Employment Essentials: 5 Lessons from April 2018

Gowling WLG's employment, labour & equalities experts bring you the latest top five employment law developments that may affect your business.

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1. Do employers need to match enhanced maternity pay for fathers taking Shared Parental Leave? Uncertainty continues
2. When does contractual notice of termination served by post take effect?
3. Employer imposed contractual changes: the difficulty of relying on implied acceptance
4. Clarification of ACAS early conciliation 'stop the clock' provisions
5. Right to itemised pay statements to be extended to all workers

1. Do employers need to match enhanced maternity pay for fathers taking Shared Parental Leave? Uncertainty continues

April 2015 saw the reshaping of family-friendly leave with the birth of Shared Parental Leave (ShPL). A mother can elect to curtail their maternity leave period two weeks after giving birth. She can then elect to convert the unused portion of that leave, so that up to 50 weeks' statutory leave and 37 weeks' statutory pay can be shared between both parents. But can employers offer enhanced contractual maternity pay to mothers for any part or all of those 50 weeks, but only statutory shared parental pay to fathers?

The Employment Appeal Tribunal (EAT) in Ali v Capita Customer Management Limited has now confirmed that it is not direct sex discrimination for employers to offer 14 weeks' enhanced maternity pay but only statutory ShPL pay.

While this case is in line with Government guidance and the traditional view, it is notable that Mr Ali's case concerned an enhanced maternity pay period of only 14 weeks which happens to be the minimum maternity leave period required under the EU Pregnant Workers Directive. As such, a question mark remains where enhanced contractual maternity pay period exceeds 14 weeks. See our recent article for more on the case of Mr Ali and a direct discrimination case.

While we have at least a limited answer on the question of direct sex discrimination, subject to any future appeal (likely), the question of indirect sex discrimination is still very much up for grabs. Three weeks after the EAT handed down the Ali judgment, the EAT handed down its related judgment in Hextall v Chief Constable of Leicestershire Police.

In Hextall, the same question was considered through the prism of an indirect discrimination claim. Direct discrimination is less favourable treatment of a person because of a protected characteristic. Indirect discrimination concerns the application of a provision, criterion or practice (PCP) which puts those sharing a particular protected characteristic at a disadvantage which cannot be justified by the employer: this concept is concerned with 'equality of results' rather than 'equality of treatment'.

The EAT has held that the tribunal had been wrong to dismiss Mr Hextall's claim as it wrongly applied the restrictive approach as applies to direct discrimination comparators in an indirect discrimination claim (the maternity exception - see Ali - is limited to direct discrimination claims). Also, it failed to correctly identify the particular disadvantage associated with the PCP. The PCP was "paying only the statutory rate of pay for those taking a period of shared parental leave" but the effect of the PCP was that the PCP put a man wishing to take ShPL at a particular disadvantage in comparison with women, in that he is proportionately less likely to be able to benefit from an equivalent rate of pay when taking leave to act as primary carer for his child, to that received by women on maternity leave." The case is now going back to the tribunal to reconsider the question of indirect discrimination on the correct basis.

The Hextall judgment does not change the Ali judgment, that men on Shared Parental Leave cannot directly compare themselves with women on maternity leave. Nor has it decided the indirect discrimination question. Instead it leaves open the possibility that enhancing maternity pay, but not ShPL pay may potentially give rise to an indirect discrimination claim by fathers. The question of indirect discrimination continues to be unresolved and we await a further tribunal decision or appeal for greater clarity.

In an era of changing traditional gender roles, with more men wanting to take an active role in child-rearing from an early age, employers should consider whether to offer enhanced shared parental pay which mirrors any enhanced maternity pay policy in any event. Ask yourself:

• Will enhanced ShPL pay assist in attracting and retaining talent in your organisation?; and
• What are the potential discrimination risks versus costs if you offer enhanced maternity but not enhanced ShPL pay?

2. When does contractual notice of termination served by post take effect?

If an employee is dismissed on written notice posted to their home address, when does the notice period begin to run?

