Employment Essentials July 2022: Employment law top 10 recent developments

27 minute read
25 July 2022

In our latest Employment Essentials article, we share our top picks of recent employment law developments that may affect your business.

This month, our top 10 picks are:

Case law updates

  1. Fire and rehire - untying the employer's hands
  2. Unlawful inducement - when has collective bargaining concluded?
  3. Holiday pay - holidays for term-time only workers not subject to pro rata reduction
  4. Whistleblowing - dismissal for criticising colleague when making a protected disclosure not automatically unfair
  5. Gender-critical views a protected "philosophical belief" but manifestation may be restricted
  6. Long COVID: Symptoms may amount to a disability

Proposed legislative changes

  1. Industrial action
  2. Paid neonatal leave Bill
  3. Employment (Allocation of Tips) Bill

Latest hot topic news

  1. The hot topic of hot temperatures


Case law updates

1. Fire and rehire - untying the employer's hands

In March, we reported on the "Strengthening of the unions' hands: Restraining 'fire and re-hire'" following the High Court in USDAW & others v Tesco Stores Limited implying a contractual term and granting an injunction restraining Tesco from 'firing and rehiring' employees in order to remove a contractual entitlement to enhanced pay known as 'retained pay'. The entitlement, which was negotiated as a retention incentive at a time when Tesco was reorganising its distribution centres, was stated to be 'permanent' and was intended to last for as long as the employee remained in the same role. In these unusual circumstances, the High Court held that it was appropriate to imply a contractual term preventing Tesco from exercising its right to terminate on notice for the purpose of removing or diminishing the employee's entitlement to the retained pay.

However, on 15 July, the Court of Appeal allowed Tesco's appeal against the High Court's decision. The Court of Appeal has held that the High Court was wrong to find that pre-contractual statements showed that both parties intended that the entitlement should be permanent in the sense that the contracts would continue for life, or until normal retirement age/closure of the workplace, or that the circumstances in which Tesco could terminate the contracts should be limited.

Although the retained pay provisions incorporated into the contracts specified no time limit, nor was there a 'sunset clause', the express terms of the contracts also included a standard termination on notice clause. As such, under the contracts Tesco has the right to give notice in the ordinary way, and the entitlement to retained pay would only last as long as the particular contract remained in force. The Court of Appeal went so far as to say that the retained pay clause would have had to include wording such as "provided the site remains open, retained pay will continue until you reach the age of 65" in order for employees to counter the termination on notice clause.

Furthermore, even if the High Court had been correct in its interpretation of the contract, this was not a case in which the grant of an injunction was justified, as financial damages would have sufficed.

Takeaways

  • The Court of Appeal's overturning of the High Court's judgment is a return to the orthodoxy on the interpretation of a contract containing an express termination on notice clause.
  • Although Tesco has succeeded on appeal, agreeing an express clause as to a "permanent" contractual benefit should always be treated with caution. Where trade unions seek to negotiate "permanent benefits", employers need to look beyond addressing the present business need and build in some flexibility to adapt to future business needs. For example, consider setting a "long stop" date to avoid future disputes.
  • The judgment comes as the practice of "fire and rehire" remains under scrutiny. On 29 March 2022, the Government announced that a new Statutory Code of Practice will be published on the use of "fire and rehire" practices. Tribunals and courts will be required to take the Code into account when considering relevant cases, including unfair dismissal. They will have the power to apply an uplift of up to 25% of an employee's compensation where the Code applies, and the employer unreasonably fails to follow it. Further details of the Statutory Code of Practice are now awaited. Employers should continue to consider carefully all options (from both a legal perspective and a PR perspective) before turning to "fire and rehire".

2. Unlawful inducement - when has collective bargaining concluded?

Under section 145B of the Trade Union and Labour Relations (Consolidation) Act 1992, employers are prohibited from making offers to employees with the sole or main purpose of undermining collective bargaining by the union (unlawful inducement). If a complaint for breach of s145B is upheld, the award is £4,554 (revised annually in April) per union member receiving the offer. Where an offer is made to a large number of union members, the cost can be considerable.

