In brief – June monthly round up

Welcome to June's In Brief employment law update.

To help you keep quickly up to date with employment law, we summarise the key developments arising from cases, legislation and consultations for this month.

If you would like to discuss any of the points raised, please get in touch.

In this bulletin:

1. In the courts...recent case updates
2. Legislation
3. Consultations
4. News

In the courts... recent case updates

Employees using 'cyber-picketing' as new form of collective action

Earlier this year, four employees were dismissed for engaging in a new form of collective action known as 'cyber-picketing' against Cineworld following a dispute over pay. The cyber-picketing involved employees and members of the public block booking cinema seats and keeping them in their online baskets so that they could not be sold via the tills or online.

The claimant joined a union whilst in her previous employment which was not recognised as a trade union by the respondent. The claimant discussed the idea of a cyber-picket with other employees at a pub and followed it up with an email stating that cyber-picketing would be an effective form of striking. The claimant was dismissed for gross misconduct. She unsuccessfully appealed the decision and therefore brought a claim for unfair dismissal.

The ET needed to decide whether the claimant's actions were that of an independent union representative, as the trade union was not recognised by her employer. If so, the claimant's dismissal would have been automatically unfair.

The ET decided that the claimant's meeting and subsequent email were part of union representative's activities and therefore she had been unfairly dismissed. This emphasises the caution that employers need to take when taking disciplinary action against union representatives as the protection under the Trade Union and Labour Relations (Consolidation) Act is wide ranging and could include activities of an independent trade union.

This is also an example of how the development of technology now means that geography and other barriers no longer exist to workers who wish to partake in such actions.

Claims for victimisation following evidence given in employment tribunal proceedings

In Aston v The Martlet Group, the EAT held that a claimant could not bring a victimisation claim under the Equality Act 2010 in relation to something said by the respondent's witnesses during cross examination at a preliminary hearing.

Mr Aston (A) was employed by i-Ride as an operations manager. After a period of long term sick leave, A refused to return to his role or any alternatives offered to him. A was therefore dismissed and offered £4,000 as a good will ex-gratia payment. The payment however was never paid to him as he refused to sign a letter issued to him by i-Ride relating to the payment.

A brought a claim for unfair dismissal and disability discrimination. A's claims were out of time, but at the preliminary hearing he was granted an extension of time on the basis that it was just and equitable by the ET so that his discrimination claim can be dealt with.

During cross-examination at the preliminary hearing, the £4,000 offer was offered again during the cross-examination by one of the witnesses. However, following further communications after the preliminary hearing, i-Ride denied that there was any binding unconditional offer to make the payment and the payment was never paid. A therefore amended his claim to include victimisation as a result of not being paid what he had been offered during the preliminary hearing.

A's claim were all dismissed and he appealed on the basis of the victimisation claim and in part in relation to his discrimination arising from disability claim.

Dismissing the appeal, the EAT found that the common law principle of judicial proceedings immunity applied, and therefore the offer of £4,000 at the hearing did not provide A with valid grounds to make a victimisation claim based on the statements made at the preliminary hearing.

Although this case provides clarity as to when judicial proceedings immunity applies, it is important to note that the victimisation was only brought in relation to the employer's actions after the offer made during cross-examination. If a claim had been brought regarding the actions of the employer after the first offer, the outcome may well have been different.

Incorporation of a collective agreement into an individual employment contract

In Lozaique v Tesco Stores Ltd the EAT found that a collective agreement term that reduced overtime pay was not incorporated into an individual's contract of employment on the facts of the case presented. The claimant worked for Tesco and was contractually required to do 20 hours of overtime a week, at a pay rate of time and a half. A letter sent in October 2005 confirmed this. Tesco stated that a subsequent collective agreement was incorporated into the claimant's contract which reduced the pay for 12 hours of the overtime to single pay. The claimant brought an unlawful deduction of wages claim in the ET to recover the difference in pay.

The ET found in favour of Tesco and agreed that the collective agreement was incorporated into the claimant's contract of employment; therefore the reduction in pay was lawful. However, the EAT overturned this decision on appeal and found that the ET had made an error in law by determining that all of the terms of the collective agreement applied. This is because the claimant had a contractual obligation to perform the overtime, and therefore the collective agreement terms relating to overtime pay could not override the contractual provisions relating to the claimant's rate of pay for obligatory overtime. The EAT also dismissed the contractual position having been changed by custom and practice, reaffirming the well known position that this cannot override an express term of the contract, Therefore, the terms of the contract and 2005 letter applied over the provisions on overtime pay set out in the collective agreement.

