

On 16 January, Acas published a draft revised Code of Practice on Disciplinary and Grievance Procedures clarifying itsguidance on the right to be accompanied. The Code confirms that an employer must agree to a worker's request to be accompanied by any chosen companion from one of the statutory categories, namely a fellow worker, trade union representative or official.

The statutory requirement for the worker's request to be "reasonable" applies to the making of the request, not to the worker's choice of companion. Acas has also inserted guidance to the effect that a worker can change their chosen companion if they wish, and can do so without waiving their right to change their choice again.

The revised Code is currently awaiting Parliamentary approval. In addition, Vince Cable has called upon Acas to carry out a review of the Code of Practice as a whole.

Atypical workers

Zero hours contracts

Zero hours contracts (ZHC) have attracted much bad press in recent times. Are ZHCs a social blight on the employment landscape that needs to be expunged? If so, what should be done?

Contracts falling under the zero hours label can be very varied. ZHCs in and of themselves are not inherently bad. In some scenarios they can work very well for both employer and worker. It is the potential misuse of such contracts that has resulted in the current social concerns.

The use of "exclusivity clauses" has caused much of the concern and is the feature of this type of arrangement being tackled by legislation this year. Under the Small Business, Enterprise and Employment Bill expected to be passed before Parliament dissolves on 30 March, all exclusivity clauses contained in ZHCs will be unenforceable.

How quickly the new ban will be in force (possibly October) and other potential restrictions yet to be announced will depend on the outcome of the General Election.

Agency workers

The Agency Workers Regulations 2010 (AWR) have so far resulted in very little appellate level case law. 2015 will feature the first Court of Appeal consideration. In Moran v Ideal Cleaning Services Ltd, the Court will consider the scope of those protected under the AWR.

The EAT held that workers are afforded protection only if they are supplied by a temporary work agency to work "temporarily" for the end user. The controversial EAT decision suggests that any agency worker placed "indefinitely" at the outset of an assignment would fail the "temporary" test. The case is expected to be heard sometime in the summer. A reference to the CJEU is likely.

The EAT is due to consider the scope of the obligation on hirers to provide agency workers with information about permanent vacancies and to give them the same opportunity as permanent workers to find permanent employment. In Coles v MoD, the tribunal found the obligation did not extend to equality of opportunity during the selection process with internal applicants who are permanent employees.

Sickness absence

Fit for Work Service

The first phase of the Fit for Work service was launched at the end of 2014, with the aim of providing occupational health assessments to assist employees to return to work where absent for four weeks or more. The Service will provide online and telephone advice. In addition a 'referral' service will offer free occupational health assessments (usually over the telephone) with return to work plans for employees who have been or expect to be absent for four weeks or more.

We begin the year with employees and employers able to obtain "free, expert and impartial work-related health advice" via the new website and telephone advice line and the referral service expected to be fully up and running from May.

Statutory sick pay rate

From 6 April, the statutory sick pay rate will increase from £87.55 to £88.45 per week.

Disability discrimination

Managing sickness absence is a notoriously tricky area for employers, particularly when dealing with disabled employees, who may require more time off than others. The application, without modification, of an employer's sickness absence procedure to a disabled employee may give rise to a discrimination claim, but to what extent are employers obliged to make adjustments to those procedures? Hopefully we will receive some much need judicial guidance on this tricky area this year.

In January, the EAT heard the case of Houghton v Land Registry. In this case, the original tribunal upheld claims for discrimination arising from disability. The claimants had each received a formal warning as a result of a number of disability-related sickness absences. This had the knock on effect of excluding them from an annual corporate bonus. The tribunal found the employer had failed to show justification for the unfavourable treatment. Judgment is expected soon.

In February, the Court of Appeal is due to hear the appeal in Griffiths v Secretary of State for Work and Pensions concerning triggers in an attendance policy. The EAT held that an employer's duty to make reasonable adjustments for a disabled person does not extend to disregarding the absence triggers in its attendance policy.

Transfer of undertakings

Who is 'assigned' to the 'organised grouping' being transferred under a service provision change? Like last year, it featured in a number of cases concerning managerial roles, and is likely to be a recurring issue. .

This year, the Court of Appeal will consider whether an employee's "assignment" to a single contract was temporary, as her duties had been reduced on her return to work following illness due to work-related stress. (Rynda v Rhijinsbuger).