But just how wide is the scope of section 145B? In 2021, the Supreme Court in Kostal UK Ltd v Dunkley & ors held that an employer may make an offer directly to its workers in relation to a matter which falls within the scope of a collective bargaining agreement but only where the employer has first followed, and exhausted, the agreed collective bargaining procedure (this is likely to involve a considerable length of time). What an employer cannot do with impunity is make a direct offer to its workers, including union members, before the collective bargaining process has been exhausted.

The recent cases of Ineos Infrastructure Grangemouth Ltd v Jones and ors and Ineos Infrastructure Grangemouth Ltd v Arnott and ors illustrate that where collective bargaining agreements are ill-defined, it may be more difficult to establish when the process is complete. In these cases, pay negotiations were instituted and five meetings took place between November 2016 and March 2017. The employer initially proposed a pay rise of 2.3%, whereas Unite sought 3.25% plus enhancements to benefits. The employer eventually made a 'final and best' offer of 2.8% in March 2017. Unite presented the 2.8% pay offer to its members but did not recommend it for acceptance and did not put it to a vote. The members instead authorised Unite's negotiating team to return to talks and seek an improved offer. However, the employer took the view that it had done all that it reasonably could do in the negotiations and that its only option was to make the pay award unilaterally.

The Employment Appeal Tribunal (EAT) upheld a tribunal finding that the collective bargaining process had not been exhausted at the time the employer made its offer. A key finding of the tribunal was that, following the final meeting between the employer and Unite, the parties were close to agreement, such that an objective observer would regard it as more, rather than less, likely that agreement would have been achieved by further collective bargaining. Where the collective bargaining agreement is light on detail, without a prescribed number of meetings or process, the proper approach is for the tribunal to ascertain, objectively, whether or not negotiations were as a matter of fact at an end. If an employer cuts short the process, or engineers an automatic end point to the negotiations by simply calling something its "best and final" offer, it risks falling foul of s145(B).

Takeaways

  • Employers do have an ability to lawfully vary terms without it amounting to an unlawful inducement but only where collective bargaining has genuinely been exhausted, with all stages of the procedure set out in the collective agreement having been concluded.
  • Tribunals will objectively determine whether or not negotiations were at an end. An employer cannot cut short the process, or engineer an automatic end point, by simply calling something its "best and final" offer.
  • It is more difficult for employers to establish that collective bargaining has genuinely been exhausted where the collective bargaining agreement contains little detail and there is therefore greater ambiguity over how and when the process is at an end.

3. Holiday pay - holidays for term-time only workers not subject to pro rata reduction

Should holiday entitlement be pro-rated to prevent term-time only workers from receiving a disproportionately higher level of holiday pay than full-time or part-time workers who work throughout the whole year? The Supreme Court in Harpur Trust v Brazel has said "no". The Supreme Court has held that the amount of leave to which a part-year worker employed under a permanent contract is entitled, should not be pro-rated to be proportional to that of a full-year worker. This case concerned a music teacher who worked for varying hours during only certain weeks of the year (school terms only), but had a so-called 'permanent' contract under which she worked for a number of years, as opposed to working under discrete fixed-term contracts.

The Working Time Regulations 1998 (WTR) generally require that a "calendar week method" is used to calculate holiday pay, rather than a 'percentage method'. As such, term-time only workers are entitled to 5.6 weeks' holiday based on their weekly work pattern during the term, without any reduction to reflect that they only work part of the calendar year. The Court accepted that the underlying Working Time Directive (which remains retained EU law following Brexit) does allow for the leave requirement for part-year employees to be pro-rated. However, the domestic WTR make a more generous provision than required under the Directive. While this gold-plating leads to a result whereby a part-year worker on a permanent contract receives holiday pay representing a higher proportion of their annual pay than full-time or part-time workers working throughout the year, the Court simply says that a slight favouring of workers with a highly atypical work pattern is not so absurd as to justify the wholesale revision of the statutory scheme.

