Employment Review – March 2018
In this month’s update we take a look at several cases – covering employers’ knowledge of disability in relation to reasonable adjustments claims, redundancy consultation in the event of liquidation, a working time issue and an immigration case relating to right to work documents. You can also read a summary of the government response to the Taylor Report and catch up on changes to statutory payments and Tribunal awards.
- Knowledge of disability
- Redundancy consultation
- Time spent on call and working time
- Increase in statutory payments and awards
- Taylor report on gig economy
- Business immigration: Right to work documents
Knowledge of disability – Donelien
In Donelien v Liberata UK Ltd, the Court of Appeal considered whether an employer had constructive knowledge of an employee’s disability in a reasonable adjustments claim. An employer’s duty to make reasonable adjustments is only triggered when the employer has actual or constructive knowledge of an employee’s disability. Constructive knowledge arises where the employer could reasonably be expected to know of the disability.
Ms Donelien (D) was employed by Liberata UK Ltd as a court officer. In October 2009 she was dismissed for her persistent short-term absences and failure to comply with the absence notification procedure. In the last year of her employment, D was absent from work for 128 days. She gave a number of different reasons for her absences, including hypertension, viral illness, dizziness, difficulty breathing and stomach upsets and on one occasion she provided no reason for her absence.
In May 2009, Liberata referred D to their occupational health service. Liberata asked a number of questions, including whether there was any medical condition that explained D’s absences. The occupational health service met with D and issued a report in July 2009. This stated D was not disabled but it failed to respond to all the questions Liberata had asked.
Liberata followed up this report by receiving a second more detailed report from another doctor at the occupational health service who had not met D, but had discussed the case with the doctor who produced the first report. Like the first report, the second report did not provide sufficient responses to the questions Liberata had asked. Liberata did not follow this up. However, it did attempt to investigate whether D was disabled by holding “return to work” meetings with D and considered correspondence from her GP. D was dismissed and she subsequently brought a number of claims including a claim for failure to make reasonable adjustments.
The Court of Appeal held, by unanimous decision, that the employer did not have constructive knowledge of the employee’s disability and was not therefore under a duty to make reasonable adjustments. The test was whether the employer could reasonably be expected to know that the employee was disabled at the time and not whether it could have done more. Liberata had not blindly accepted the opinion given by occupational health. Liberata had taken reasonable steps to determine whether D was disabled as it had gone back to the occupational health service for a second opinion and had conducted further investigations before reaching a conclusion.
This case means that employers can rely on advice from their occupational health advisers in determining whether an employee has a disability for the purposes of the Equality Act 2010 provided the right questions are asked and further clarification is sought where appropriate. If the report from Occupational Health does not address all the issued raised by the employer, then this should be followed up. The case confirms that an employer does not need to take every possible step to check whether an employee is disabled (to avoid having constructive knowledge of the disability) rather, the test is what the employer could reasonably be expected to know.
Redundancy consultation – Keeping Kids Company
In Keeping Kids Company v Smith and others, Employment Appeal Tribunal (EAT) considered when the duty to commence collective redundancy consultation arose when a charity went into liquidation.
Keeping Kids Company (KKC) was a charity that assisted marginalised and disadvantaged children. In late 2014 KKC was in severe financial difficulties. On 12 June 2015 it applied to the government for a grant of £3 million. In its application, it proposed a business plan that involved a restructure. This suggested that over 50% of posts might be deleted but no specific posts were identified.
On 29 July 2015 the government offered a grant on the basis of KKC’s business plan. The same day, KKC sent an email to all staff indicating that discussions with the government had been resolved and salaries would be paid the following day. On 30 July 2015, KKC paid the salaries, but it was also revealed that the Metropolitan Police were investigating safeguarding issues at KKC. On 3 August 2015 the Cabinet advised KKC the grant was terminated and demanded immediate return of any unspent grant money. On 5 August 2015 KKC closed and all employees were dismissed.
A number of employees brought claims against KKC for failing to consult under s188 TULRCA. This is the section that requires collective consultation where an employer proposes 20 or more redundancies within a period of 90 days or less.
The requirement to consult arises when the employer is “proposing to dismiss” employees as redundant. The consultation must begin “in good time”. There is a limited exception for employers in terms of the obligation to collectively consult where there are “special circumstances which render it not reasonably practicable” for employers to comply with the consultation obligations.
A failure to collectively consult can be very costly because it can result in a protective award of up to 90 days’ pay for each affected employee.
