Here are our top picks of the latest employment law developments from an unusually busy summer that may affect your business.
Our top 10 picks are:
Case law updates
- COVID-19 "paid Special Leave" not discriminatory
- TUPE: SPC activities pre and post transfer fundamentally different
- Philosophical Belief Discrimination: further extension of gender critical belief
- Unfair dismissal: scope of 'political opinion' dismissals
- Fraud: "The Thief, His CV and the NHS Chairs"
Government consultations & proposed legislation
- Protection from Redundancy (Pregnancy and Family Leave) Bill
- Employment status
- Public sector exits
Hot topic news
- Zero hour contracts
- Real Living Wage
Listen to our podcast 'Employment Essentials: September 2022'
1. COVID-19 "paid Special Leave"
Employer's special leave policy during COVID-19 pandemic was not discriminatory
As the furlough scheme was not an available option for every employer during the pandemic, some employers put in schemes to support employees who, for reasons of shielding or childcare, were unable to attend work and unable to work from home. The Scottish Fire and Rescue Service did just that. They put in place paid special leave which enabled such employees to take paid leave on an indefinite basis subject to the requirement that they first exhaust any accrued time off in lieu (TOIL) and annual leave.
Did the preconditions of first needing to exhaust accrued TOIL and annual leave turn an otherwise generous paid leave scheme into one which amounted to:
- "unfavourable treatment" giving rise to discrimination arising from disability under s15 of the Equality Act 2010 (EA); and/or
- a "disadvantage" amounting to indirect sex discrimination under s19 of the EA?
In Cowie and ors v Scottish Fire and Rescue Service, some employees complained that the preconditions for taking paid special leave were unfavourable/put them at a disadvantage in that it removed the flexibility of taking TOIL and/or annual leave at a time of their choosing.
Dismissing the claims, the Employment Appeal Tribunal (EAT) held that the preconditions imposed for obtaining paid special leave did not amount to 'unfavourable treatment' for the purposes of s15 or a 'disadvantage' within the meaning of s19. There was no general requirement on employees to use TOIL and/or annual leave at a time of the employer's choosing. The specific requirement to exhaust any accrued TOIL and/or annual leave only arose when, and to the extent that, an employee sought to access paid special leave. It would be artificial to consider the requirement to use accrued TOIL and/or annual leave separately from the entitlement to paid special leave because the two were inextricably linked. The employees could not cherry-pick just certain aspects of the leave scheme. Although the scheme was subject to conditions for entitlement, that could not detract from the favourable nature of that treatment.
Treatment which is favourable/advantageous will not amount to unfavourable treatment or disadvantageous merely because the employer could have made it even more favourable/advantageous.
2. TUPE – SPC activities pre and post transfer fundamentally different
Under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) for there to be a 'service provision change' (SPC) the activities carried out after the transfer must be 'fundamentally' the same as those carried out before the transfer. As held by the EAT in Metropolitan Resources Ltd v Churchill Dulwich Ltd  those activities need not be identical; it will be sufficient if they are 'fundamentally or essentially the same as those carried out' by the alleged transferor. The question as to whether the activities are "fundamentally the same" is one of fact and degree for the tribunal's assessment.
Recently, the case of Tuitt v London Borough of Richmond Thames provides an example of where an activity was no longer fundamentally the same. The case concerns CCTV monitoring operators. From 2005 to 2018, the Local Authority outsourced its CCTV monitoring to a third party provider, Broadland. The CCTV operatives supplied proactively monitored 12 screens, reporting any suspicious behaviour to the police, and also responded to safety-related calls from the police, businesses and the public.
In 2018, Broadland gave notice to the Local Authority to end the contract. In light of mounting pressures to make budget cuts, on expiry of the contract the Local Authority chose to divert the CCTV funding, no longer employing full time CCTV operatives. Instead, any future CCTV monitoring would need to be done by the Local Authority's Careline operative on duty who also happened to work out of the CCTV monitoring room. Careline work was to take priority over any CCTV monitoring. On any given shift, the Careline operator on duty was already 'overloaded' with time consuming calls in relation to vulnerable residents. Careline work would routinely take up to 95% of the on duty operative's time so the extent to which they were able to perform CCTV monitoring was "minimal". Only reactive support could be provided and even then the majority of calls went unanswered.
The EAT upheld the tribunal's finding that there was no SPC from Broadland back to the Local Authority as the activities pre and post transfer were fundamentally different. On the tribunal's findings, the Local Authority's Careline staff were not performing the majority of the duties carried out by the predecessor, namely proactive monitoring, and far from the Careline duties being something additional to the pre-transfer role, they lay at the heart of the activity now being undertaken by the relevant employees.