In BT Managed Services Ltd v Edwards, the EAT will consider whether an employee on permanent sickness absence and in receipt of Permanent Health Insurance payments was assigned to a grouping of employees that transferred. We wait to see if the EAT agrees with the tribunal that once it was contemplated that the employee would no longer provide work for the organised grouping, he ceased to be assigned to that grouping.

Equality

Discrimination recommendations

Employment tribunals' power to make wider recommendations in discrimination cases for the benefit of the workforce as a whole is expected to be abolished from 6 April, subject to the passage of the Deregulation Bill. Despite this power having been used on a number of occasions since 2011, the Government views it as unnecessary.

While removing the wider recommendations provision introduced by the Equality Act 2010, the more longstanding power to make recommendations for the benefit of an individual claimant remains.

Equal Pay

The gender pay gap will continue to attract headlines. The World Economic Forum's "Global Gender Gap Report 2014" revealed that the UK has slipped from 18th to 26th in the world ranking of gender equality, with the average woman earning £18,000 annually compared with £24,800 for the average man.

Large-scale equal pay claims have been the predominant issue faced by public sector employers for several years now. Traditionally the reserve of public-sector workers, are things about to change? We now have a high profile private sector claim in Brierley v Asda Stores Ltd. The Manchester Employment Tribunal will shortly begin hearing a claim by 400 female floor staff seeking equal pay with male distribution centre staff.

It will also be interesting to see if the tribunals will use their new power to order equal pay audits. Since October last year, where a tribunal makes an order against an employer in an equal pay claim, it must, subject to certain exemptions, require the employer to conduct an equal pay audit and publish the results to its employees and online.

Age Discrimination

Was the compulsory retirement of large numbers of serving police officers following budget cuts, albeit directly age discriminatory, nevertheless lawful as objectively justified? In Harrod and others v Chief Constable of West Midlands Police and others, the tribunal found that while the aim of increasing efficiency was a legitimate aim, the compulsory retirements were not objectively justified as the police forces had not adequately considered less discriminatory alternatives. The Employment Appeal Tribunal will consider the issue in March.

Wages

National Minimum Wage

The National Minimum Wage (Consolidation) Regulations are expected to come into force on 6 April 2015, consolidating and simplifying the extensive raft of regulations currently in place.

We began the year with the Government "naming and shaming" 37 employers who failed to pay their workers the national minimum wage. The penalty for underpayment of the national minimum wage is expected to increase in late 2015, possibly October. The maximum financial penalty will increase from £20,000 per notice irrespective of the number of underpaid workers, to £20,000 per underpaid worker.

Unfair dismissal

Whistleblowing

Whistleblowing claims will continue to be a regular feature of many tribunal unfair dismissal cases. Under the Small Business, Enterprise and Employment Bill, the Government will be given the power to require 'prescribed persons', to whom whistleblowing disclosures can be made, to report annually on the disclosures they receive. A consultation is expected later this year on the nature and extent of the reporting to be required.

In the meantime, the list of 'prescribed persons' will continue to grow, as does the list of those classed as "workers". Student nurses and student midwives will be added to those protected from 6 April.

Reasonable investigation

For a dismissal to be fair, the employer must have a fair reason for dismissal and must have acted reasonably in treating that reason as sufficient to justify dismissal. In February, the Court of Appeal will consider whether the obligation to conduct a reasonable investigation means an employer must investigate every aspect of an employee's defence to a charge of misconduct. Can the employer decide something is too implausible to investigate? (Shrestha v Genesis Housing Association).

Consistency of treatment

In relation to the fairness of a misconduct dismissal, tribunals will have regard to inconsistency of treatment. Broadly, employers should consider the level of sanction that has been imposed on other employees in the company in similar circumstances and act consistently with previous decisions, unless there are material differences.

In March, the EAT will consider whether the concept of inconsistency of treatment applies in cases where the ground for dismissal is a breakdown of trust and confidence amounting to some other substantial reason for dismissal (Ngwenya v Cardinal Newman Catholic School).

The virtual world

Dismissal for social media misuse will continue to be a regular feature of unfair dismissal claims. A key feature will continue to be whether statements made via social media are viewed as "public" or "private".

Is twitter always 'public' (Game Retail v Laws)? To what extent does the privacy setting on Facebook make a difference? Does the fleeting nature of Snapchat make a difference? What about LinkedIn? The nuances of the various forms of social media are likely to add a new twist.


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