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Articles Employment 3rd Apr 2019

Employment Law Review – April 2019

Welcome to our April Employment Law Review. In this bulletin we take a look at new neurodiversity guidance, a further development on holiday pay, the question of when suspending an employee amounts to a breach of contract, and gender diversity in the boardroom. We also highlight key dates and new rates to be aware of this month.

  • ACAS guidance on neurodiversity in the workplace
    It is estimated that around 1 in 7 people (more than 15% of people in the UK) are neurodivergent, meaning that the brain functions, learns and processes information differently. Neurodivergence includes Attention Deficit Disorders, Autism, Dyslexia and Dyspraxia. ACAS has published new guidance on managing these conditions in the workplace.
  • Pimlico plumber loses substantial holiday pay claim
    This landmark case has seen many twists and turns relating to worker status, and following last year’s ruling that Mr Smith was in fact a worker, he brought a holiday pay claim. This was rejected on the grounds of being out of time. The outcome highlights the fact that many individuals may be unaware of their rights when it comes to holiday pay.
  • When is a suspension a breach of contract?
    A recent case raises the question as to whether an employee should be suspended whilst an employer deals with allegations of misconduct. The law is not clear on when suspending an employee amounts to a breach of contract, and the point was central to a claim against the London Borough of Lambeth.
  • Key dates and new rates to be aware of in April
    As usual, April sees annual updates to employment rates and limits. Figures have been confirmed for new payments, including the national minimum wage and employment tribunal limits. Employers also need to be aware of the deadline for gender pay gap reporting.
  • Companies called on to meet board gender diversity targets by 2020
    The proportion of women in the boardroom has traditionally been low, although, over the last couple of decades, progress has been made, partly in response to the demands of investors. A number of jurisdictions have adopted actions to increase female representation at boardroom level, and there is also research to suggest that a good level of gender diversity can improve boardroom effectiveness.


ACAS guidance on neurodiversity in the workplace

It is estimated that around 1 in 7 people (more than 15% of people in the UK) are neurodivergent, meaning that the brain functions, learns and processes information differently. Neurodivergence includes Attention Deficit Disorders, Autism, Dyslexia and Dyspraxia. ACAS has published new guidance on managing these conditions in the workplace.

Acas has published new guidance on managing neurodiversity in the workplace. Neurodiversity refers to people who have dyslexia, autism, ADHD, dyspraxia and other neurological ‘spectrum’ conditions. It affects the way in which one in seven people in the UK learn and process information. These conditions are not solely related to learning and can confer strengths and weaknesses.

The guidance seeks to identify policies and practices which help people with these conditions “get work and flourish within a diverse workforce” and explores issues relating to underperformance, recruitment processes, awareness, support and management, tailoring practices and the potential merits of a neurodiverse workforce. It explains the importance of employers taking steps to support neurodiversity in their workplace. What is important to recognise is that employers may be obliged to treat certain types of neurodivergence as a disability under the Equality Act 2010 and make reasonable adjustments.

More information can be found HERE

Pimlico plumber loses substantial holiday pay claim

This landmark case has seen many twists and turns relating to worker status, and following last year’s ruling that Mr Smith was in fact a worker, he brought a holiday pay claim. This was rejected on the grounds of being out of time. The outcome highlights the fact that many individuals may be unaware of their rights when it comes to holiday pay.

Employment status was once again rocked by the landmark case of Pimlico Plumbers Ltd and Mullins v Smith [2018] UKSC 29 last year when the Supreme Court considered whether Mr Gary Smith, a plumber engaged as an independent contractor was required to perform his work for Pimlico Plumbers personally. The Supreme Court found that this was the case and that Mr Smith was therefore a worker under s230 of the Employment Rights Act 1996.

