Employment and pensions

Employment Law Coffee Break | Protected beliefs in the workplace, round-up on proposed reforms and salary sacrifice

Published on 30th Jun 2022

Welcome to our latest Coffee Break in which we look at the latest legal and practical developments impacting employers.

Employment Appeal Tribunal rules on employee's refusal to use preferred pronouns

Following last year's Employment Appeal Tribunal decision in Forstater, the EAT has again looked at the difficult issue of what constitutes a "belief" for the purposes of the Equality Act 2010 and has again drawn a distinction between protected beliefs and how they manifest in the workplace.

Here, the claimant was a health and disabilities assessor carrying out assessments on individuals claiming disability-related benefits. Assessments for vulnerable individuals, for example those with mental health issues who found the online process more difficult, tended to take place face to face. During the induction process the claimant explained that his beliefs (or lack of beliefs) were such that he would not agree to use the preferred pronouns of transgender service users, in conflict with workplace policies. His stated beliefs included "a belief in the truth of the Bible, and in particular, the truth of Genesis 1:27, such that 'it follows that every person is created by God as either male or female. A person cannot change their sex/gender at will. Any attempt at, or pretence of, doing so is, pointless, self-destructive and sinful'"; and a lack of belief in "transgenderism" and "gender fluidity" such that he did not believe that a person could change sex/gender.

Attempts were made by his employer to see if his position could be accommodated but ultimately he brought claims in the Employment Tribunal for direct discrimination, indirect discrimination and harassment in respect of his religion or belief. Overturning the decision of the tribunal that the claimant's beliefs were not protected under the Equality Act 2010, the EAT found that the tribunal had erred in applying the Grainger test to the case in hand - it had "wrongly considered the claimant's beliefs relative to his particular employment; had erroneously assumed they must give rise to unlawful discrimination or harassment; [and] had focused on the potential manifestation of the claimant's beliefs instead of the beliefs themselves". The tribunal had also "applied too high a threshold" when considering whether the beliefs were worthy of respect in a democratic society, the EAT stating that "it is necessary for the threshold to be set at a low level so as to allow for protection not just of beliefs held to be acceptable by the majority but also of minority beliefs, even where those beliefs might offend offers". The EAT therefore found that the claimant's belief in Genesis 1:27 amounted to a protected characteristic and likewise his lack of belief that it is possible for a person to change their sex/gender at will (to the extent it fell to be considered against the Grainger criteria).  

However, the EAT agreed with the tribunal that in the particular circumstances of the case, the claimant's claims of direct discrimination, indirect discrimination and harassment on the basis of these protected beliefs failed; in particular the tribunal had "found as a fact that the claimant had not suffered the acts of less favourable treatment/harassment complained of; it had permissibly found that the claimant's beliefs were not the reason for the respondents' conduct" and "given the particular context, it could not be said that the tribunal had erred in finding the measures adopted by the respondents were necessary and proportionate to meet a legitimate focus on the needs of potentially vulnerable service users and on the risks to those individuals". A permissible distinction could be drawn between the claimant's beliefs and the particular way in which he wished to manifest those beliefs.

The case highlights the continuing care needed where an individual raises beliefs which are potentially capable of protection under the Equality Act 2010 (and which case law suggests is an area where tribunals will in broad terms be prepared to adopt a fairly wide interpretation), with the EAT noting that the manifestation of those beliefs in the work context "will give rise to difficult questions that can only be answered by a careful appraisal of the facts of the individual case".

As in Forstater, the EAT was keen to stress that it recognised that the case "may touch on issues of wider social concern and debate" and wished to "make clear that we express no views as to the merits of any side in that debate" stating that its function was purely to "determine such questions of law as arise in the case before us". The claimant has indicated that he wishes to appeal the EAT's decision.

Latest on proposed workplace reforms

Menopause will not be a protected characteristic under the Equality Act

The government has confirmed that it does not intend to make menopause a protected characteristic under the Equality Act 2010. In a letter to Caroline Nokes MP (Chair, Women and Equalities Committee), the Minister for Work and Pensions confirms "Our key objective is to ensure that women going through the menopause are treated fairly at work by ensuring that employers are fully aware of the challenges faced by these women and their current legal obligations, including under the Act. Introducing menopause as a new protected characteristic in the Act would require primary legislation and we have no current plans to revise the Equality Act 2010" and "The 'fit' of menopause as a characteristic into the Act would require careful consideration. Wherever possible the Act is intended to create protection across all the relevant areas, and menopause does not seem to align with this, being only relevant to Part 5 of the Act (Employment)".

