Employment Essentials: What employers need to know from September/October 2020

Both COVID-19 and non-COVID-19 employment law developments have continued apace in September and October. Here we provide a round-up of developments employers need to know with a dozen of our top picks:

Half a dozen non-COVID-19 Government measures

1. Public Sector Exit Payments
2. Acas Early Conciliation rule changes
3. Gender recognition
4. IR35
5. Subject Access Requests
6. Modern Slavery Act 2015 (MSA) reform

A quartet of COVID-19 Government measures

7. CJRS extended
8. Job Support Scheme postponed
9. Job Retention Bonus
10. Legal duty to self-isolate

A couple of case law developments

11. The rise of an interim relief?
12. Disability discrimination: long term effect

Half a dozen non-COVID-19 Government measures

1. Public Sector Exit Payments

The long foretold yet hastily implemented Government plans to introduce a £95,000 cap on the total pre-tax aggregate value of public sector exit payments are coming into force on 4 November 2020.

The Restriction of Public Sector Exit Payments Regulations 2020 ("Exit Pay Regulations") were made on 14 October (signed by the Minister) and come into force only 21 days thereafter, being 4 November 2020.

The 4 November date is critical as if an exit occurs on or after that date, then the cap will apply, even if the terms were agreed beforehand (although in some limited specific cases, it may be possible to seek a discretionary waiver).

For more see our alert: Public Sector Exit cap in force from 4 November 2020.

2. Acas Early Conciliation rule changes

The Rules of Procedure for Acas Early Conciliation (EC) are changing from 1 December 2020. The key change is that the current one-month period (which can be extended by a further 14 days with agreement) is changing to a new six-week period with no opportunity to extend. In addition from 8 October, the employment tribunal rules of procedure have been updated.

For more detail of the full EC rule changes and the key changes to the tribunal rules, see our alert: Changes to the Acas early conciliation procedure.

3. Gender recognition

On 22 September 2020, the Government gave its long-awaited Response to a Consultation on proposed changes to the Gender Recognition Act 2004 by way of a short a written statement to Parliament.

Back on 3 July 2018, the Government Equalities Office (GEO) opened a consultation seeking views on whether applications for a Gender Recognition Certificate (GRC) in future should continue to require:

1. A medical diagnosis of gender dysphoria.
2. A report detailing the treatment received by the applicant.
3. Documentary evidence that the applicant has been living as their chosen gender for at least two years. In particular, the consultation sought views on whether the two-year period should be reduced or removed.
4. The applicant to sign a statutory declaration that they intend to live permanently in their acquired gender until death (making a false statement is a criminal offence).
5. The consent of the applicant's spouse, where applicable.
6. Payment of an application fee of £140.

In the GEO's response, it concludes that no change is needed in relation to the requirements for a GRC. The GEO's view is that the balance struck in the GRA 2004 is correct, in that there are proper checks and balances in the system and also support for people who want to change their legal sex. However, it agreed that the application process could be improved. The GEO intends to put the procedure online and reduce the current £140 fee to a nominal amount.

In providing its response in the form of a short written statement, unsurprisingly it has come in for immediate criticism from some disappointed by the outcome. On 28 October, the House of Commons Women and Equalities Committee launched a new inquiry into reforming the requirements of the Gender Recognition Act 2004. The Committee's Chair questions whether a move to an online process and reduced fee was enough progress. In a call for evidence that runs until 27 November, the Committee is seeking views on what other changes may be required to improve transgender equality.

4. IR35

Having been delayed by a year due to the business impacts of COVID-19, the extension of the existing public sector restrictions and rules on IR35 (workers providing services through intermediaries such as personal services companies (PSCs)) to medium and large private sector organisations is proceeding all steam ahead for 6 April 2021.

Under the controversial change, instead of the contractor having responsibility for determining their employment status for tax purposes, the client or hirer will need to make the call. They could be liable for any missing tax if they get the decision wrong. See our earlier alert IR35 private sector reform: Get ready for April changes.