NHS holiday pay calculation should include overtime

In East of England Ambulance Service NHS Trust v Neil Flowers and others, employees of the NHS brought claims for unlawful deductions from wages, arguing that the calculation of their holiday pay had failed to take account of "non-guaranteed overtime" (when, at the end of a shift, an employee was in the middle of a task and had to see it through to completion) and "voluntary' overtime" (when an employee volunteered to work extra shifts).

The EAT ruled that the employees holiday pay should be calculated to include both non-guaranteed and voluntary overtime. The Trust appealed.

Dismissing the appeal of the Trust, the Court of Appeal approved the decision in Dudley Metropolitan Borough Council v Willetts and held that the NHS Terms and Conditions of Service meant that employees were contractually entitled to have both non-guaranteed and voluntary overtime included in the calculation of holiday pay and that non-guaranteed and voluntary overtime pay should be taken into account when calculating the four weeks' paid leave under the Working Time Directive, provided the payments are sufficiently regular and paid over a sufficient period.

This case is clearly relevant to all NHS organisations but is also relevant to non-NHS organisations, both in the public and private sector who will have to consider whether an employee's voluntary overtime meets the threshold of regularity as under the Working Time Directive. This is not always straightforward.

Practically, it may be the simplest solution for some employers to routinely include all overtime payments in their holiday pay calculations, on the basis that the administrative costs (and potentially legal costs too) of differentiating between individual employees' overtime patterns could be too high and / or complex.

Reductions to injury to feelings awards because of contributory negligence

In First Greater Western Limited & Linley v Waiyego, the EAT established that awards for injury to feelings in discrimination cases can only be reduced because of contributory negligence in rare circumstances and that the non-binding observation in Way v Crouch that discrimination claims were subject to contributory negligence was too broad.

The claimant is employed by First Greater Western Limited, although she was on sick leave for lengthy periods from August 2014 onwards. She brought three claims against a total of 11 named respondents between June 2014 and August 2015 which alleged wide ranging discrimination from a period stretching back to March 2005 covering 20 separate incidents.

The ET awarded the claimant damages for injury to feelings in respect of only two; a claim for failure to make reasonable adjustments and a claim for discrimination arising from disability. On appeal, the respondents contended that the ET had erred in law in failing to make any deduction to reflect the Claimant's contributory negligence (in this instance, by failing to give the respondent details of her previous cognitive behavioural therapist).

However, the EAT held that while contributory negligence can apply to some discrimination claims under the Equality Act, such cases will rarely if ever arise, not least because of the difficulty in identifying or attributing ‘fault’ to a victim of discrimination.

Instead, where such cases arise, it may be more appropriate for these to be treated as examples of failure to mitigate loss.

Holiday pay: long-term backpay claims

The Northern Irish Court of Appeal has decided that, contrary to a previous English decision, employers cannot rely on a gap of 3 months to break a series of deductions with the result that it makes it easier for employees to bring historic holiday pay claims. Although the decision is only persuasive it could open the door for a similar claim in the English and Welsh courts and this finding could have significant cost implications for employers. For more information please click here.

Members States can limit holiday carry over in cases of sick leave to the four weeks' leave granted under the Working Time Directive

In TSN v Hyvinvointialan liittro ry, Advocate General Bot expressed an opinion which explained that in the event of sickness, neither the Working Time Directive (the Directive) nor the EU Charter of Fundamental Rights prevent national law or a collective agreement from limiting holiday carry over to the four weeks' leave granted under the Directive.

In two conjoined cases from Finland, the employees argued that in order to ensure that the rules on holiday carry-over which apply to the four weeks' leave under the Directive also apply to holiday in excess of the four weeks under national law or collective agreements, the EU Charter of Fundamental Rights should be read together with ECJ case law on annual leave an sickness. The EU Charter of Fundamental Rights states that "every worker has the right to ... an annual period of paid leave".