This means the express provisions for calculating holiday pay for workers with variable hours contained in the WTR cannot be overridden by capping annual holiday pay at 12.07% of annualised hours for ease of calculation.

Takeaways

  • Any employers who for "part-year workers" on 'permanent' contracts use the approach previously recommended by Acas for casual workers of applying 12.07% of annual pay, will need to review the way in which they calculate holiday pay and the terms of any relevant contracts.
  • Tricky questions arise for employers who currently use the 12.07% approach to pay holiday to their zero-hours staff with permanent contracts. Employers need to consider their potential exposure and take detailed advice on potential options. For example, employers should ensure zero-hours workers on permanent contracts are not used for only very short concentrated periods in a given holiday year.
  • Where employers have a mix of full-year and part-year workers working under 'permanent' contracts, they may face employee relations issues. Full-time and part-time full-year workers may well see it as inequitable that part year colleagues receive proportionately greater holiday entitlement.

4. Whistleblowing - dismissal for criticising colleague when making a protected disclosure not automatically unfair

If an employee raises an issue with their employer that discloses any legal wrongdoing and the disclosure is in the public interest, this may amount to a protected public interest disclosure. If it does, the employee will gain protection as a whistleblower which will mean that if they are dismissed as a consequence, it will be regarded as automatically unfair where the protected disclosure is the principal reason for the dismissal. This will have a significant impact on the potential compensation that can be awarded, as the cap that applies in relation to ordinary unfair dismissal claims will not apply.

In Kong v Gulf International Bank Ltd, the Court of Appeal has upheld an EAT and tribunal decision that an employee who was dismissed following making a protected disclosure, in the course of which she questioned a colleague's professional competence, was not automatically unfairly dismissed. The manner in which the employee criticised her colleague was properly separable from the protected disclosure as the reason for dismissal.

The Court of Appeal accepted that some things are necessarily inherent in the making of a protected disclosure and are unlikely to be properly viewed as distinct from it such as the upset a protected disclosure causes. Nevertheless, ultimately the question is what motivated the decision-maker for dismissing or treating the whistleblower in an adverse way. In an appropriate case, a tribunal may be entitled to conclude that there is a separate feature of the whistleblower's conduct that is distinct from the protected disclosure and is the principal reason for their treatment.

The Court of Appeal agreed that this was one of those unusual cases where it was appropriate to conclude that what motivated the decision to dismiss was not the protected disclosures, but rather the whistleblower's lack of emotional intelligence and insensitivity in the way she conveyed personal criticisms of a colleague. That reason was a separate and distinct reason for treatment from the protected disclosure itself.

Takeaways

  • A twist on the old adage "shoot the message not the messenger" sometimes you can "shoot the messenger's behaviour but not the message".
  • The question to be determined in an automatically unfair dismissal case is what motivated a particular decision-maker; in other words, what reason did they have for dismissing or treating the whistleblower in an adverse way? A tribunal is entitled to conclude that there is a separate feature of the whistleblower's conduct that is distinct from the protected disclosure and is the real reason for the treatment.

5. Gender-critical views a protected "philosophical belief" but manifestation may be restricted

In recent years, gender identity has become a topic attracting significant media coverage and often sparking heated social media debate. Last year the EAT in Forstater v CGD Europe [2021] held that gender-critical beliefs, including a belief that sex is immutable and should not be conflated with gender identity, are protected under the Equality Act 2010. Both those holding a gender identity belief and those holding a gender critical belief are protected under the law.

What the 2021 EAT judgment does not mean is that those with gender-critical beliefs can indiscriminately and gratuitously refer to trans persons in terms other than they would wish. Such conduct could, depending on the circumstances, amount to harassment or discrimination. It is the manifestation of a belief that may, depending on the circumstances, be restricted.

This month we have two judgments on the manifestation of gender critical beliefs reaching different conclusions.

In Mackereth v Department for Work and Pensions and anor, the EAT held that a Christian doctor's gender critical beliefs were protected under the Equality Act 2010. However, the employer's response to the manifestations of his beliefs - his refusal to use transgender service users' preferred pronouns in his role as a health and disabilities assessor of benefits claimants - was not direct discrimination, harassment or indirect discrimination.