In preparation for the rule change, the Income Tax (Pay As You Earn) (Amendment No. 3) Regulations 2020 were made on 22 October and come into force on 6 April 2021. Where a deemed employer has failed to make income tax deductions under PAYE from payments made to an off-payroll worker, and there is no realistic prospect of recovering the outstanding income tax from the deemed employer within a reasonable period, these regulations allow HMRC to recover the tax liability from other parties within the labour supply chain being the client for whom the work has been undertaken or the agency (the first agency) the client contracts with in the labour supply chain where that agency is based in the UK.

Although there is nothing unlawful about continuing to engage contractors through a PSC, the IR35 rules result in a significant administrative burden and potential tax burden for the end-user. If not done already, employers should factor the IR35 regime into future staffing decisions.

5. Subject Access Requests (SARs)

On 21 October, the Information Commissioner's Office (ICO) published updated guidance for organisations providing more detail on how to deal with subject access requests under the General Data Protection Regulation (GDPR). In particular:

• Stopping the clock for clarification. The ICO has explained and illustrated with examples the circumstances in which a SAR may be deemed complex and enable the response period of up to a month from receipt of a SAR to be paused while a controller waits for the individual to clarify their request.
• Determining when a SAR is manifestly excessive. The guidance confirms this assessment requires the controller to consider whether the SAR is clearly or obviously unreasonable. The ICO recommends taking all the circumstances of the SAR into account and using them to determine whether the response required is proportionate when balanced with the burden or costs involved in dealing with the SAR.
• Costs that can be included when charging a reasonable fee for excessive, unfounded or repeat SARs. The controller's reasonable fee may include the costs of its staff time, copying, postage and other expenses involved in transferring the data to the individual, including the costs of discs, envelopes and USB devices.

6. Modern Slavery Act 2015 (MSA) reform

Modern Slavery Act 2015 reform

On 22 September 2020, the Government published its Response to the consultation on transparency in supply chains. Section 54 of the MSA requires certain commercial organisations to produce an annual slavery and human trafficking statement. The outcome of the consultation is that the requirements relating to publication of a Modern Slavery Statement are to be enhanced with the aim of improving the reporting process.

The key proposed changes:

• Contents of Statements - The MSA currently lists six areas that organisations may want to include in their Statement. The Government is proposing make these mandatory issues that the Statement must cover being:
  1. the organisation's structure, its business and its supply chains;
  2. its policies in relation to slavery and human trafficking;
  3. its due diligence processes in relation to slavery and human trafficking in its business and supply chains;
  4. the parts of its business and supply chains where there is a risk of slavery and human trafficking taking place, and the steps it has taken to assess and manage that risk;
  5. its effectiveness in ensuring that slavery and human trafficking is not taking place in its business or supply chains, measured against such performance indicators as it considers appropriate; and
  6. the training about slavery and human trafficking that is available to its staff.

Other topics may also be added to this list and elements of the list may be amalgamated. The additional topics may include disclosure of instances of modern slavery, whistleblowing mechanisms and collaboration with external partners.

• Publication on Government-run website - Organisations will be required to publish their Statements on a new digital government reporting service in addition to their own website.
• Single reporting deadline - There is currently no statutory prescribed time limit on when an organisation must publish its Statement. A single reporting deadline is to be introduced requiring Statements to be published annually by 30 September in respect of the preceding 1 April - 31 March period.
• Increased accountability - Statements will be required to state the date of Board (or equivalent) approval and director (or equivalent) sign off. Where a Statement is produced for a group, the individual entities covered will need to be named.
• Extended remit - Public bodies that meet a specific budget threshold will be added to those required to publish a Statement.
• Enforcement - The Government says it will take forward options for civil penalties for non-compliance "in due course".

The Response does not provide a timetable for implementing these proposals. Instead, it states that "the Home Office's intention is to introduce this when parliamentary time allows".

A quartet of COVID-19 Government measures

7. Coronavirus Job Retention Scheme extended

On 31 October 2020, HM Treasury announced that the Coronavirus Job Retention Scheme (CJRS), which was due to come to an end that day, would be extended in order to provide support to businesses and employees during the new national lockdown due to begin on Thursday 5 November. The CJRS therefore remains available to businesses from 1 November and will be open until December.

The level of support available under the extended scheme mirrors that available under the CJRS in August, with the Government paying 80% of wages up to a cap of £2,500. Flexible furloughing is allowed under the extended CJRS, as well as full-time furloughing.

