What do employers need to know and do this June?

Written on 15 Jun 2015

We set out below the key issues for employers in light of recent employment law developments. Also, please note that if you operate employee share plans, arrangements must be registered and annual returns submitted online to HMRC by 6 July 2015 (see here).

New laws introduced and what’s in the pipeline

On 26 May the ban on using exclusivity clauses in zero-hours contracts and the increase in the maximum penalty for underpayment of the national minimum wage came into force (see here). The following day the Queen’s speech set out the legislative reforms the Conservative Government will be focusing on (see here). The Secretary of State for the Department of Business Innovation and Skills has since indicated that the focus will be on the measures announced in the Queen’s speech as set out in the Conservative party manifesto. Questions have been raised as to whether the pledge to introduce volunteering leave in larger companies is now taking a back seat (see here). However, David Cameron did indicate this week that he would be “happy to consider” some form of grandparental leave (see here). Whether and when this happens remains to be seen.

The Ministry of Justice has this week also announced its review of Employment Tribunal fees. Depending on the outcome of this review it may be followed by a period of consultation on any proposed reforms (see here). In the meantime, UNISON is in the Court of Appeal next week with its judicial review of Employment Tribunal fees.  See our latest blog here.

 ET decisions emphasise the need for clear policies and procedures.  And have you planned beyond them?

The need for clear policies and procedures, which are kept up to date and notified to an employee, is demonstrated in two recent Employment Tribunal (“ET”) decisions dealing with mobile phone use.

  • In the first, a bus driver was seen holding his mobile phone while exiting a bus stand in breach of the employer’s very strict and clearly communicated mobile phone rules. His subsequent dismissal was found by an ET to be fair. The prohibition on the “visible presence” of mobile phones in the cab area of buses had been made very clear in the company’s written policies, which were regularly updated and circulated to employees and on posters around the workplace. (Ruparell v East London Bus & Coach Co Ltd)
  • In contrast, the dismissal of a long serving employee who was reported for using his mobile phone while driving in his own car into a workplace car park was held by an ET to be unfair. Amongst other matters, the ET noted that although the company’s policy covered driving both on and off the public highway while on company business there was uncertainty as to whether or not it applied to Mr Whitehead in the circumstances. He was driving his own car, not claiming a company car and was not on company business. Whilst the ET applauded the company for placing safety as its number one priority and accepted that managers must set an example, Mr Whitehead had not been given any copy of the policy to sign to acknowledge that he had been made aware of the rules. The ET stressed that the reason why such policies should be signed is so that employees are aware of the existence of particular rules and of the consequences of breaching a particular rule. (Whitehead v First Group Holdings Ltd)

However, as well as ensuring your written policies and procedures are up to date, clear and accessible, recent stories highlight that no policy will ever be able to cater for every eventuality. Employers must plan beyond their written policies and procedures to limit the damage to their business when staff are unwilling to play ball or perhaps simply do not think (see here).

EAT confirms that sub-contractors are caught by TUPE

Where a client engages a contractor to perform services, it is common for that contractor to sub-contract those services. Many outsourcing agreements between a client and its contractor will contain provisions dealing with the possibility of TUPE (the Transfer of Undertakings (Protection of Employment) Regulations 2006) applying to any further sub-contracting in the provision of the services. The Employment Appeal Tribunal(“EAT”) has now confirmed the importance of ensuring any potential sub-contracting arrangements are included in such agreements, finding that the wording of the service provision change clauses in TUPE covers not only the immediate relationship between the client and contractor but also the indirect relationship between the client and the sub-contractor. There is no need for a legal or contractual relationship. The question is on whose behalf is the sub-contractor performing the services? The case has been remitted back to the ET for a decision on the facts of the case. (Jinks v London Borough of Havering (2015))

Do you know who is providing services which your business relies on within your supply chain?

The Modern Slavery Act 2015 will require businesses operating within the UK to make disclosures regarding slavery and human trafficking in their supply chain. The disclosure provisions are expected to come into force this October and whilst the disclosure obligations will only apply to businesses with a total turnover of at least a specified amount (which the figure is still awaited), the amount which is specified is likely to relate to an organisation’s global turnover, not just that of the UK operation. Whilst the Act is intended to focus on large organisations whom the Government hopes will have sufficient resources and capabilities to investigate their supply chains and potentially exert real influence to eliminate any slavery and trafficking found, given the media scrutiny on this issue impacting on reputation, this is an issue which all employers must remain alert to. See our alert here.

A timely reminder to review recruitment processes as ET awards £16,000

The ET recently awarded £16,000 to a woman who applied for a job, was interviewed but was then rejected as she was unable to work Saturdays due to the fact she observed Shabbat (the Jewish day of rest which runs between sundown on Friday until sunset on Saturday). Her rejection was despite the fact that the company appeared to operate a shift system, incorporating two days off a week and which may potentially therefore have been able to incorporate Ms Fhima’s working requirements. Employers should ensure that if they do require strict days and times of work to be observed they are able to justify why this is so. (Fhima v Travel Jigsaw (2015)).