The tribunal had been entitled to draw a distinction between Dr Mackereth's beliefs and the way he wished to manifest those beliefs, finding that any assessor not prepared to address service users in the manner of their choosing would have been treated the same way, regardless of whether they shared such beliefs. The direct discrimination claim therefore had to fail.

As for indirect discrimination, the tribunal was entitled to find that the employer's insistence that assessors use service users' preferred pronouns, and confirm a willingness to adhere to this, were a necessary and proportionate means of achieving the employer's legitimate aims being to ensure transgender service users were treated with respect and in accordance with their rights under the Equality Act 2010, and to provide a service that promoted equal opportunities. Accordingly his claim for indirect discrimination also failed.

By contrast, in the substantive hearing of Ms Forstater's case, a tribunal has held in Maya Forstater v CGD Europe and Others that Ms Forstater, a consultant researcher, was discriminated against when a think tank ended its relationship with her because of her gender-critical beliefs which she had expressed on social media.

In this case, the researcher worked for a think tank where wide ranging and vigorous discussion and debate were the norm. Her views were expressed in the context of a social media debate regarding the 2018 government consultation on proposed amendments to the Gender Recognition Act. When, following complaints from colleagues, the employer raised the fact that her views were in contrast to the organisation's views of recognising a person's self-identified gender, Ms Forstater agreed to add a statement in her social media profile confirming that her views were her own. She also consistently said that she would use someone's preferred pronouns but continued to advocate her right to engage and write about the topic outside of work. She also agreed that her views should be kept out of the workplace unless there was a specific invitation to talk about it in future.

As ever, each case will turn on its particular facts. Subject to further appeal, these two cases make an interesting comparison. Employers can still, for example, take action over bullying or harassment of other employees. This might include, for example, a point-blank refusal to use a trans person's preferred pronouns. It was significant that in the case of Ms Forstater, she had not been found to have violated the employer's bullying or harassment policies and she consistently said that she would use someone's preferred pronouns. In contrast, in the case of Dr Mackereth, he refused to comply with his employer's policy on the use of preferred pronouns. While his beliefs were protected, it was not unlawful discrimination for his employer to disallow this particular manifestation.

These latest judgments will not be the final word on the clash between gender critical beliefs and gender identity beliefs, with a number of other cases in the tribunal pipeline.

Takeaways

  • Both those holding a gender identity belief and those holding a gender critical belief are protected under the law, both types of belief having been found to be worthy of respect in a democratic society.
  • Despite beliefs being protected, employers will be able to restrict the manifestation of any protected belief in the workplace where doing so is necessary, proportionate and in pursuit of a legitimate aim.

6. Long COVID: Symptoms may amount to a disability

In Burke v Turning Point Scotland, an employment tribunal has held that an employee with long COVID symptoms was disabled within the meaning of the Equality Act 2010.

The facts of this case are a relatively straightforward application of the statutory test for determining if an individual is disabled and an unsurprising result. As a decision only at tribunal level, it is of course non-binding, though notable as the first reported case in relation to long COVID and unlikely to be the last. Recent figures from the Office for National Statistics demonstrate that there is still a sizeable number of people suffering from long COVID. As of 1 May 2022, two million people in the UK were reporting symptoms. Of those, 71% reported that their symptoms affect their day-to-day activities, with 20% reporting that their day-to-day activities had been 'limited a lot'.

Each case will turn on its own facts. Not all long COVID cases will amount to a disability, but many are likely to meet the statutory definition. It is now clear that long COVID is a genuine condition and employers will need to be sensitive to this. Keeping an open mind and engaging in dialogue with employees will be key.

Employers may need to be more flexible regarding medical evidence. One notable feature of this case is that the GP fit notes signing the claimant off work were issued without direct consultation and based simply on what the claimant was telling the GP over the phone rather than any informed medical examination. The tribunal accepted in this case that there was less medical evidence than usually expected due to the difficulty of having a face-to-face consultation with a GP.