The EAT also rejected claims that the change in activities had been engineered to avoid TUPE applying. There was no evidence that the decision not to employ full time CCTV operatives was driven by anything other than budgetary pressures.
The question as to whether the activities are "fundamentally the same" is one of fact and degree for the tribunal's assessment. Just because the label "CCTV monitoring" was added to a Careline operative's list of duties did not necessarily mean the CCTV monitoring activity carried out before and after the transfer was fundamentally the same. As found in this case, the work had undergone a significant change from a full predominantly proactive monitoring service to an extremely limited and minimal reactive support service, meaning it was no longer fundamentally the same activity.
3. Philosophical Belief Discrimination: further extension of gender critical belief
Following the recent judgments in Forstater and Mackereth (see our July 2022 Employment Essentials), it is clear that both those holding a gender identity belief and those holding a gender critical belief are protected under the Equality Act 2010. Both have a right to hold and a limited right to manifest that belief - provided that they do so in a way that does not discriminate or harass their colleagues (or other people that they come into contact with), or breach their employers' legitimate internal policies. Each case will be fact sensitive on whether manifestation of a belief is inappropriate.
The London Central ET has now held that barrister Allison Bailey suffered direct discrimination and victimisation by Garden Court Chambers because of her gender critical philosophical beliefs (that women are defined by biological sex rather than gender identity) and further because of her belief that gender theory, as promoted by Stonewall, is severely detrimental to women (including that it denies them female-only spaces) and to lesbians (in that it labels them as bigoted for being same-sex attracted).
Essentially, the direct discrimination and victimisation claims succeeded due to Garden Court's knee jerk reaction following complaints by those holding gender identity beliefs about Ms Bailey's gender-critical comments on social-media and in the media. The acts for which Garden Court were held liable to Ms Bailey were publicly tweeting that it would launch an investigation into complaints about Ms Bailey and in how it dealt with a complaint by Stonewall.
The tribunal rejected claims of indirect discrimination by Garden Court and also rejected claims that Stonewall had instructed, caused or induced discrimination by Garden Court.
As a decision of the first instance tribunal, this latest judgment is of course non-binding on other tribunals. Nevertheless, it is highly notable in that it goes further than Forstater and Mackereth as to the scope of gender critical beliefs which may be protected under the Equality Act 2010. In this case, all parties accepted that Ms Bailey's gender critical belief that sex is a material reality that should not be conflated with gender or gender identity was capable of being a protected belief. However, the tribunal in Bailey went further in the conclusion that views about Stonewall's campaigning on gender self-identity having harmful effects (driving forward the erosion of women's rights, lesbian identity and the characterisation of gender critical belief as transphobic) was part of Ms Bailey's protected belief.
The "gender identity v gender critical" debate is often heated. Should an issue arise in the workplace, employers should pause and consider the issue in full. A knee-jerk reaction is never wise. Employers should also review internal policies and practices to ensure that they support protection of beliefs on both sides of the debate.
4. Unfair dismissal: Scope of 'political opinion' dismissals
Where the reason, or the principal reason, for dismissal relates to the employee's political opinions or affiliation, then the two year qualifying service requirement to bring an unfair dismissal claim is disapplied (section 108(4) Employment Rights Act 1996).
In Scottish Federation of Housing Associations v Jones the EAT clarified that s108(4) only applies where the dismissal relates to the content of the employee's political opinion or the particular identity of the political party they are affiliated with. This is because the mischief s108(4) is designed to address is a dismissal arising from the content of a person's political opinions or the identity of the party with which the person is affiliated. A requirement to appear to be politically neutral is not a requirement that relates to someone's political opinions or affiliations for the purposes of s108(4).
In this case the employer represents housing associations in Scotland. Being politically neutral at all times was described as a fundamental aspect of its operations, given its dealings with Government and other political parties. When the head of membership and policy was dismissed six months after being appointed, she claimed that the real reason for her dismissal was that she sought permission to stand for Scottish Labour in the 2019 General Election despite a 'political activity' clause in her contract of employment preventing her from having a 'formal role' of a political nature. She wished to bring an unfair dismissal claim, but lacked the two years' qualifying service to do so.
If Ms Jones had two years' service, it would not automatically have followed that she would succeeded in her unfair dismissal claim. Political neutrality clauses can be lawful in principle in appropriate cases.
But beware of other potential claims. While rejecting Ms Jones' unfair dismissal claim due to lack of qualifying service, the EAT held it was open to the tribunal to find that her belief that 'those with the relevant skills, ability and passion should participate in the democratic process' was a philosophical belief protected by s10 of the Equality Act 2010 and her discrimination claim, which does not require a period of qualifying service, has been allowed to proceed.