Following this ruling, Mr Smith brought a holiday pay claim in the Employment Tribunal, who have now held that Mr Smith was not entitled to his alleged £74,000 arrears of holiday pay, as his claim was out of time. Under tribunal regulations, a holiday pay claim must be made within three months of each holiday period, unless each leave date was taken within three months of the last as a ‘series’ of leave. Mr Smith’s last holiday leave was on 4 January 2011, therefore, pursuant to the three-month tribunal time limit for lodging claims, his claim had to be lodged no later than 3 April 2011. Mr Smith lodged his claim in May 2011 after his employment was terminated, claiming holiday pay from the period of 2005 to his termination date, and argued that he did this because he did not know he was entitled to paid leave before this. Furthermore, when Mr Smith brought his tribunal claim in 2011, the law did not impose this three-month ‘series’ requirement.

Mr Smith is said to be “extremely disappointed at the outcome after spending seven years going through the courts defending his legal right to be recognised as a worker.” The written decision has not yet been published but it is understood that Mr Smith will appeal.

Comment: This ruling represents a blow to individuals who have been wrongly classed as self-employed for long period of time and are completely unaware of what rights they have in relation to holiday pay. Despite the three month requirement being favourable to employers, especially when coupled with the two-year long-stop on holiday pay claims, the time limit is subject to appeal. Therefore, employers should have clear policies on their holiday pay arrangements to minimise any confusion. In this regard, an employer should give employees holiday pay particulars which are sufficient to enable the employee’s entitlement to be easily calculated.

The decision in Pimlico comes just after the government announced the launch of a campaign to help workers understand their rights in relation to holiday pay. This may not necessarily increase the number of holiday pay claims in the Employment Tribunal, as the possibility that workers will become more aware that they may be owed holiday pay will be balanced against more employers becoming aware of, and complying with, their holiday pay obligations.

When is a suspension a breach of contract?

A recent case raises the question as to whether an employee should be suspended whilst an employer deals with allegations of misconduct. The law is not clear on when suspending an employee amounts to a breach of contract, and the point was central to a claim against the London Borough of Lambeth.

“To suspend or to not suspend” is often a question that hangs over an employer’s head when dealing with an employee who is faced with allegations of misconduct. Whilst most employers are aware that suspension should not be a knee jerk reaction, the law is not clear on when suspending an employee amounts to a breach of contract. The recent case of The Mayor & Burgesses of the London Borough of Lambeth v Agoreyo [2019] EWCA Civ 322 explores and sheds light on this situation.

Background
Ms Agoreyo worked for the Borough (the Respondent) as a primary school teacher. Following allegations that Ms Agoreyo had “dragged and carried” two children out of the classroom, she was suspended pending an investigation.

Ms Agoreyo was informed by the Respondent that the suspension was not a disciplinary sanction. However, Ms Agoreyo immediately resigned and brought a breach of contract claim against the Respondent, arguing that her suspension amounted to a repudiatory breach of the implied duty of trust and confidence.

The legal issue – what is the implied duty of trust and confidence all about?
All employment contracts include an implied term of mutual trust and confidence between the employer and employee, which, in a nutshell, means that the employer must not, without reasonable and proper cause, conduct itself in a manner calculated and likely to destroy or seriously damage the relationship of trust and confidence between employer and employee.

A repudiatory breach of this term may entitle an employee to terminate the contract and bring a claim for constructive unfair dismissal or wrongful dismissal. Therefore, an employer must satisfy itself that it has reasonable and proper cause to suspend an employee to avoid breaching this implied term.

Employers should consider the following questions when deciding whether to suspend an employee:

  1. Are the allegations so serious that, if they were upheld, the employer would be entitled to dismiss the employee without notice?
  2. Has there been a breakdown in the relationship between the employer and employee?
  3. Has the employer has lost trust in the employee?
  4. Has the employee threatened violence or damage to the employer’s property?
  5. Could the employee’s presence at work prevent the employer from being able to properly investigate the allegation (such as where the employee may destroy evidence or attempt to influence witnesses)?

Where the answer is yes to any of these questions, it may be appropriate to suspend an employee. However, alternatives to suspension should always be considered where appropriate.

Decisions at first and second instance
Ms Agoreyo brought a claim against the Respondent in the County Court, claiming that the suspension had not been reasonable nor necessary and therefore amounted to a repudiatory breach of the implied duty of trust and confidence. The County Court rejected the claim. However, on appeal, the High Court concluded that the Respondent did not have reasonable and proper grounds to suspend Ms Agoreyo. The Judge criticised the fact that the Respondent had not explored the alternatives to suspension and had not explained to Ms Agoreyo why it could not conduct a fair investigation without suspending her.

