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Articles Employment 7th Jul 2017

Employment Review: July 2017

This month we consider four cases which address significant issues including the question of a father’s remuneration rights in only the third reported decision on Shared Parental Pay, the irrelevance of an employer’s belief that a disclosure was not protected in the context of a whisteblowing dismissal claim, the impact of worker status on holiday entitlement and a reminder about the costly risk of pregnancy discrimination to employers.

We also report on increasing numbers of auto-enrolment compliance spot checks and Theresa May’s “fair and serious” offer on the rights of EU citizens living in the UK post-Brexit.

Shared Parental Pay

Ali v Capita Customer Management Limited (March, 2017)

An employment tribunal has held that it was direct sex discrimination for an employer not to enhance shared parental pay for a male employee (beyond the two weeks’ leave the employer offered on full pay) when female employees on the same contract were entitled to 14 weeks’ enhanced maternity pay.

Mr Ali was a former Telefonica employee who transferred to Capita under TUPE. When Telefonica employees transferred, Telefonica’s policies transferred with them. Under the Telefonica policies, new fathers are entitled to two weeks’ full pay during their paternity leave. Mr Ali argued that the employer’s assumption of paying a man caring for his baby less than a woman performing the same role took away the choice that he and his wife wanted to make as parents for their baby. According to Mr Ali, this was directly discriminatory on the grounds of sex and not a valid assumption to make in 2016.

The employment tribunal upheld Mr Ali’s sex discrimination complaint. It accepted that men are being encouraged to play a greater role in caring for their babies. The employment tribunal believed that the role of primary carer is a matter of choice for the parents, but that the choice should be free of “generalised assumptions” that the mother is always best placed to undertake the primary role and should get full pay.

The decision is thought to be only the third case on the enhancement of shared parental pay, following a successful claim against Network Rail and an unsuccessful claim against Leicestershire Police.

Commentary: This case will be of interest to any employer who currently pays enhanced maternity pay but does not reflect this enhancement in parental leave pay. The risk of a direct discrimination claim continues to pose a threat to employers. However, this case is a first instance decision based on its own facts, it is not binding and also conflicts with a previous case. It is also understood that the case is being appealed which we will of course keep you updated about. Once we have a finding from the appeal court, employers will be in a much stronger position to consider making changes to their policies. However, in the meantime, it would be advised that employers run a risk assessment on their policies so they can assess the financial impact of any changes that may need to be made.

Employer’s belief that a disclosure was not protected is irrelevant

Beatt v Croydon Health Services NHS Trust (May, 2017)

In a whistleblowing unfair dismissal case, the fact that the employer believed that the employee’s disclosure was not protected is irrelevant. If the employer dismisses the employee for making a disclosure which the tribunal finds was protected, the dismissal will be automatically unfair.

In Beatt v Croydon Health Services NHS Trust, Mr Beatt, a consultant cardiologist, made a number of claims relating to staffing levels, experience of staff and patient safety. The Trust investigated his concerns under its “Speak Up Policy” and concluded that his claims were entirely without merit. A disciplinary investigation ensued and a number of charges were upheld following a disciplinary hearing. These included that he had made unsubstantiated and unproven allegations of an unsafe service and of unsafe staffing levels. The Trust concluded that his claims were made as part of a campaign against a colleague, were vexatious and were calculated to hamper the safe and effective running of the department. It dismissed him for gross misconduct.

Mr Beatt claimed that his dismissal was automatically unfair on whistleblowing grounds. The Trust argued that his disclosures were not protected as he did not reasonably believe that a person’s health and safety was being or was likely to be endangered. The employment tribunal upheld his claim, ruling that he had made a number of protected disclosures and this was the principal reason for his dismissal. The Trust appealed and their appeal to the EAT was successful. Mr Beatt then appealed to the Court of Appeal.

The Court of Appeal upheld the original tribunal’s decision.

Commentary: Employers cannot defend a claim of whistleblowing automatic unfair dismissal by arguing that they did not believe that the disclosure made by the employee qualified for protection. If the tribunal finds that the employee’s disclosure was a protected disclosure, the employer’s belief is irrelevant. This case emphasises how hard it will be for an employer who has dismissed a whistleblower to separate the issues of dismissal and protected disclosures. With difficult employees, it may well be challenging to prove that any protected disclosures made were irrelevant to the dismissal.