Recognising the increase in menopause-related discrimination claims in the Employment Tribunals (discussed in our Coffee Break earlier this month), the government confirms that it will assess in consultation with the Equality and Human Rights Commission and Acas, whether existing guidance on the menopause adequately reflects the growing body of relevant tribunal caselaw and good practice and whether improvements can be made to increase employer and employee understanding of the law.

The letter also confirms that the government does not intend to implement the dual discrimination provision in the 2010 Act (which would allow an individual who believes that they have been treated less favourably because of a combination of two protected characteristics to bring a combined claim), as the protection under the existing protected characteristics is believed to be adequate and introducing combined discrimination would bring unwelcome regulatory complexity and place new costly burdens on businesses and the public sector. Employees can already bring a discrimination claim on two or more grounds, which the courts can consider within a single claim.

Higher damages against trade unions & temporary workers to replace striking employees

Against the backdrop of ongoing and proposed industrial action, new legislation has been laid before Parliament to increase the limits on the maximum damages award which may be made against a trade union where industrial action is found to be unlawful and to revoke the restriction on employment businesses supplying temporary workers to replace striking workers during official industrial action. It is intended that with effect from 21 July 2022, the limits on the maximum damages awards that may be made against a trade union where industrial action is found to be unlawful will be increased as follows:

  • Less than 5,000 members: £40,000 (currently £10,000).
  • 5,000 to 24,999 members: £200,000 (currently £50,000).
  • 25,000 to 99,999 members: £500,000 (currently £125,000).
  • 100,000 members or more: £1,000,000 (currently £250,000).

Regulations have also now been published which propose to revoke regulation 7 of the Conduct of Employment Agencies and Employment Businesses Regulations which prevents an employment business from supplying an employer with temporary workers to perform duties normally performed by a worker who is on strike or taking industrial action, or the duties normally performed by any other worker who has been assigned to cover a striking worker.

We spoke last week with Partner Julian Hemming who helps our clients with managing strikes and other forms of industrial action and you can listen to Julian below (or alternatively using this link).

Code of Practice on dismissal and re-engagement

We have previously reported on the government's announcement that it will issue a statutory code of practice on dismissal and re-engagement. During a debate in the House of Lords it has been confirmed that a draft code will be published for consultation this summer.

Salary sacrifice and pension contributions

This month's Pensions Spotlight turns its focus on salary sacrifice and the importance of ensuring that the employee continues to earn at least the National Living Wage.

Employers who operate salary sacrifice for pension contributions need to be satisfied that the cash wages payable to the employee after the pensions exchange amount to at least the National Living Wage (NLW).

It is important to note, however, that not all payments count towards the NLW. Overtime, shift premia and allowances are all examples of payments that do not count. Therefore, employers cannot add these payments to basic pay when calculating pay before the pension contribution exchange. If excluding such payments means that the exchange will reduce pay below the NLW, the employer will be in breach. 

Performance-related pay, bonuses and commissions, however, are examples of pay which do count, so the employer may include these amounts.

To help avoid inadvertent breaches, employers should have procedures to cap salary sacrifice (or remove some employees from the salary sacrifice arrangements) to ensure that NLW rates are maintained. It is often the case that a salary sacrifice policy will exclude employees below a certain salary level to preserve the NLW and entitlement to state benefits.

Where employees fall outside of the salary sacrifice scheme, they can still be asked to contribute to the pension scheme, but their contributions must be deducted from their pay. Pension contributions deducted from pay do not reduce the NLW provided the amounts deducted are not expenditure required in connection with the employee's employment or for the employer's own use or benefit. This proviso is met because pension contributions are made voluntarily and deducted for the purpose of passing them to the third party pension provider. 

If an employer has past payments to correct, it may well trigger a requirement to report to the Pensions Regulator, in which we can help discuss the form this should take and the steps needed to rectify the past. It is generally a good idea to outline the proposed remedy when reporting the breach.

Please do contact Osborne Clarke Pensions Partner, Claire Rankin, for more advice in this area.

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* This article is current as of the date of its publication and does not necessarily reflect the present state of the law or relevant regulation.

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