Our first 2020 Employment Essentials insight is here. Gowling WLG's employment, labour & equalities experts bring you the latest top five employment law developments that may affect your business:

  1. Unfair dismissal: what the employer is deemed to know
  2. Unfair dismissal: risk of reputational damage of employee facing criminal charges
  3. Disability discrimination: guidance on meaning of provision, criterion or practice (PCP)
  4. Disability discrimination: Disability must be established at date of each discriminatory act relied on
  5. National minimum wage (NMW): reforms to 'salaried hours work'

1. Unfair dismissal: what the employer is deemed to know

To establish that a dismissal is fair, the employer must establish that it (1) dismissed for a potentially fair reason and (2) it acted reasonably in treating the reason as sufficient to justify dismissal.

When identifying the reason for a dismissal, courts generally only need to look at the reason(s) of the appointed decision-maker. In most cases, it is the mental processes of the person or persons who was or were authorised to, and did, take the decision to dismiss that are relevant. However, at the end of last year, the Supreme Court in Royal Mail Group v Jhuti [2019] UKSC 55 confirmed that the employer will be liable for the reasons of any manipulator in the "hierarchy of responsibility above the employee" even where that reason is hidden from the decision maker.

The improper actions or motive of a line manager will therefore be attributed to the employer. In other words, if a line manager determines that an employee should be dismissed for one reason (for example, whistleblowing or trade union activities), but hides it behind an invented reason (for example, poor performance) which the decision-maker adopts, the reason for the dismissal is the hidden (unfair) reason rather than the fair invented reason (the 'attribution principle').

But does the attribution principle also apply in relation to the second part of the unfair dismissal test of "acted reasonably in treating the reason as sufficient to justify dismissal"? The Employment Appeal Tribunal (EAT) in Uddin v London Borough of Ealing has answered - YES. The principle set down in Jhuti applies not only to attribution of knowledge as to the reason for dismissal but equally applies for the purpose of assessing whether the employer acted reasonably in dismissing.

In this case, Mr Uddin, a deputy team leader in the family intervention programme, was dismissed for alleged sexual misconduct. The dismissing officer, Mrs Fair (yes that is her real name) considered the investigating officer's (Mr Jenkins) report. In taking the decision to dismiss, Mrs Fair placed weight on the reference in the report to the alleged victim having made a police report. Shortly after Mr Jenkins submitted his report, he was made aware that following police questioning, the alleged victim withdrew her allegation to the police as she "didn't realise it would be so griefy and that she felt pressured by the council/Mr Jenkins". Mr Jenkins failed to pass that information on to Mrs Fair.

The EAT concluded that Mr Jenkins' involvement in the dismissal process did not end with the presentation of his investigation report and recommendations. The fact that he knew that the alleged victim had withdrawn her allegations (and why) and that Ms Fair took her decision in ignorance of this was something the tribunal should have considered when determining whether the employer acted reasonably in treating the reason as sufficient to justify dismissal. As a result, the employee had been unfairly dismissed.

Lessons for employers:

  1. The scope of information that will be deemed known (attributed to) to the employer when making a decision to dismiss is wide. The EAT's decision has applied the reasoning in Jhuti to circumstances in which a failure to provide accurate and up-to-date information undermined the dismissing manager's ability to consider the true position rather than manipulation. The motivation of the investigating officer was not explored or considered to be relevant.
  2. Those involved from the beginning to the end of a disciplinary process must ensure that the information that they provide is and remains accurate, particularly a process in which the employee's reputation or ability to work in their chosen field of employment is potentially affected. Where new relevant information becomes known after the investigating officer has submitted their report, it cannot simply be ignored.
  3. Employers should review policies and training, especially for managers, on investigations, disciplinary hearings and dealing with allegations from an employee of any wrongdoing on behalf of the employer or a manager.

2. Unfair dismissal: risk of reputational damage of employee facing criminal charges

Employers can face tricky decisions where an employee is charged with criminal offences committed away from work. The Acas Code of Practice on Disciplinary Practice and Procedures states:

"These [offences] should not be treated as automatic reasons for dismissal regardless of whether the offence has any relevance to the duties of the individual as an employee. The main considerations should be whether the offence is one that makes the individual unsuitable for his or her type of work or unacceptable to other employees. Employees should not be dismissed solely because a charge against them is pending or because they are absent through having been in custody."

Can an employer dismiss an employee charged with a criminal offence when their continued employment poses a risk to the employer's reputation? Potentially yes.

In Lafferty v Nuffield Health, the EAT confirmed an employee was fairly dismissed for some other substantial reason (SOSR) given the potential reputational risk to his employer, a registered not-for-profit charity, when he was charged with a serious criminal offence.

In this case, the employee was a hospital porter whose role included transporting anaesthetised (and therefore vulnerable) patients to and from theatre. He was charged with assault with intent to rape on 17 February. The employee was initially suspended on full pay on 22 February.