Tribunal awards £25,000 to trainer who lost job over pregnancy

Ms D Lewandowski v Bradford District Apprenticeship Training Academy (April, 2017)

A woman has been awarded £25,000 in compensation after an employment tribunal ruled she had been unfairly dismissed after she became pregnant.

Lewandowski was initially employed on a fixed-term contract due to end in March 2015. Her contract had been verbally extended in December 2014, after she had been promoted and awarded a pay increase, to 31 March 2016. Lewandwoski claims that she was then offered a further extension to 31 March 2017 which she verbally accepted. She claims she then spent five weeks chasing written confirmation. She was later dismissed in February 2016, shortly after announcing her pregnancy.

The agency denied Lewandowski lost her job because of her pregnancy, telling the tribunal that she was dismissed because of redundancy, and that her fixed-term contract had expired. They claimed that a formal extension had not been offered and that was the reason Lewanwoski was chasing the written offer. However, the tribunal found that the agency had offered “unreliable” evidence. The tribunal said the agency’s behaviour was “substantially and procedurally unfair”, stating that firing an employee over their pregnancy was a “serious act of discrimination”.

Lewandowski was awarded £9,130 for financial loss of earnings including interest, £15,600 for injury to feelings and £435 for loss of statutory rights.

Commentary: It was clear from the evidence given in this case that the real reason for dismissal was the claimant’s pregnancy. The amount of compensation awarded for injury to feelings demonstrates how dimly a tribunal will view such discrimination. Employers would be advised to provide regular equality and diversity training in the workplace to ensure that grounds for claims of discrimination do not arise. Employers would also be advised to document any variations to contracts in writing as and when they are agreed verbally so as to avoid any potential dispute at to the terms.

Pensions auto-enrolment spot checks

Since March, the Pensions Regulator (TPR) has been making spot checks on employers across the UK and is looking to enforce employers’ auto-enrolment duties by using its statutory powers to obtain information and enter premises.

The focus is on employers that TPR judges to be at risk of failing to meet their auto-enrolment duties. These can be employers that failed to lodge a declaration of compliance on time or declared fewer jobholders than TPR expected.

All employers in existence in early 2012 have passed their staging dates and most new employers must also comply with auto-enrolment. TPR is now well-placed to look back and identify non-compliant employers. It has also warned that all employers set up from October 2017 must comply from day one.

Failure to comply with a demand for information can lead to a civil fine or criminal prosecution.

The recent case involving Johnsons Shoe Company in May 2017 resulted in a massive fine. TPR published a press release about Johnsons Shoes Company, an employer it had issued with penalty notices. In April 2015, seven months after Johnsons failed to complete a declaration that it had complied with its auto-enrolment duties, TPR issued a notice ordering it to do so by the end of June. It failed to do this and received a fixed penalty notice for £400. In November this became an escalating penalty, increasing by £2,500 a day. Johnsons finally complied in December when the penalty was £40,000. TPR enforced the debt through the courts.

Employer’s should ensure that they are fully compliant. If you have any concerns the Freeth’s pension team will be able to provide help and support.

Can workers carry over holiday that they have been prevented from taking when they are mistakenly classed as self-employed? The Attorney General for the ECJ Gives His Opinion

Opinion on King v The Sash Window Workshop given by Advocate General Tanchev (June, 2017)

In another significant holiday pay case, the Court of Justice for the European Union (CJEU) Advocate General (AG) has given an opinion in the case of King v Sash Window Workshop Ltd.

King was working as a salesman, receiving only commission, for 13 years. During his engagement he took different amounts of holiday each year but this was unpaid because the company, and King himself, believed him to be self-employed meaning he was not entitled to holiday pay. King’s contract was terminated in 2012 and Mr King brought claims in the employment tribunal for age discrimination and unpaid holiday pay under the WTR 1998. Mr King’s holiday pay claim was divided into three main issues. Firstly, holiday pay relating to paid leave accrued but untaken during Mr King’s final (incomplete) leave year. Second, holiday pay relating to holiday which Mr King took during the previous 13 years with Sash Windows but was not paid and thirdly, holiday pay relating to leave which Mr King was entitled to by way of his employment status as a worker but had not actually taken.

As a starting point, the employment tribunal accepted that both the company and Mr King had mistakenly believed that he was self-employed. He was deemed a worker. The tribunal also accepted that Mr King would have taken more holiday had he been paid for his annual leave.