The Employment Tribunal decided in favour of the employees. It found that there was a proposal to dismiss by 12 June 2015 and although it did not know who would be made redundant, this did not permit the consultation to be delayed. It also found that the events which led to KKC’s demise did not amount to a “special circumstance”
KKC appealed to the EAT. The EAT dismissed the appeal. It held there was a clear “proposal to dismiss” on 12 June 2015, when KKC submitted its application because its business plan would potentially see over 50% of posts removed. KKC could not say it did not have sufficient information to comply with its collective consultation obligations until the government had responded to its application. The EAT also held the consultation had to begin promptly after 12 June 2015.
This case illustrates that an employer’s obligation to begin collective consultation starts when it has a clear proposal to dismiss at least 20 employees through redundancy. This obligation starts irrespective of whether the employer has yet identified which employees are at risk.
Time spent on call and working time – Matzak
In Ville de Nivelles v Matzak, the ECJ considered whether time spent by firefighters on “stand-by” at home who may be required to report to work within 8 minutes constituted working time under the Working Time Directive.
Matzak (M) is a retained firefighter for Ville de Nivelles. He is required to be on stand-by for work during evenings and weekends for one week out of every four. When M is on stand-by, he must remain contactable and he must be able to report to the fire station within eight minutes. This means M must live near the fire station and the activities he can do whilst he is on stand-by are restricted. Time spent on stand-by is unpaid. M brought proceedings against his employer, complaining that he should be paid for the time he spends on stand-by.
The ECJ held that stand-by time, where an employee is under a duty to respond to calls within 8 minutes, must be considered as working time. M was required to remain no more than 8 minutes away from the fire station, which limited the opportunity M could dedicate to his personal activities. Therefore M’s circumstances could be distinguished from a person who whilst on stand-by is only required to be contactable by his employer, but free to engage in other activities.
This case confirms that where an employee’s ability to engage in personal activities is significantly restricted whilst they are on stand-by, the time they spend on stand-by will constitute working time. Such hours will therefore count towards their hours for the purposes of the 48 hour working week. It is difficult to say what a “significant” restriction is, but it is the longer the time an employee has to respond and attend the workplace, the less significant the restriction will be. We will have to wait for future cases to provide some guidance on this point.
This case was brought under the European Working Time Directive and therefore relates to working hours for working time purposes, so it does not strictly make a decision on whether the hours constitute working time for the purpose of National Minimum Wage and therefore whether a UK employee has to be paid for such hours. The National Minimum Wage Regulations have their own provisions in relation to on-call and standby work which need to be carefully considered and applied to the particular circumstances of any case.
April increase in compensation limits, NMW, SMP and SSP
From 6 April 2018, compensation limits for certain tribunal awards and other statutory payments will increase from their current level.
The increases are as follows:
- Maximum limit on a week’s pay (used to calculate statutory redundancy payments and awards including basic and additional awards for unfair dismissal) will increase from £489 to £508
- Maximum compensatory award for unfair dismissal will increase from £80,541 to £83,682
- Minimum basic award for certain unfair dismissals (dismissals for reasons of train union membership or activities, health and safety duties, pension scheme trustee duties or acting as an employee/workforce representative) will increase from £5,970 to £6,203.
In relation to dismissal cases, it is important to note that the new figures only apply where the effective date of termination falls on or after 6 April 2018. Where the effective date of termination falls before 6 April 2018, the previous limits will apply.
National Minimum Wage
From 1 April 2018, the NMW will increase as follows:
- National living wage (workers aged 25 and over) will increase from £7.50 to £7.83
- Standard adult rate (workers aged between 21 and 24) will increase from £7.05 to £7.38
- Development rate (workers aged between 18 and 20) will increase from £5.60 to £5.90
- Young workers rate (workers aged under 18 but above the compulsory school age who are not apprentices) will increase from £4.05 to £4.20
- Apprentice rate will increase from £3.50 to £3.70
Statutory Maternity Pay and Statutory Sick Pay
- From 1 April 2018, statutory maternity, paternity, adoption and shared parental pay will be increased from £140.98 a week (the current level) to £145.18 a week. Maternity allowance will increase to the same rate on 9 April 2018.
- From 6 April 2018, statutory sick pay will increase from £89.35 a week (the current level) to £92.05 a week.
Government response of Taylor report on gig economy
On 7 February 2018, the government published a response to the Taylor Report setting out its proposals. We have set out a summary of the government’s responses to the key proposals in the Report below.