Given the nature of the charges and the employee's role in working with vulnerable patients, the hospital manager believed it would not be appropriate for the employee to return to work until after his trial leaving him with two options: (1) to suspend him on full pay or (2) dismiss him. As at 9 March, there was no information on the timing of a trial, meaning any period of suspension would be open-ended. In deciding to dismiss the employee due to the potential risk to the charity's reputation, the employer took into account:

  • An open-ended commitment to suspend on full pay would not be a proper use of charitable funds.
  • Guidance from the Charity Commission on the risks of reputational damage.

(Note: several months later the employee was acquitted of the criminal charges.)

The EAT upheld the tribunal judgment that the employer had established a fair reason for dismissal. The potential reputational risk was not trivial and had been identified by experienced managers who genuinely believed that it existed. SOSR had been established.

In addition, the employer acted reasonably in treating the SOSR as sufficient reason to dismiss. The employer had conducted a fair investigation. There had not been a "knee jerk" reaction on its part. The employee had not been dismissed because of a belief that he was guilty of the offence with which he had been charged but because of the adverse effect the fact of the charge could have on the employer's reputation. An investigation in those circumstances would be justifiably more limited.

In this case, given the employer's charitable status and the scrutiny that charities face in relation to such matters, the decision that suspension on full pay was not an option also fell within the band of reasonable responses.

Lessons for employers:

  • An employer may potentially fairly dismiss for SOSR when continued employment of an employee poses a genuine risk to its reputation.
  • As ever it will depend on the circumstances of the case. Factors to be taken into account include the nature of the offence, the nature of the employee's work, the position of the employee, and the extent to which the work involves contact with members of the public, particularly children and vulnerable adults.
  • The nature of the employer will also be important. In this case the charitable status of the employer was an important factor. For large employers, alternatives such redeployment should first be considered.

3. Disability Discrimination: guidance on meaning of provision, criterion or practice (PCP)

PCPs are an essential element for indirect discrimination and some claims for a failure to make reasonable adjustments. For a disabled employee to establish these types of claims, they must establish that there was a PCP that put them at a particular or substantial disadvantage when compared to people who are not disabled.

'PCP' is construed widely potentially including formal and informal practices, policies and arrangements and in certain cases may include one-off decisions.

The Court of Appeal in Ishola v Transport for London, has now clarified when a one-off decision may be considered a PCP stating:

  • The concept of a PCP does not apply to every act of unfair treatment of a particular employee.
  • To test whether the PCP is discriminatory or not it must be capable of being applied to others.
  • Although a one-off decision or act can be a practice, it is not necessarily one.
  • The words 'provision, criterion or practice' all carry the connotation of a state of affairs indicating how similar cases are (1) generally treated or (2) how a similar case would be treated if it occurred again.

The Court of Appeal provide examples from earlier cases to demonstrate how a single decision or act by an employer may fall on either one side or another of the line:

  • an incorrect application of the employer's disciplinary process to an individual's case, in circumstances where there was nothing to suggest that the employer made a practice of holding hearings in that unfair way, would not be a practice as there is nothing to indicate that a hypothetical comparator would (in future) be treated in the same incorrect way.
  • a decision not to allow a certain part-time working pattern, which is likely to be repeated if requested by others, could be a practice.

In this case, the disabled employee complained of a failure to fully investigate a particular grievance. This was in the context of an uncooperative disabled employee for whom the employer had dealt with a number of previous grievances raised properly. It was only the last grievance that had not been fully investigated due to the that grievance having been raised only shortly before the sickness absence review meeting which had already been rescheduled several times due to the lack of cooperation from the disabled employee.

In the circumstances of this case, there was no evidence or finding that the employer's failure to investigate grievances before the employee's capability dismissal hearing was the way things were generally done or would be done in the future. This was a one-off act in the course of dealings with the particular employee. As such, no PCP was made out.

Lessons for Employers:

  1. Useful guidance on what is meant by a 'provision, criterion or practice' and specifically the circumstances in which a one-off act or decision can correctly be categorised as a 'practice'
  2. A PCP will not be established in relation to a one-off act in an individual case where there is no indication that the decision would apply in future. To amount to a PCP there must be a state of affairs indicating how similar cases are generally treated or how they will be treated in the future.

4. Disability Discrimination: Disability must be established at date of each discriminatory act relied on

Under section 6(1) of the Equality Act 2010 (EqA), a person is disabled if they have a physical or mental impairment and the impairment has a substantial and long-term adverse effect on their ability to carry out normal day-to-day activities.

Under Schedule 1 paragraph 2(1) EqA, the effect of an impairment is "long-term" if:

  1. it has lasted at least 12 months, or
  2. it is likely to last at least 12 months, or
  3. it is likely to last for the rest of the life of the person affected.

In Tesco Stores v Tennant, the EAT reminds us that it is for the claimant to establish that they are disabled and the importance of whether they are relying on Schedule 1 paragraph 2(1)(a) or 2(1)(b) or 2(1)(c).