The scope of the rule disapplying the two year service requirement is limited to where the reason/principal reason for dismissal relates to the content of the employee's political opinion or the identity of the political party.
Despite the uncertainty as to the extent to which political beliefs can amount to a protected philosophical belief under the Equality Act 2010, a belief in participatory democracy is capable of being a protected philosophical belief.
5. Fraud: "The Thief, His CV and the NHS Chairs"
In most cases of CV (curriculum vitae) falsehoods that come to light after an individual is in post, the employment contract will simply be immediately terminated due to the employee committing a fundamental breach of contract. In these circumstances, the employer will usually be entitled to summarily dismiss the employee without notice. See our September 2018 Employment Essentials for an example of a cargo pilot providing a false reference from the fictitious Capt Desilijic Tiure – better known as Jabba the Hutt of Star Wars fame!
Some cases of CV fraud can amount to criminal offences of obtaining a pecuniary advantage by deception, contrary to s.16 (1) of the Theft Act 1968 and fraud (by false representation) under the Fraud Act 2006 resulting in a custodial sentence.
That is what happened in the case of Mr Andrewes, who decided to go big in claiming fake qualifications and experience. In 2004, Jon Andrewes successfully applied for the role of CEO at a hospice. He claimed to have a number of prestigious university degrees, as well as significant relevant work experience when in fact his only academic qualification was a Higher Education Certificate in Social Work and he had no relevant work experience. In 2006 he further falsely claimed to have obtained a PhD, insisting that he should thereafter be referred to as Dr Jon Andrewes with all references to him in the hospice's materials and website being updated.
In 2015, using the same or similar lies, he was also appointed to two remunerated roles as a director and then Chair of two NHS Hospital Trusts. It was following an investigation by the NHS Trusts that the truth emerged. In January 2017 Mr Andrewes pleaded guilty to one count of obtaining a pecuniary advantage by deception and two counts of fraud and was sentenced to two years' imprisonment.
The Supreme Court has now considered for the first time whether the confiscation regime under the Proceeds of Crime Act 2002 (POCA) applies in a case of CV fraud, where a job applicant lies about their qualifications and as a result is employed and paid a higher salary (in a case where the actual rendering of services for lack of holding a particular qualification was not itself illegal). The question is whether when such a person is convicted for fraud, should a confiscation order be made so as to strip the fraudster of their earnings (net of tax and national insurance)? In particular, would such a confiscation order be disproportionate under section 6(5) of POCA?
The Crown Court agreed that a confiscation order could potentially apply to the full net earnings during the relevant period, in this case £643,602.91, subject to the "recoverable amount". Under the POCA, the court must make a finding of the amount available to pay a confiscation order known as the "recoverable amount" – put simply the amount which the defendant has free to pay a confiscation order. In this case it was assessed at £96,737.24.
Somewhat surprisingly, the Court of Appeal quashed the confiscation order stating that in the employment context, recovery does not mean returning the amount of remuneration received. Providing full value by performing the services required of employment is capable of constituting restoration. There were no statutory or regulatory bars to Mr Andrewes holding the positions he had held and he had given full value for his remuneration through his competent work. Accordingly, full restoration had already occurred.
The Supreme Court has now taken a middle ground. On the one hand, it accepted that it would be disproportionate to make a confiscation order of the full net earnings without making any deduction for the value of the services rendered. On the other hand, it was unacceptable for no confiscation order to be made. A confiscation order could be made for the difference between the higher earnings obtained due to the fraud and the lower earnings that would have been obtained if there had been no fraud. The fraudster would have to give up any "profit" they made through their lies, but account would be taken of the fact that the employers did receive value in the form of services rendered, in exchange for paying their salary.
Applying this principled middle way in the case of Mr Andrewes, a confiscation order of £244,568 would be proportionate. As the "recoverable amount" had been assessed at the lower amount of £96,737.24, a confiscation order for that amount was restored.
The importance of checking qualifications and job history during the recruitment process! Perhaps the producers of the recent telly drama "The Thief, His Wife and the Canoe" will follow up with "The Thief, His CV and the NHS Chairs".
6. Protection from Redundancy (Pregnancy and Family Leave) Bill
The Government is backing the Protection from Redundancy (Pregnancy and Family Leave) Bill introduced as a Private member Bill. This Bill will enable regulations to be made to make provision about protection from redundancy during or after pregnancy or after periods of maternity, adoption or shared parental leave (rather than wait for such measures to be included in the delayed Employment Bill promised in the 2019 Queen's Speech).