Mr King succeeded in the employment tribunal with respect to his claim for discrimination and paid holidays under all three headsoutlined above. However, the claim for holiday under the third head (ie holiday pay for leave Mr King was entitled to as a worker but had not actually taken) was appealed to the EAT and then the Court of Appeal. The Court of Appeal referred the case to the ECJ to determine whether the Claimant needed to take leave before knowing whether he was entitled to be paid for it. In considering this question, the Attorney General for the ECJ held that if a worker is not given the right to paid leave (even where neither party realises such a right exists as in this case) then that right carries over until they get a chance to take it. It added, on termination, the worker would be entitled to payment in lieu for all such untaken leave for the full period of employment.

It remains to be seen whether the CJEU will follow this opinion and it is interesting and a little surprising to note that the limitation issues in Fulton v Bear Scotland that were discussed in the June Employment Bulletin were not considered in this case. If adopted by the CJEU this means that if an individual is found to be a worker and says that he would have retrospectively taken more holidays had they been paid for them then the worker would be entitled to carry over the holidays until either: they are given an opportunity to take them or they are paid for them on termination.

Commentary: The outcome of this case will evidently be significant where the status of the individual is disputed. The AG opinion is not binding on the CJEU, nor UK employers at this stage. Nevertheless, it is important to note that while most businesses won’t be affected, those that engage individuals on a commission-only basis, or on other non-standard contracts, and do not provide for paid holiday, may be hit hard should at a later date this status be challenged. Employers who find that those they have always regarded as self-employed contractors actually have worker status will now potentially be faced with a significant financial liability for unpaid holiday pay.

Theresa May’s offer on EU Citizens’ Rights in the UK

Theresa May has made a “fair and serious offer” to European Union leaders over the future rights of EU citizens, offering those who arrive lawfully before Brexit the chance to build up the same rights to work, healthcare and benefits as UK citizens. May told European Union Leaders that the UK was willing to agree to a “cut-off point” between the 29th March this year, when Article 50 was triggered, and March 2019 as preferred by the European Commission.

The government’s previous position was that it wished to deal with the rights of EU citizens as part of the withdrawal negotiations with the EU, rather than to unilaterally guarantee their rights. This position has given rise to considerable uncertainty for EU citizens and their family members living in the UK.

The government’s offer sets out that all EU citizens and their families in the UK will need to apply to the Home Office for permission to stay. This will be required by UK law once the UK leaves the EU. The permission to stay will be in the form of a residence document demonstrating settled status.

It appears to be proposed that this process will be in addition to that already in place for securing EU residence documents. For example, those who already hold a permanent residence document under free movement rules will still have to apply for settled status. EU citizens already in the UK – and those who arrive lawfully during a subsequent “grace period” – expected to be up to two years – will be given the opportunity to build up the five years’ residence as a ‘qualified person’ required for Permanent Residence. After the “grace period” has elapsed, newly arriving EU citizens will be subject to whatever immigration system replaces freedom of movement after Brexit.

EU citizens make up a substantial contribution to our vital industries. Figures published in February from the Office for National Statistics showed there were 2.2 million people working in the UK at the end of last year who were nationals of another EU country. A number of key questions remain unanswered such as the terms under which EU nationals can work here and vice versa. The domestic workforce in England could not plug in the gaps migrant labour fills so this is a critical issue and the unanswered questions will leave those recruiting EU citizens on edge as to what is to come. EU workers’ contribution to the economy must not be underestimated.

If companies want to be certain over the future of their EU skilled workers, they are advised to encourage any EU workers, who are classified as a ‘qualified persons’, to apply for a registration certificate. This will prove their right to live or to work in the UK and give the assurance employers need ahead of any immigration changes imposed.

Companies that hold a Sponsor Licence are permitted to employ non-EU workers in the UK and we may see the same or similar work sponsorship system introduced for European workers for those who do not enter the UK during the ‘grace period’. Companies may be reluctant to recruit due to costs this may incur for example, sponsorship for employees to stay in the UK. From April this year, with the introduction of the Immigration Skills Charge, a new visa could be anything up to £5,000 more for non-EU citizens, which will create a significant financial burden for employers on top of the existing fees. If the sponsorship requirement is extended to EU workers, companies may have to apply for a separate licence, at a cost still unknown. Given the CIPD reports on EU worker shortages, these extra costs are likely to fuel the skills crisis even further.

The content of this page is a summary of the law in force at the present time and is not exhaustive, nor does it contain definitive advice. Specialist legal advice should be sought in relation to any queries that may arise.

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