In this case, the employee was off sick for extended periods as a result of depression. The tribunal held the employee's depression was an impairment which had a substantial, adverse effect on the claimant's ability to carry out day to day activities from 6 September 2016 and that it was long term under para 2(1)(a) - "has lasted at least 12 months".

On appeal, the employer argued that as disability was only established under para 2(1)(a), the claimant did not meet the required definition of disabled until 6 September 2017 not 2016. Accordingly, the claimant was not protected in respect of any allegedly discriminatory acts before that date.

Allowing the appeal, the EAT confirmed that a disability must have long-term effect at the time that the alleged acts of discrimination are committed. Therefore, if the claimant's condition has not lasted at least 12 months at the time of the alleged discriminatory act (or, if there is more than one act, at the time of each act), the claimant will not meet the definition of disability relying on para 2(1)(a). They will only meet the definition of disability if they can instead show that at the time of the alleged discriminatory act (or acts), their condition was likely to last 12 months or for the rest of their life under paras 2(1)(b) or (c) - something the claimant did not do in this case.

Lessons for employers

  • It is for the claimant to establish that they are disabled.
  • Whether or not the substantial adverse effect is likely to recur must be judged by assessing the evidence available at the time of the alleged discrimination.
  • It is irrelevant to consider what in fact happened subsequently. The fact that a condition has, since the date of the alleged discrimination, lasted for 12 months is not relevant to the question whether these eventualities were likely at the time of the alleged discrimination.
  • A tribunal must perform the hypothetical and artificial act of determining what the prognosis would have been in the light of the information available at the time of the act of discrimination. The tribunal can consider medical evidence obtained after the event but only if it relates to circumstances at the time.

Illustrative examples:

  1. A has been suffering with depression for six months when A issues a disability discrimination claim. The hearing does not take place for more than a year. At the time of the hearing, A has suffered from depression for more than 12 months. At the hearing, a doctor gives evidence that, at the time of the alleged discrimination, A's depression was unlikely to last for 12 months (even though, in the event, it did). In such a case, A would be held not to have been disabled at the material time.
  2. B has been off work with severe depression and anxiety for six months when B issues a disability discrimination claim. The medical reports at the time the condition arose indicate the condition is likely to last for 12 months or more. B then makes an unexpected swift recovery before the illness has lasted 12 months and before the hearing. In those circumstances, a tribunal could find that B was disabled at the time of the alleged act of discrimination, because at that time it was likely that the condition would last for 12 months or more.

5. National minimum wage: reforms to 'salaried hours work'

Back in December 2018, the Government consulted on the impact of the NMW rules on salary sacrifice schemes, in particular whether employers were withdrawing savings schemes from low-paid workers in order to avoid non-compliance with the NMW.

The Government has now published its Response and draft regulations. Three substantive legislative changes will be made to the existing NMW regulations to ease administration of the NMW rules.

The changes, expected to come into force on 6 April 2020, are:

  1. Pay cycles: to allow salaried hours workers to be paid in additional equal instalments, such as fortnightly or four-weekly (currently to be a 'salaried worker' you must be paid weekly or monthly).
  2. Calculation year: to give employers the ability to choose a single calculation year for their workers (currently the relevant calculation year depends on the individual worker's start date).
  3. Salaried work pay premia: to allow employers to make premium payments to their salaried hours workers in respect of basic hours, and to allow salaried hours workers' contracts to specify these premium pay arrangements. These payments will not form part of the workers' remuneration for calculating NMW (currently if a workers is entitled to premium pay for working particular days such as Bank Holidays or particular hours then they cannot be classed as salaried workers).

As regards salary sacrifice schemes, the regulations will not be amended as many employers had hoped. Instead, some enforcement leeway will be given if a breach of the NMW is due to the operation of an eligible salary sacrifice scheme. Uniform payments or deductions for other items connected with employment will continue to be penalised.

From April 2020 employers offering salary sacrifice and deductions schemes will no longer be fined if the scheme brings payment below the national minimum wage rate, subject to strict eligibility criteria to include that the worker has opted into the scheme and not been forced into it by their employer.

Naming & shaming back

The NMW Naming scheme, suspended since July 2018, will also be back. Under the revamped scheme, the threshold has risen so that only employers who owe £500 of arrears will be named. Previously, the threshold was £100. Businesses who underpay by less than £500 will have the chance to correct their mistakes without being named, but will still have to reimburse workers and pay the associated fines. The updated enforcement guidance also provides further background on when HMRC may consider permitting self-correction in general. In addition, the government will provide more information on causes of breaches, publish an educational bulletin for employers highlighting common reasons for underpayment, and name employers more frequently.

An employer will be referred to the Department for Business, Energy and Industrial Strategy (BEIS) for naming immediately upon commencing recovery action if no appeal has been made and an employer fails to pay - and not, as previously, when the court or tribunal action is complete. Where an employer is referred to , the guidance now confirms that any public interest argument the employer should not be named will be considered very restrictively.