The details of the changes will be set out in subsequent Regulations. Currently, employees who are at risk of redundancy during maternity or other family leave must be offered suitable alternative employment if a suitable vacancy exists. It is expected that the current rule will be extended so as to continue to apply until six months after their return from leave and to also apply to pregnant employees before they go on maternity leave.
There is no information at present on when the changes, which will apply in England, Wales and Scotland, will be introduced, but likely to be sometime in 2023 or 2024.
7. Employment status
The Government has published its Response to the 2018 Employment Status Consultation on the possible codification of an employment status test (being the key recommendation of the 2017 Taylor Review on Modern Employment Practices).
Despite a previous commitment to legislate to improve the clarity of the employment status test, the Government has now decided not to legislate, but instead has published updated guidance.
While acknowledging that codification of the employment status test and aligning the tests for employment rights purposes and for tax purposes could help bring clarity in the long term, the Government has decided now is not the right time to do so, as it might create cost and uncertainty for businesses in the short term.
In the words of John Whiting OBE, Tax Director, Office of Tax Simplification, March 2015:
"Employment status is a complex and wide ranging subject that many have said has no real solution – and that if we did manage to "solve it", we should immediately move on to world peace as we'd clearly be on a roll."
8. Public sector exits
On 8 August, HM Treasury published a consultation 'Public Sector Exit Payments: a new controls process for high exit payments' which closes on 17 October 2022.
HM Treasury is proposing to introduce a new administrative controls process for Central Government public sector exit payments over £95,000 and amend the existing process for special severance payments (payments in excess of an employee's statutory or contractual entitlements) and is accompanied by draft guidance. It is stated to support the Government's wider ambition to reduce the use of large exit payments in the public sector and follows the previous revocation of the Restriction of Public Sector Exit Payments Regulations 2020 from 19 March 2021. So red-tape controls as a disincentive rather than a legal cap.
On 15 August, the Cabinet Office published a related supplementary consultation document on reforms to the Civil Service Compensation Scheme (CSCS), which proposes limiting voluntary redundancy payments to three weeks' pay per year of service, introducing a maximum redundancy and exit payment limit of 18 months' salary, and capping compulsory redundancy payments at nine months' salary, among other measures. This latest consultation follows previous attempted reforms of the CSCS in 2016.
9. Zero-hour contracts
On 11 August, the Chartered Institute of Personnel and Development (CIPD) published a new report titled "Zero-hours contracts: Evolution and current status". The report reflects on how zero-hour contracts (ZHC) are used, and considers their benefits and drawbacks for employers and workers. It draws on a new survey of employers which suggests that the number of workers engaged on ZHC is small, accounting for about 3% of total employment, and has changed little since 2015.
Essentially a ZHC is a type of contract used by employers whereby workers have no guaranteed hours and agree to be potentially available for work. They may be used by companies seeking labour flexibility and by workers seeking flexibility around their other commitments. ZHC often receive bad press, but as the CIPD report concludes, used in the right way ZHC can provide benefits to both employers and workers. When used appropriately, workers on ZHC are, overall, as satisfied with their jobs and report better health/wellbeing and work–life balance than other workers.
However, the report notes in a minority of cases, ZHC are misused providing only one-way flexibility. The CIPD therefore recommends:
- Introduction of a right for variable hours workers to request a more stable contract or working arrangement after they have been employed for six months.
- Create a statutory code of practice on the responsible management of zero-hours workers that would include the requirement to pay compensation if workers' shifts are cancelled at short notice.
- Improve labour market enforcement, including through the creation of a Single Enforcement Body and a stronger focus on supporting employer compliance.
- Abolish 'worker status' to help clarify and enhance employment rights for zero-hours workers and more widely.
The first three items have been previously called for as part of the 2017 Taylor Review, 2018 Good Work Plan and are expected to be part of the delayed promised Employment Bill. As for item four, the Government has recently confirmed that there are no current plans to address the issue of employment status in legislation (see above).
10. Real Living Wage
The "real living wage" rate, unlike the statutory National Minimum Wage (which includes the National Living Wage) is a voluntary wage rate set by the Living Wage Foundation which applies to staff working for accredited living wage employers aged 18 or over. The RLW is currently £11.05 in London and £9.90 for the remainder of the UK.
The annual revision of the RLW rate is usually announced in November each year, but the 2022/23 rate increase announcement is being brought forward to 22 September 2022 in response to the unprecedented rise in living costs faced by workers. Accredited living wage employers are expected to implement the rise, once announced, as soon as possible but by 14 May 2023 at the latest.
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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