In the Advocate General's opinion, the Directive itself allows Member States to grant enhanced leave to employees and the EU Charter is applicable to circumstances where an employee is entitled to enhanced leave under national law or a collective agreement. Provided that the four weeks' leave granted in the Directive is not affected by the holiday carry-over entitlement, member states can set their own rules on the allowance, carry-over and extinction of paid annual leave which is over and above the four week minimum.

The ECJ will need to decide whether to follow this opinion.

One-off direct offer to employees which bypassed collective bargaining did not constitute an unlawful inducement

In Kostal UK Ltd v Dunkley the Court of Appeal held that a one-off direct offer to employees concerning pay which bypassed collective bargaining did not amount to an unlawful inducement within the meaning of section 145B of the Trade Union and Labour Relations (Consolidation) Act (TULRCA) 1992. TULRCA prohibits employers from inducing their workers to bypass collective bargaining in certain circumstances:

1. Where an independent trade union is seeking to be recognised and the employer makes an offer where the sole or main purpose is to guarantee that they workers' terms will not be determined by a collective agreement; and
2. Where an independent trade union is already recognised and workers' terms of employment are determined by collective agreement negotiated by the union and the employer makes an offer where the sole or main purpose is to guarantee that either the whole or some of the workers' terms will no longer be determined by collective bargaining.

Where a claim is brought under section 145B of TULRCA, it is for the employer to show what their sole or main purpose was in making the relevant offer. In this case, the employers appeal succeeded as union members were not being asked to relinquish their right to union representation, even temporarily. The employer had simply gone directly to the workforce to ask whether they would agree a particular term on this one occasion.

Employer found liable for direct discrimination on the basis of a perceived disability

In the recent case of Chief Constable of Norfolk v Coffey, the Court of Appeal has upheld the EAT's previous finding and has confirmed that the rejection of the Claimant's transfer application on the basis of a perceived disability was discriminatory.

The Claimant in this case was a front line police officer for Wiltshire constabulary who suffered a degree of hearing loss and tinnitus; it was accepted by the parties that her condition fell short of amounting to a disability under the Equality Act as it did not in any way prevent her from carrying out normal 'day to day' activities, nor did it prevent her from performing her role in full.

The Claimant's application to transfer to the Norfolk constabulary was, however, rejected on the basis that her hearing fell 'just outside' the required standards for recruitment and the Constabulary had concerns that her condition would deteriorate such that it would have a substantial impact on her ability to perform the role in the future; that is, her application was rejected due to the perception of a progressive condition.

For perceived disability discrimination to be established it is necessary for the discriminator to have believed that all elements of the statutory definition of disability are met; Norfolk Constabulary argued that frontline activities are unique and that the hearing aspects of the role fall outside the definition of normal day-to-day activities such that this requirement was not satisfied. However, the Court of Appeal considered that the 'multifarious activities' that the role of a police officer involves – or at least those for which good hearing is relevant – are 'normal day to day activities'.

On this basis, the Court considered that the Claimant's application was rejected due to the Constabulary's belief that her hearing would deteriorate to such an extent to have a serious impact on her ability to perform day-to-day activities and, as such, was direct discrimination because of a perceived future disability.

Employers should therefore be wary of making any assumptions about medical conditions of its employees and the possible impact of any such condition in the future, as protection may still be afforded by the Equality Act on the basis of perception discrimination. It is also worth bearing in mind that the phrase 'normal day-to-day activities' is to be given an interpretation which encompasses activities which are relevant to participation in working life.

Key cases to be reported

The ET has recently finished hearing the remitted case of Brierly and others v Asda Stores Ltd; Ahmed and others v Sainsbury's Supermarkets Ltd where it considered whether equal pay claims, brought by multiple claimants on the same claim form, had been issued in accordance with the Employment Tribunal Rules of Procedure 2013. This follows the Court of Appeal's decision that the jobs of claimants of equal pay claims submitted on the same ET1 do not have to be identical but must be similar. We await news of the judgment reached – watch this space!

Legislation

Companies (Directors' Remuneration Policy and Directors' Remuneration Report) Regulations 2019

On 10 June 2019, the Companies (Directors' Remuneration Policy and Directors' Remuneration Report) Regulations 2019 came into force. The regulations are the same as the draft regulations published on 9 April 2019 and implement Article 9a (right to vote on a company’s remuneration policy) and Article 9b (information to be provided in and right to vote on the remuneration report) of the Shareholder Rights Directive, as inserted by the Shareholders Rights Directive II.

