Employment Law Review - February 2021

 

Welcome to our February Employment Law update.

Although it's been a short month, there have been plenty of developments! The Supreme Court handed down its long awaited decision that Uber drivers are 'workers' and not self-employed for employment rights purposes. Our practical steps to managing risk for businesses that engage contractors are here. Since this judgment, around 8000 Uber drivers have filed claims both in the Employment Tribunal and Country Court to enforce worker rights.We also highlight some important cases, including a decision that a dismissal for refusing to wear a face mask was fair, and a case which highlights the importance of regular and effective anti-bullying and harassment training. As always, we bring you up to speed with the latest developments, including the ICO's guidance for employers on recording COVID-19 vaccination status, compliance principles for the changes to IR35 and the delayed enforcement of gender pay gap reporting.

• Coronavirus Developments

• Dismissal for refusing to wear a face mask was fair

• Employers must regularly review and refresh anti-bullying and harassment training

• Duty to make enquiries about confidential information provided by new staff

• IR35 enforcement – HMRC confirms a 12 month 'penalty holiday'

• Enforcement delayed for Gender Pay Gap reporting

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Coronavirus Developments

This month's key developments are below:

• Furlough Scheme extended – The Coronavirus Job Retention Scheme (CJRS) has been extended until 30 September 2021 for all parts of the UK. Both full and flexible furlough options remain available with employers being able claim 80% of an employee's usual salary for hours not worked, up to a maximum of £2,500 per month. From July 2021 employers will be required to contribute 10% towards the cost of hours their staff do not work, rising to 20% in August and September. Employers must pay employer national insurance and pension contributions on the full amount paid to the employee, including any CJRS grant.

• COVID-19 Vaccines and employee data – The Information Commissioner's Office (ICO) has recently published guidance on the data privacy issues that employers need to consider in relation to recording employee vaccination status. Employers' reasons for recording vaccination status must be clear and compelling because information relating to an employee's health is considered special category personal data. The guidance explains that to lawfully process special category data, employers must identify both a lawful basis for processing the data (under Article 6 UK GDPR) and a separate condition for processing the special category data (under Article 9 UK GDPR) identifying the 'employment condition' or 'public health condition' as the most appropriate. Transparency and communication of any such policies will be key and employers are advised to routinely review the need to collect this type of data as the vaccine roll out progresses.

• COVID-19 Workplace testing – Further guidance on workplace testing has been published and guidance on working safely during coronavirus has been updated to reflect the extension of rapid workplace testing to businesses with 50 or more employees. The guidance includes information on how to order lateral flow tests if employees cannot work from home. It also clarifies that employers must continue to follow the 'working safely' measures appropriate to its sector, even if employees test negative or have been vaccinated. Employers seeking to introduce a COVID-19 workplace testing policy should pay particular attention to its data protection obligations in the processing and recording of test results, and also consider how to communicate the policy to the workforce.

Dismissal for refusing to wear a face mask was fair

An Employment Tribunal has decided that an employee who was dismissed for refusing to wear a face mask whilst on client premises was fairly dismissed. This is a helpful case for employers. The decision supports the view that if a fair procedure is followed, dismissal for refusal to wear PPE can fall within the band of reasonable responses. This is likely to be the first of many cases on this issue so employers should be mindful that a different outcome could be reached on different facts.Mr Kubilius was a delivery driver for Kent Foods, a distribution company transporting food from suppliers to customers. The employee handbook required courteous treatment of all clients and that employees take all reasonable steps to safeguard their own health and safety and that of others. In addition, the drivers' handbook required client instructions regarding PPE to be followed. On 21 May 2020 Mr Kubilius attended a client's site. All visitors to the site were issued with a face mask on arrival. At the time, wearing face masks was not a legal requirement. Mr Kubilius refused to wear a face mask. The client reported the issue to Kent Foods and banned the individual from site. Kent Foods undertook an investigation and following a disciplinary hearing dismissed Mr Kubilius for gross misconduct.The Tribunal considered that the employer's decision to dismiss fell within the band of reasonable responses and was fair. It highlighted that Kent Foods had been entitled to take into account the importance of maintaining good client relationships, the fact that Mr Kubilius continued to say he'd done nothing wrong highlighting concerns about future conduct and that the client had banned him from site so it was not feasible for him to continue in his role.COVID-19 has seen many working practices change and has brought to the forefront employers' health and safety obligations to ensure a safe working environment, including by taking steps to lessen the risk of staff infecting one another at work. This decision gives employers an idea of how Tribunals might view misconduct dismissals relating to health and safety requirements.