The government is committed to acting in this area. It is concerned about retaining the flexibility in the labour market and wants to avoid imposing unnecessary burdens on businesses. Therefore the government will carry out a consultation to determine the best way forward.
Online employment status tool
The government is intending to develop one, but says it will be complex and will need to follow final decisions on the legislative framework.
Written statement of terms
The right to a written statement of terms will be extended to all workers. The government will consult on the best way to do this and what information should be included in the statement. It also intends to introduce a right to request a more predictable contract for all workers.
Determining employment status
The government has decided not to take forward the proposal for employment status hearings to be expedited and for the burden of proof to be reversed in such cases.
Enforcing employment rights
The government wants to simplify the process of enforcing tribunal awards. It also intends to name and shame employers who do not pay tribunal awards and agrees that employment judges should consider stronger punishments for employers who ignore previous tribunal judgments.
Gig economy workers and NMW
The government has said it will look to define what constitutes working time for gig economy workers who are entitled to NMW. It will consult on how working time should apply to platform working.
The government has agreed with the recommendation to explore the effect of introducing a higher NMW rate for hours that are not guaranteed in the contract.
As part of its response, the government has launched four further consultations in the following areas:
- Enforcement of employment rights
- Agency workers
- Measures to increase transparency in the UK labour market
- Employment status
It is uncertain how long it will take the government to undertake these consultations. In addition, there are parts of the review that require further clarification. For example, it is not clear what the right to request a more predictable contract entails. With further detail required, it remains to be seen whether there will be a change in the law and how significant it might be. We will hopefully have more information when the government has concluded its consultations.
Business immigration: legal update
Right to work documents: Baker v Abellio
Is a failure to produce right to work documents a valid reason to dismiss on grounds of ‘illegality’? A recent Employment Appeal Tribunal judgment suggests that the answer is sometimes ‘no’.
The employer, Abellio London Ltd, a bus company, dismissed Mr Baker, a bus driver employed by them, on the basis that he could not prove his right to work. He was a Jamaican national who had lived in the UK since childhood. The right to work issue came up upon an audit. He was eventually able to produce an up-to-date Jamaican passport, but that was not sufficient to prove his right to work. He was suspended and directed to obtain a ‘No Time Limit’ (“NTL”) endorsement by applying to the Home Office, to prove his right to work. He refused to do so on the basis that he thought it was not required, and in any event, he could not afford the application fee (having been suspended without pay).
What has changed?
At first instance the Employment Judge had held that Mr Baker’s failure to provide documentary proof of his right to work in UK was a valid reason for the company to dismiss him on grounds of ‘illegality’. The Employment Appeal Tribunal has disagreed and overturned this decision. It highlighted that Mr Baker was not subject to immigration control, and so no NTL document was required. This is a new interpretation of the prevention of illegal working legislation and does not sit comfortably with the Home Office’s approach here, which, according to Abellio, advised that Mr Baker’s right to work documents were not sufficient to establish a statutory excuse.
How does this affect employers / HR teams?
The judgment seems somewhat unfair on employers given that you cannot know if an employee is subject to immigration control unless that employee provides the right to work documents requested. A lesson here is that it will often be prudent to plead ‘some other substantial reason’, in addition to ‘illegality’. In this appeal, although illegality was not made out, ‘some other substantial reason’ was upheld insofar as Abellio’s belief that it could not employ Mr. Baker was a genuine one.
The reason many employers suspend without pay pending a disciplinary hearing is to ensure that, if it is confirmed that the employee does not have the right to work, no further payments will have been made which could amount to the proceeds of crime. This is generally a sound approach but ironically on the facts of this case the apparent consequence was that Mr Baker could not afford the application for the right to work document which was needed. The employer actually funded his application for a new passport, but there was no indication of any help having been given with the fee for the NTL application.
The issue ought to have been picked up by the employer before Mr. Baker commenced employment. It is unlikely that any claims would have been triggered if the requirement for the NTL application had been raised before he started with the company. The difficulties faced here were a consequence of no statutory excuse having been established at the outset.
This case illustrates that it is crucial to conduct thorough right to work checks before on-boarding new employees. Our new right to work App has been designed to help HR staff secure a statutory excuse in a simple and easy way, using your iPhone or Android phone. Get in touch with us if you would like to learn more.
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The content of this page is a summary of the law in force at the date of publication 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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