The HM Treasury press release outlines the eligibility rules governing the extended CJRS. It states that neither the employer nor the employee need to have previously used the CJRS, and that the scheme is available in respect of employees who were on the employer's PAYE payroll by 23:59 on 30 October 2020. It has also been confirmed by HMRC that if employees were on an employer's payroll on 23 September 2020 (notified to HMRC on an RTI submission on or before 23 September) and were made redundant or stopped working afterwards, they can also qualify for the scheme if re-employed.

At the time of writing, we are still awaiting the full details of the CJRS extension.

8. Job Support Scheme postponed

The Job Support Scheme (JSS), which was scheduled to come into effect on 1 November 2020, has now been postponed until the CJRS extension ends (see above).

Details of the JSS were published on 22 October in The Job Support Scheme Policy Paper with a number of highly significant revisions having been made to the scheme since it was originally proposed in September.

Once introduced, as it currently stands, under the JSS (Open) the Government will pay 61.67% of hours not worked up to a cap of £1,541.75 per month, with the employer contributing 5% of non-worked hours up to a cap of £125 per month. The caps are based on a monthly reference salary of £3,125. This means employees earn a minimum of at least 73% of their normal wages, where their usual wages do not exceed the reference salary. The employee will have to work a minimum of 20% of their normal hours.

Under the JSS (Closed), for businesses required to close their premises due to coronavirus restrictions, the JSS grant will cover up to two thirds of employees' salaries, subject to a cap of £2,100 per month.

For more detail see our evolving alert: COVID-19 Job Support Scheme Q&A: the essentials for employers and employees.

9. Job Retention Bonus

To encourage employers to retain furloughed employees after the Coronavirus Job Retention Scheme closes, employers can claim a £1,000 payment for every employee previously claimed for, non-fraudulently, under the CJRS who, subject to minimum earnings thresholds, remains continuously employed until 31 January 2021 and not serving a contractual or statutory notice period starting before 1 February 2021.

On 2 October 2020, HM Treasury published a new Schedule to the Coronavirus Act 2020 Functions of HMRC (Coronavirus Job Retention Scheme) Direction ("the October Treasury Direction) setting out the "who, what and when" for employers to claim the JRB.

This is one to watch as amendments may be made in light of the CJRS extension, in particular to the 'continuously employed to 31 January 2021' requirement and the current 15 February to 31 March 2021 claim period.

For more see our insight: COVID-19: The CJRS & Job Retention Bonus final pieces.

10. Legal duty to self-isolate

On 28 September, new regulations came into force not only making self-isolation a legal requirement and introducing penalties for individuals, but also introducing offences and penalties for employers in England.

The Health Protection (Coronavirus, Restrictions) (Self-Isolation) (England) Regulations 2020 prohibit employers or agencies from allowing workers who are required to self-isolate to work in any place except in the place where they are self-isolating (home working). The regulations also create criminal offences and the penalties that apply for breaches of its requirements. In the case of an offence by an employer, fines begin at £1,000 rising up to £10,000 in relation to subsequent offences.

For more see our alert: COVID-19: Legal duty to self-isolate means employers can face substantial fines.

A couple of case law developments

11. The rise of an interim relief?

In a sign of a potential rise in claims for interim relief, an Employment Tribunal has ordered the reinstatement of an employee claiming unfair dismissal for using a trade union to bring his grievance over coronavirus measures.

In certain types of unfair dismissal case, a tribunal can grant the employee interim relief by making an order for the continuation of their employment pending final determination of the case. The purpose of interim relief is to preserve the status quo until the full hearing of the claim. A successful interim relief application is extremely favourable from a claimant's perspective because they will remain on full pay until the unfair dismissal litigation is concluded. Moreover, even if the claimant loses at the substantive hearing, they will not be required to reimburse their former employer the pay they have received since the interim relief hearing. Accordingly this can be a potentially powerful tool for a claimant when available.

Interim relief is only available where the dismissal is alleged to be automatically unfair because the reason (or principal reason) for dismissal is:

• Union membership or activity.
• Making a protected disclosure ("whistleblowing").
• Activities as a health and safety representative, a working time representative, a pension scheme trustee, or an employee representative for the purposes of collective redundancy or TUPE consultation.