Takeaways

  • A person suffering from long COVID may, depending on the facts of the particular case, meet the statutory definition for being disabled.

Proposed legislative and guidance changes

7. Industrial action

  • The Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2022 came into force on 21 July 2022.

    With little notice the Government introduced new regulations removing the prohibition on employment businesses from supplying employers with temporary agency workers to perform the duties normally performed by a striking worker who is taking part in official industrial action, or the duties normally performed by any other workers who has been assigned to cover for such a worker.

  • The Liability of Trade Unions in Proceedings in Tort (Increase of Limits on Damages) Order 2022 came into force on 21 July.

    The caps on damages for unlawful industrial action have been increased for the first time since 1982. The caps vary with the size of the union's membership. For unions with 100,000 or more members, the damages limit increases from £250,000 to £1 million.

8. Paid neonatal leave Bill

On 15 July 2022, the Government announced that it was backing the Neonatal Care (Leave and Pay) Bill. The Bill, if passed, will allow parents to take up to 12 weeks of paid leave in addition to other parental leave entitlements such as maternity, paternity and shared parental leave. This will enable them to spend more time with their baby and delay the requirement to go back to work if their baby is still undergoing hospital care. It will apply to parents of babies who are admitted into hospital up to the age of 28 days, and who have a continuous stay in hospital of seven full days or more. The leave must be taken before the end of a period of at least 68 weeks beginning with the date of the child's birth.

The right to neonatal care leave will apply to all eligible parents without any qualifying service requirement. However, neonatal care pay will only apply to those eligible parents who have at least 26 weeks' continuous employment and meet minimum earning requirements. Employers will be able to reclaim payments from the Government. The usual offset rules will also apply.

If passed, the new rights are not expected to come into force until sometime in 2024 or 2025 and will apply in England, Wales and Scotland.

Many of the necessary legislative changes to implement the Bill will be via changes to the Social Security Contributions and Benefits Act 1992 by introducing new sections 171ZZ16 to 171ZZ24 - the sort of numbering suggesting it may be time for the 1992 Act to be rewritten and simplified!

9. Employment (Allocation of Tips) Bill

On 15 July 2022, the Government announced that it was backing the Employment (Allocation of Tips) Bill. The Bill, if passed, will ensure that all tips go to workers by making it unlawful for businesses to hold back service charges. A new statutory Code of Practice will be developed to provide businesses and staff with advice on how tips should be distributed. In addition, workers will receive a new right to request more information about an employer's tipping record with employers being required to have a written policy on how tips are allocated. It will still be possible for employees to pool tips and for tronc systems to be operated independently of the employer.

There is no information at present on when the changes, which will apply in England, Wales and Scotland, will be brought into force should the Bill be passed.

Latest hot topic news

10. The hot topic of hot temperatures

A number of MPs and unions are calling on the Government to introduce legislation to ensure employers maintain maximum temperatures in the workplace of 30 degrees Celsius, or 27 degrees Celsius for workers doing strenuous work and to require employers to introduce effective control measures, such as installing ventilation or moving staff away from windows and heat sources. So what is the current position?

The Workplace (Health, Safety and Welfare) Regulations 1992 require employers to ensure that temperatures in all workplaces inside buildings are reasonable. While the HSE Approved Code of Practice sets a limit on minimum workplace temperatures of 16 degrees (or 13 degrees if the work involves severe physical effort), there is no limit on the maximum temperature. This is because certain workplaces (glass works, bakeries etc) will always be far hotter than most other workplaces. But it states that even where staff are working in very hot environments, they can still work safely "provided appropriate controls are present". What is reasonable? This will vary from workplace to workplace. The HSE recommend employers carry out a thermal comfort risk assessment. This is not just about recording the temperature: consider air movement, radiant temperature, humidity and the type of clothing staff have to wear. For more details see 'Health and Safety Executive: What the law says, Is it too hot to work?'


If you have any questions about this article, or about employment law in general, please get in touch with Jane Fielding or Connie Cliff.

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