In another case, a day nursery was found not to have discriminated against an applicant, Ms Begum, in interview by requesting that she wore a shorter jilbab so as not to cause a tripping hazard. The Employment Appeal Tribunal upheld the ET’s decision that the nursery’s requirement not to wear a garment which potentially constituted a tripping hazard did not discriminate unfairly against Muslim women. The nursery allowed other members of staff to wear jilbabs and one such member wore a full length jilbab. In any event, if this requirement was found to be discriminatory against Muslim women, the health and safety concerns surrounding a possible trip hazard meant that this would be justifiable. Whilst the nursery was successful here, the case highlights the care that must be taken when tackling sensitive issues during the job application process and which may be perceived as discriminatory by the applicant. Indeed, it would be interesting to see if the ET would have reached the same decision had the nursery not had other staff members who already wore jilbabs. (Begum v Pedagogy Auras UK Ltd t/a Barkey Lane Montessori Day Nursery)

Voicing views in the workplace

How would you deal with two employees in the workplace where one’s religious views clash with another’s lifestyle? Essentially, the ET in a recent decision has reinforced the fact that employers will need to deal with such matters on a case by case basis and that it is not a case of religious beliefs trumping another form of protected characteristic or vice versa. Indeed, perhaps the real message from this case for employers is that when dealing with such matters the first step is to identify the point at which a matter should be dealt with under a formal disciplinary process and recognising that whilst the issues involved may be sensitive, resolution more informally may be appropriate. Where a formal process is appropriate, as in any situation, time should be taken to get it right.

In this case a discussion had taken place between Ms Mbuyi, an Evangelical Christian and her colleague, a lesbian, regarding attendance at church and the recognition of homosexual marriages. In the course of this conversation Ms Mbuyi had expressed her belief that God did not condone homosexuality and that it was a sin but that indeed we are all sinners. Ms Mbuyi’s colleague was upset but did not raise any formal complaint. Ms Mbuyi was however dismissed in light of her remarks and the ET found that as a consequence Ms Mbuyi had been unlawfully discriminated against.

However, the decision is not a signal that one form of protected characteristic out trumps another (and indeed it should be remembered that this is only an ET decision). The case, as with others on this issue, is very much on its own facts. Whilst the ET here had found that Ms Mbuyi’s beliefs were worthy of respect in a democratic society, the investigation process had been inadequate with stereotypical assumptions regarding Evangelical Christians influencing the process. Further, Ms Mbuyi had not been forcing her religious belief on her colleague. She was simply responding to issues raised with her in what appeared to be a reasonable manner.  (Mbuyi v Newpark Childcare (2015))

On a related note, the “gay cake” row will not have escaped notice and highlights particularly the publicity that can surround issues of discrimination in the provision of goods and services. Whilst Mr Lee won his lawsuit against Ashers bakery, a Christian bakery, for refusing to decorate a gay-themed cake including the slogan “Support Gay Marriage”, his compensation was a low £500.   Ashers bakery is now appealing (see here).  Please do contact your usual OC Contact if you have any questions regarding the duty not to discriminate in the provision of goods and services, including the duty to make reasonable adjustments for disabled clients and customers (see here). 

Tax status of payments in settlement agreements

A decision of the Tax Chamber of the First Tier Tribunal has demonstrated the careful analysis that is required when looking at the tax treatment of payments made in a settlement agreement. The Tribunal held that a £600,000 payment made by a bank to an employee under a compromise agreement (now termed settlement agreements) was made to settle a potential race discrimination claim and was not therefore “earnings” from employment, even though it was calculated by reference to loss of earnings (here the payment reflected compensation for “low” bonus awards on account of alleged race discrimination). The reason why the payment was being made by the bank was key in the Tribunal’s analysis. On the facts there was strong evidence that Mr A intended to bring a claim for race discrimination relating to alleged discrimination during the course of his employment and that the payment was made to settle the potential claim. It could not therefore be taxed as “earnings” under section 62 of the Income Tax (Earnings and Pensions) Act 2003 (“ITEPA”).

The compromise agreement also contained specific payments relating to Mr A’s redundancy, reinforcing the fact that when looking at payment(s) made under any settlement agreement a careful analysis should be made of which charging provisions apply from a tax perspective and whether it should be split into different parts. Elements included in a settlement agreement may be taxable as earnings under a number of charging provisions including section 62 ITEPA, section 401 ITEPA or may fall outside such provisions. We must now wait to see if HMRC applies for permission to appeal this decision. If you wish to discuss this decision further, please do contact your usual OC Contact. (Mr A v HMRC (2015))