Employers must regularly review and refresh anti-bullying and harassment training

The Employment Appeal Tribunal found that an employer could not rely on 'stale' and ineffective training to defend a harassment claim. Anti-bullying and harassment training should be regularly updated and the workforce routinely trained to demonstrate that organisations are taking all reasonable steps to prevent harassment in the workplace.An individual can make a claim for harassment against their employer on the basis that the employer is vicariously liable for the conduct of its employees in the workplace. Such claims can be defended if an organisation can show that it has taken 'all reasonable steps' to prevent an employee from carrying out acts amounting to harassment.Mr Gehlen alleged that he had been harassed by a colleague on the grounds of his race. An internal investigation concluded that the colleague had regularly made racist comments and was ordered to undertake further equality and diversity training. Mr Gehlen subsequently bought an Employment Tribunal claim that he had been subject to racial harassment during his employment. The Tribunal upheld the complaint concluding that Mr Gehlen's colleague had regularly made comments that Mr Gehlen should work in a corner shop, that he had brown skin and questioned why he was in the country. The Tribunal rejected the employer's defence that it had taken all reasonable steps to prevent harassment, even though equal opportunities and anti-bullying and harassment policies were in place. It considered the policies to be stale and ineffective, evidenced by the racist comments and the fact that other managers failed to take the necessary actions when they became aware of the inappropriate comments in the workplace. The EAT agreed, emphasising that it would have been a reasonable step for the employer to refresh the training provided to staff.This case demonstrates the importance of having comprehensive and effective training in place. Employers can expect Tribunals to scrutinise the quality of its training. In this case the Judge commented that 'if training involved no more than gathering people together and saying “here is your harassment training, don't harass people, now everyone back to work”, it is unlikely to be effective, or to last.' Freeths supports organisations with effective and tailored diversity and inclusion training. Please contact us to discuss the impact of this case on your business.

Duty to make enquiries about confidential information provided by new staff

The Court of Appeal has confirmed that an employer that had received confidential information from new employees who moved from a competitor, was liable to their former employer for breach of confidence. This case is a reminder to employers to make reasonable enquires about any potentially confidential information that a new starter brings with them.An equitable obligation of confidence arises where confidential information has been received without having been disclosed in breach of confidence and the recipient knows, or has notice, that the information is confidential.A number of employees left Trailfinders and entered into franchise agreements with a competitor Travel Counsellors Limited (TCL). TCL did not supply new franchisees with potential customers; they were encouraged to bring their own. Before the employees left Trailfinders, they took client contact and other relevant information and transferred this to TCL's systems. The High Court found that the ex-employees were in breach of contractual and equitable obligations of confidence. The Court also found that TCL was in breach of an equitable duty of confidence to Trailfinders because it had received information from the ex-employees which it knew, or had notice, was confidential and had used the information to benefit its business. TCL appealed, arguing that it did not know that the information received was confidential.The Court of Appeal rejected TCL's appeal. TCL was on notice that at least some of the information it had received from the ex-employees was likely to be confidential to Trailfinders, not least because TCL treated its own client lists as confidential. The volume of client information disclosed by the ex-employees (one list contained details of over 300 individuals) also supported the conclusion that TCL was on notice that some of the information was likely to be confidential. The Court concluded that a reasonable person in TCL's position would have made enquiries as to whether the information was confidential.Arguably this case imposes a greater burden on a recipient of potentially confidential information. If an employer receives information from ex-employees of another employer, it may have a duty to make enquiries about the confidentiality of that information to minimise the risk of being exposed to claims for breach of confidence or inducing breach of contract.

IR35 enforcement – HMRC confirms a 12 month 'penalty holiday'

A new policy paper has been published by HMRC outlining its approach to compliance with the changes to off-payroll working rules (IR35) and emphasises the importance of early notification of errors. IR35 is designed to make sure that an individual who works like an employee, but through a personal service company (PSC) or other intermediary, pays broadly the same Income Tax and National Insurance contributions as other employees. The IR35 rules do not apply to self-employed individuals.The changes to IR35 mean that responsibility for determining employment status for tax, will shift from the individual's PSC, to the business/end user engaging them which may also be required to pay the relevant employment taxes. The changes, which come into effect on 6 April 2021, will apply to all large and medium-sized businesses. Although the HMRC has confirmed that there will be 12 month 'penalty holiday' in respect of any inaccuracies, this will only apply if there is no evidence of deliberate non-compliance and if 'reasonable care' is taken in making employment status determinations. It is important for businesses to audit all self-employed contractors, make a status determinations via the online Check Employment Status for Tax tool (CEST) and, if relevant, pay the requisite employment taxes. Audits supported by a legal team are protected by legal privilege.The Uber decision together with the changes to IR35, see self-employed relationships under real scrutiny; both demonstrate that a written contract cannot mask the reality of a working relationship for employment rights and tax purposes. The tests applied to determine employment status for tax and employment rights are largely the same, and businesses making status determinations that contractors fall 'inside IR35' may be exposed to employment status claims in the Employment Tribunal or County Court. It is important to take advice on the potential risks, liabilities and opportunities in this area.

Enforcement delayed for Gender Pay Gap reporting

Qualifying employers are required to publish Gender Pay Gap (GPG) reports for the reporting year 2020/21. The Equality and Human Rights Commission (EHRC) has produced guidance on including furloughed employees in the report and has also confirmed that it will delay enforcement action for 6 months. This means all qualifying employers now have until 5 October 2021 to report GPG data, however, are encouraged to report before October 2021 where possible.