1. Is it when the letter would have been delivered in the ordinary course of post?; or
2. When it was in fact delivered to that address?; or
3. When the letter comes to the attention of the employee and they have either read it or had a reasonable opportunity of doing so?

This is the question recently considered by the Supreme Court in Newcastle upon Tyne Hospitals NHS Foundation Trust v Haywood.

And the answer is (c), in the absence of an express contractual provision, a written notice of termination served by an employer does not take effect until the employee has read it or had a reasonable opportunity of doing so.

In this case, Mrs Haywood was at risk of redundancy. She was on annual leave from 19 April to 3 May. On 20 April, the employer sent a letter to her home address by recorded delivery, purporting to terminate her contract with 12 weeks' notice ending on 15 July. As Mrs Haywood was on holiday, the postal service was unable to deliver the letter and took it to the sorting office. Mrs Haywood's father-in-law collected it and took it to her house on 26 April. She read it on 27 April when she returned from her holiday.

The date on which the 12 week notice period started to run was highly significant in this case. If time did not start to run until 27 April then the notice period would expire on 20 July. What a difference a day makes? 20 July happened to be Mrs Haywood's 50^th birthday. If her employment was terminated on or after her 50^th birthday, she would be entitled to a non-actuarially reduced early retirement pension worth £200,000.

The Supreme Court rejected the employer's arguments that notice was given when the letter was delivered to Mrs Haywood's address. It is important for both the employer and the employee to know whether or not the employee still has a job. In the absence of an express contractual term specifying when a notice of termination is effective, the notice starts to run when the letter comes to the attention of the employee and they have either read it or had a reasonable opportunity of doing so.

This judgment now aligns the contractual law position with the statutory position in respect of the effective date of termination (EDT) under the Employment Rights Act 1996. Back in 2010, the Supreme Court in Gisda Cyf v Barratt [2010] UKSC 41, a case in which a summary dismissal was communicated by letter, held that the EDT was when the employee actually read the letter informing her of her summary dismissal.

Lesson for employers:

• When dismissing an employee, it is usually best to inform the employee in person (written confirmation being simply that, confirmation, and not the mode of first communication of the actual decision). This will remove any ambiguity about the date of dismissal.
• For those occasions when it is not possible to communicate with the employee in person, contracts can be drafted to include express provisions that deem when notice takes effect. However, beware that any express contractual provisions would not alter the statutory position with respect to the calculation of the EDT for statutory unfair dismissal purposes, meaning that, confusingly, there could be a different termination date for wrongful and unfair dismissal claims arising from the same termination.

3. Employer imposed contractual changes: the difficulty of relying on implied acceptance

If an employer unilaterally imposes a contractual change, it is possible for employees' agreement to be implied if they continue to work without protesting after the change has been imposed, but it is risky. Careful analysis of all communication from employees (both verbal and written) is necessary to ensure nothing has been communicated that suggests or evidences objection to the changes. Care also needs to be taken in situations where the changes imposed do not have immediate effect, for example a clause relating to redundancy terms.

In April, the Court of Appeal reminded employers of the risks of relying on implied consent. In Abrahall and ors v Nottingham City Council and anor, the Court has held that a group of employees who continued to work following their employer's imposition of a pay freeze did not agree to a variation of contract. Although the employees did not bring tribunal claims until two years later, they had protested through their trade unions at the time of the breach, and their continuing to work could not be taken as unequivocal acceptance of a change that was wholly to their disadvantage. A decision by the union not to take industrial action is not the same as a decision to accept a variation and there was no suggestion that the unions made it clear that they would take no further steps, still less that they would reluctantly agree to the freeze.

This case highlights the difficulty of relying on implied acceptance of a contractual change:

• where the variation is wholly disadvantageous to the employees, acceptance is less likely to be inferred;
• collective protest may be enough to negate any inference otherwise to be drawn even if the individual employees themselves say nothing;
• an employer's reliance on inferred acceptance will be weakened where the employer represented at the time that there was no variation of contract and thus that acceptance was unnecessary, as was the case here.