Decision on appeal
The Court of Appeal overturned the High Court’s decision and noted that where an employer has reasonable and proper cause to suspend, it will not breach the implied duty of mutual trust and confidence. This is a fact-specific question and not a question of law, and on the facts, there was reasonable and proper cause.

Key dates and new rates to be aware of in April

As usual, April sees annual updates to employment rates and limits. Figures have been confirmed for new payments, including the national minimum wage and employment tribunal limits. Employers also need to be aware of the deadline for gender pay gap reporting.

As usual, the annual updates to employment rates and limits will take place this month. The following figures have been confirmed:

  1. The national minimum wage will increase with effect from 1 April:
    a. National living wage (25+): £8.21 per hour;
    b. Adult rate (21+): £7.70 per hour;
    c. Development rate (18-20): £6.15 per hour;
    d. Youth rate (16-17): £4.35 per hour;
    e. Apprentice rate: £3.90 per hour;
    f. Accommodation offset: £7.55 per day.
  2. Statutory sick pay will increase to £94.25 per week from 6 April.
  3. Statutory maternity, paternity, adoption and shared parental pay will increase to £148.68 from 7 April.
  4. From 6 April, workers will be entitled to itemised payslips (please see last months’ Employment Review for more information on this).
  5. Where the effective date of termination is on or after 6 April 2019, the following new employment tribunal limits will apply:
    a. The cap on a week’s pay (for statutory redundancy payment/basic award) will be £525;
    b. The maximum basic award and statutory redundancy payment will be £15,750;
    c. The maximum compensatory award will be £86,444 (or 52 weeks’ pay if less);
    d. The maximum penalty for an aggravated breach of employment law will quadruple from £5,000 to £20,000.

Employers should also be aware of 4 April 2019, which marks the Gender Pay Gap reporting deadline.

Employers who pay the apprenticeship levy should also be aware that from April, they will be able to invest up to 25% of their levy to support apprentices in their supply chain.

Companies called on to meet board gender diversity targets by 2020

The proportion of women in the boardroom has traditionally been low, although, over the last couple of decades, progress has been made, partly in response to the demands of investors. A number of jurisdictions have adopted actions to increase female representation at boardroom level, and there is also research to suggest that a good level of gender diversity can improve boardroom effectiveness.

69 FTSE 350 companies have been called on by The Investment Association and the Hampton-Alexander Review to take urgent steps and set out action plans to improve the gender diversity on their board by 2020. The companies were approached on the basis that they have one woman or no women at all on their boards and were urged to ensure that they meet the Hampton-Alexander targets of 33% women on boards by 2020.

There are many different ways these companies could attract, recruit and promote women to board level, and these actions could include unbiased recruitment and selection practices, good work–life balance policies that support female staff with caring responsibilities as well as providing clear career paths and promotional opportunities.

Rachel Reeves MP, Chair of the Business, Energy and Industrial Strategy (BEIS) Select Committee, said “It’s clear that some old-fashioned attitudes to the role of women in the workplace still linger in some of the boardrooms of our biggest companies. The low numbers of women in executive positions can only hinder progress: gender pay gaps are highest in sectors with some of the lowest numbers of women executives. The time for our biggest companies to remedy the lack of gender diversity is long overdue and they need to set out what actions they are taking to make progress.”

In 2011 the Davies Report was published to develop a business strategy to increase the number of women on the boards of listed companies in the UK. This report was reviewed over the course of five years and its findings remained consistent that women in the boardroom improve corporate performance, corporate governance and market responsiveness. This view was supported by the evidence in the Davies Report that companies with more women directors achieved a 42% higher return in sales, 66% higher return on invested capital, and 53% better return on equity compared with their rivals. The report also found that there is a reduced risk of insolvency where at least one board member is a woman.

Whilst more and more companies are making or have made good progress in gender diversity in their boardrooms, the figures are still alarmingly low and does not reflect the female pool of talent who are capable of such a role.

 


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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