There are strict time limits for seeking interim relief. An application must be made before the end of the period of seven days immediately following the effective date of termination.

In Morales v Premier Fruits (Covent Garden) Ltd, the employer's business was badly affected by the pandemic, so it proposed that all staff take a 25% pay cut and one week's unpaid leave per month. United Voices of the World raised a grievance on Mr Morales' behalf, stating that the wage reductions had caused him detriment and the health and safety of staff was being endangered by a lack of PPE.

Mr Morales was excluded from a subsequent staff meeting, but his colleague recorded the meeting on his phone and this revealed that Mr Morales' manager had expressed strong anti-union views. Mr Morales' grievance was not upheld and he was dismissed, on the face of it, because he had not consented to the pay cut. Mr Morales then brought a claim for automatic unfair dismissal for making use of trade union services and on grounds that he had made protected disclosures related to health and safety.

Interim relief orders can only be granted if, after an "expeditious summary assessment", it appears to the ET "that it is likely" that the claimant will succeed in their claim. The Employment Judge rejected the application for interim relief on the basis that that Mr Morales had made a protected disclosure relating to health and safety. However, the judge did grant the application for interim relief as Mr Morales has a good chance of success of establishing he was dismissed because he had sought the assistance of a trade union to bring a grievance. The manager in question had shown strong hostility to trade union involvement with the staff.

Warning for employers

Interim relief has traditionally only rarely been sought due to the limited circumstances in which it is available. The pandemic may, however, lead to a significant increase in applications given that it has led to an increase in trade union activities in response to employers' measures in response to the pandemic and whistleblowing over concerns about workplace safety. 'The Best Warning System: Whistleblowing during Covid-19' October 2020 report published by whistleblowing charity Protect, which analysed over 600 calls to its advice line between March and September 2020, found that most were about furlough fraud and public safety, with lack of PPE and provision for social distancing being chief among concerns.

The pandemic has also led to lengthy backlogs in the listing of employment tribunal hearings. This makes interim relief applications increasingly attractive to claimants as a means of securing financial security pending their full hearing, as applications must be heard "as soon as practicable". In Mr Morales' case, he was dismissed on 9 July and reinstated just over a month later, on 12 August.

12. Disability discrimination: long term effect

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 Sullivan v Bury Street Capital Ltd, the EAT has upheld a tribunal's judgment that an employee who suffered from paranoid delusions that affected his timekeeping and attendance did not have a disability for the purposes of the Equality Act 2010. Although the employee's condition had a substantial adverse effect on his ability to carry out normal day-to-day activities, it was not long-term, nor was it likely to recur.

In this case Mr Sullivan, a senior sales executive employed since 2008, had always demonstrated a relaxed attitude to timekeeping. In May 2013 he developed paranoid delusions which caused him to believe he was being followed by a Russian gang. The delusions affected his sleep and his behaviour at work became erratic, in particular his attendance and timekeeping. However, things improved after September 2013 until April 2017 when he became involved in pay negotiations with his employer and the paranoid delusions became worse again, to the extent they impacted on his day-to-day activities. Mr Sullivan was dismissed in September 2017, with the employer citing his poor timekeeping, absences and lack of record-keeping. The employee claimed his dismissal was discriminatory on the grounds of disability.

Mr Sullivan's claim failed as he failed to establish that he was disabled within the meaning of the Equality Act. While the tribunal and EAT accepted that he had a mental impairment because of the delusions, any substantial adverse effect (SAE) lasted only from around May 2013 to September 2013, and then recommenced a few months before his dismissal in 2017, but there was noSAE during the intervening period. Moreover, the SAE in both periods was unlikely to last at least 12 months or recur at either point. Although it had reoccurred in 2017, that was not foreseeable back in 2013 and the stress of the pay negotiations was temporary.

Lessons for employers:

• It is for the claimant to establish that they are disabled.
• Where a SAE does in fact recur, it does not necessarily mean that as at an earlier date, the effect was likely to recur.
• As the EAT summarised "although in many instances, the fact that a substantial adverse effect has recurred episodically might strongly suggest that a further episode is something that 'could well happen', that will not always be the case."

As ever, each case will depend on its particular facts.