4. Clarification of ACAS early conciliation 'stop the clock' provisions

Four years after the introduction of mandatory ACAS early conciliation (EC) we finally have appellate level confirmation on how to apply the 'stop the clock' provisions.

Prospective claimants must undertake EC before they can bring relevant proceedings in an employment tribunal, unless one of the limited exceptions applies. Once a prospective claimant has contacted ACAS, the time limit to present their claim will be extended to take account of the EC period.

In practice, however, this is not as simple as it sounds:

1. A certain period will "stop the clock", namely the period beginning with the day when the prospective claimant contacts ACAS (Day A) and ending on the day when they receive or are deemed to have received, the EC certificate from ACAS (Day B) - section 207B(3) Employment Rights Act (ERA).
2. If a time limit for bringing the claim would expire in the period beginning with Day A and ending one month after Day B, the time limit expires instead at the end of that period - section 207B(4) ERA.

The question that has caused debate is whether the 'time limit' referred to in section 207B(4) refers to the revised time limit after applying section 207B(3) so the two provisions are applied sequentially. Or does the 'time limit' refer to the original time limit so the two sections are alternatives?

In Luton Borough Council v Haque, the EAT has confirmed the widely accepted view that the time limit to present a claim should always be extended by the number of days it takes to complete the EC procedure. Sections 207B(3) and 207B(4) are applied sequentially.

In this case, Mr Haque was dismissed on 20 June. The original limitation date was 19 September (three months less a day from 20 June). He contacted ACAS on 22 July (Day A), which issued an EC certificate on 22 August (Day B). Mr Haque presented his claims to the tribunal on 18 October.

The employer argued the claims were out of time. By taking an alternative approach, the original limitation date of 19 September fell between 22 July (Day A) and 22 September (one month after Day B). Applying s 207B(4) only, the limitation period would expire on 22 September and the claim form was presented 26 days out of time.

However, the EAT disagreed and upheld the tribunal's finding that the claim was in time. By applying the provisions sequentially, the original limitation period of 19 September was extended by 31 days by subsection 207B(3) (the period between Day A and Day B) to give a revised limitation date 20 October. As there was more than a month between Day B (12 September) and the revised expiry date (20 October), s207B(4) did not need to be applied. The claim presented on 18 October 2016 was therefore in time.

5. Right to itemised pay statements to be extended to all workers

Implementing one of the Taylor Review suggested reforms, the Employment Rights Act 1996 (Itemised Pay Statement) (Amendment) (No.2) Order 2018 was made on 25 April. With effect from 6 April 2019, the Order will amend the Employment Rights Act 1996 (ERA) so that every worker, as defined under S.230(3) ERA, will have the right to be given a written itemised pay statement at or before the time at which any payment of wages or salary is made to him or her. This amends the current situation whereby only those classified as 'employees' have a statutory entitlement to receive a payslip.

As is currently the case, the written itemised pay statement will need to include the gross amount of the wages or salary; the amounts of any variable and any fixed deductions from that gross amount and the purposes for which they are made; the net amount of wages or salary payable; and, where different parts of the net amount are paid in different ways, the amount and method of payment of each part-payment.

In addition, amendments under the Employment Rights Act 1996 (Itemised Pay Statement) (Amendment) Order 2018, which also comes into force on 6 April 2019, will mean that where the amount of wages varies by reference to time worked, the statement should include the number of hours worked in respect of the variable amount of wages or salary. This needs to be as a single aggregate figure, or separate figures for the different types of work or different rates of pay.

Where an employer either fails to give a worker a statement or gives a worker a statement that does not comply with what is required, the worker will be entitled to make a reference to an employment tribunal to determine what particulars ought to have been included or referred to in a statement.

These changes will not apply in relation to wages or salary paid in respect of a period of work which commences before 6 April 2019.