Many of these requirements were already implemented in UK law but, in order to implement the parts of Articles 9a and 9b that were not already implemented; the regulations amended the Companies Act 2006 and the Large and Medium-Sized Companies and Groups (Accounts and Reports) Regulations 2008. These amendments include extending the scope of the UK’s existing executive pay framework to cover unquoted traded companies as well as quoted companies.

For further information on the full legislative changes, the BEIS have published frequently asked questions to the amendments here.

Consultations

Review of the Modern Slavery Act 2015

The final cumulative report, which summarises the findings of the four previous interim reports, of the independent review of the Modern Slavery Act 2015 was published on 22 May 2019.

Significant recommendations / comments to come from the review include that:

• the National Referral Mechanism (NRM) should change its name to reflect the work that it does;
• significant reform of the NRM is required;
• there is widespread concern at the lack of government-led post-NRM support for victims of modern slavery who have obtained a positive conclusive grounds decision; and
• the current law of prostitution may be a weak link in the fight against traffickers involved in sexual exploitation;
• when making a modern slavery statement, the six areas set out in section 54(5) of the MSA should be mandatory;
• companies should not be able to state that they have taken no steps to address modern slavery in their supply chains;
• there should be a central government-run repository for modern slavery statements;
• sanctions for non-compliance should be strengthened and the government should bring forward proposals for the creation of an enforcement body in relation to non-compliant companies; and
• the failure to make a statement or to act when instances of slavery are found should be an offence under the Company Directors Disqualification Act 1986.

The next step of the review is now for the government to respond. Watch this space for information on what the response is.

Women & Equalities Committee produce report on Non-Disclosure Agreements in Discrimination Cases

The Women & Equalities Committee of the House of Commons has produced its report on The Use of Non-Disclosure Agreements in Discrimination Cases.

For an in-depth discussion on the findings of this report, please see here.

News

Gender pay gap reporting planned to be introduced for small employers

Hilary Spencer, the director of the Government Equalities Office has confirmed that plans are underway to develop gender pay gap reporting before the 2022 review to include lowering the threshold for reporting obligations to apply to smaller companies.

The news comes after the Trades Union Congress emphasised the need for companies to actively develop ways to reduce the disparity in the gender pay figures, ensuring that they are not simply treating reporting as an exercise in compliance.

A range of further proposals have been outlined, including expanding the range of data collected and giving the Equality and Human Rights Commission (EHRC) additional powers to issue immediate fines to businesses that fail to comply with the reporting requirements.

Gartner Survey highlights Brexit's negative impact on employee behaviour

Brexit has led to a 12% reduction in productivity for employees, who are likely to spend an average of 58 minutes per day worrying about its effect, according to a recent Gartner survey. Other key trends that have been found to have arisen as a result of Brexit include:

• a decline in employee engagement;
• an increased likelihood that high-potential employees will quit;
• a stronger need by employees to receive recognition; and
• an increased likelihood that employees will lie, cheat and steal.

Ways in which employers may mitigate this impact includes high-velocity decision making such as establishing management processes that can constantly monitor behaviour.

Ex-offender employment opportunities to be boosted by plans to relax day-release rules

The government is set to relax prison day-release rules to allow prisoners to train with employers and, for those who pass a risk assessment will also be able to earn a wage. In conjunction with the Ministry of Justice's expansion of the New Futures Network, which offers jobs to offenders on release to fill skill gaps in the local economy, it is hoped that re-offending rates will fall as ex-offenders are given the chance to reintegrate into society.

The move followed a survey published by YouGov revealing that 81% of employers said that employing ex-offenders helped their business.

Business in the Community praised the programme, although the government was urged to produce a "more ambitious" plan in order to achieve this. 500 businesses have already registered to take part in the programme.

New ACAS report considers the benefits and disadvantages of new technology in the workplace

A new report published by ACAS has underlined the potential pros and cons to technological developments in the workplace. Benefits included increased efficiency and labour-saving whilst the potential drawbacks included the moral dilemma of surveilling workers and job destruction.

A link to the policy is here.