Employment Law Update - September 2022

 

Welcome to our employment law update bringing you up to speed with this month's key cases and developments.

In this month's update we discuss several important cases which recently came before the Employment Tribunals: an original report made during grievance proceedings did not benefit from retrospective legal privilege, the meaning of `in connection with` an employment contract under TUPE 2006 was discussed, and an employee with long COVID was found to not be disabled at the time of dismissal. The new `Brexit Freedoms Bill` and its proposals are also discussed.

• Brexit Freedoms Bill introduced to Parliament

• Grievance Report did not receive retrospective legal privilege

• Right to participate in share incentive plan held to transfer under TUPE 2006

• Employee with long COVID was not disabled at time of dismissal

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Brexit Freedoms Bill introduced to Parliament

On 22 September 2022, the Retained EU Law (Revocation and Reform) Bill otherwise known as the `Brexit Freedoms Bill`, was introduced to Parliament. This Bill reflects the Government's intention to repeal or amend all retained EU law and to re-establish the supremacy of domestic law. With effect from the end of 2023, all retained EU law will either be restated, replaced, or revoked. Any EU law following the end of 2023 will be known as `assimilated` law. The principle of supremacy of EU law will be abolished and domestic law will acquire priority over any retained EU law. It should be noted that the Bill does contain provision for the order of priority to be reversed for specified legislation, which would allow the retained EU law to regain precedence. Any EU derived secondary legislation, or EU direct legislation which is not specifically dealt with will effectively cease to exist after 31 December 2023, as set out in the `sunset` clause. Although this clause will not apply to any employment laws contained within Acts, this is anticipated to have a significant impact on a wide array of employment regulations, such as TUPE and the Working Time, Agency Workers, Part-Time Workers, and Fixed term Employees Regulations. It is unclear what steps the Government will take to preserve or amend any of these Regulations before the sunset date. The Bill does make provision for the deadline of 31 December 2023 to be further extended to June 2026 so developments may yet be delayed further.

Grievance Report did not receive retrospective legal privilege

The Employment Appeal Tribunal (EAT) has upheld the lower tribunal's ruling that the original version of a report made during grievance proceedings did not benefit from retrospective legal privilege.The concept of legal privilege is designed to permit clients to seek legal advice without the other side being able to see that legal advice.Mr Chakraborty had been employed by the University of Dundee as a research assistant. He subsequently raised a grievance against his line manager for harassment, bullying and discrimination. An internal investigation was carried out, and a report produced. Following a review by external solicitors, the report was then amended. At this point, Mr Chakraborty submitted claims of harassment and racial discrimination to the Employment Tribunal. In the hearing bundle, the University included the revised report but omitted to include the original unamended report. Mr Chakraborty then applied for disclosure of the original report, but this was opposed by the University, who submitted that the original report attracted the protection of legal privilege. The Employment Tribunal rejected this submission and made an order for disclosure.On appeal the EAT stated that the report was not a `communication between a client and a legal adviser for the purposes of...giving or receiving legal advice`. Nor was it a document `created in contemplation of litigation`. Instead, it was `an investigative response to a grievance`. Therefore, at the time of its creation, the report attracted neither legal advice nor litigation privilege. While the University admitted this, it argued that privilege nevertheless attached retrospectively to the report. This was on the basis that the external solicitors had given advice about the report, which had led to the amended version being produced. The University argued that if the original report was to be disclosed, it could be compared against the revised version, and it would thus be possible to infer what legal advice had been provided by the external solicitors.The EAT found this argument unpersuasive, stating that it was `unsupported by authority`. The original document could not retrospectively become privileged even if a potential consequence of its disclosure would be to allow inferences to be drawn about what advice had been given. Therefore, the appeal was dismissed. This decision is a reminder that previous drafts of documents (such as investigation reports and decision letters) can be required to be disclosed during a Tribunal claim.

Right to participate in share incentive plan held to transfer under TUPE 2006

The Employment Appeal Tribunal (EAT) has found that the right of an employee to participate in a Share Incentive Plan (SIP) did transfer under the Transfer of Undertakings (Protection of Employment) Regulations (TUPE) 2006. This was so even though the SIP was provided for in a contract separate to the employment contract.When an employee's contract of employment transfers under TUPE, regulation 4(2)(a) states that `all the transferor's rights, powers, duties and liabilities under, or in connection with any such contract shall be transferred...'. For contractual terms which are particular to the employee and are in practice more difficult to transfer over, such as a bonus scheme, case law has established that the employee instead has the right to participate in a scheme of substantial equivalence.Mr Gallagher had been employed by TEPUK Ltd, before this was acquired by Ponticelli Ltd. Accordingly, his contract of employment and the rights and obligations under it automatically transferred under TUPE 2006. Prior to the transfer, Mr Gallagher had joined a SIP which had been operated by TEPUK. However, this SIP was not mentioned in Mr Gallagher's original employment contract. Instead, it was provided for under a separate contract. After the transfer, Ponticelli refused to provide Mr Gallagher with a SIP of substantial equivalence, instead offering him a lump sum payment as compensation.Mr Gallagher then brought proceedings before the Employment Tribunal (ET). The ET found that Mr Gallagher's employment contract should reflect the obligation to provide him with a SIP of substantial equivalence on the same terms. Ponticelli then appealed to the EAT, arguing that regulation 4(2)(a) did not apply because the rights and obligations created when Mr Gallagher joined the SIP did not arise either `under` or `in connection with` the employment contract. Mr Gallagher accepted that the rights did not arise under the contract but submitted that they did arise in connection with it. The EAT dismissed the appeal and agreed that the rights and obligations under the SIP `plainly` arose in connection with Mr Gallagher's employment contract. It referred to the fact that Mr Gallagher had only been able to join the SIP because he was an employee and that his subscriptions were deducted from his overall salary. The EAT concluded that the SIP formed part of his overall package of financial benefits which were associated with his employment. Accordingly, the automatic transfer principle under TUPE applied, and Mr Gallagher had the right to participate in a SIP of substantial equivalence.SIPs are often deliberately not set out in contracts of employment as employers wish to separate rights under employment from rights under the SIP.  Whilst cases will be determined by their own facts, it is of note that Tribunals are prepared to find that rights under SIPs can transfer under TUPE.

Employee with long COVID was not disabled at time of dismissal

The Employment Tribunal (ET) has held that an employee who had COVID 19 at the time of dismissal was not disabled within the meaning of the Equality Act (EA) 2010. This contrasts to prior ET decisions which had found that employees suffering with long COVID were disabled and thus protected under the Act. Mrs Quinn had been employed by Sense Scotland as their Head of People. On 11 July 2021, she tested positive for COVID 19 and subsequently suffered from fatigue, shortness of breath, pain, headaches, and confusion. These symptoms impacted the quality of her sleep and her ability to carry out work. On the 27 July 2021, she was dismissed by Sense. On three separate occasions in August 2021, she consulted her GP, and it was during this time that she was diagnosed with long COVID and deemed unfit to work. Mrs Quinn then brought a claim against Sense alleging direct disability discrimination. Under the EA 2010, a person is deemed to be disabled if:

1. The person has a physical or mental impairment, and
2. That impairment has a substantial and long-term adverse effect on ability to carry out normal day to day activities

It was not disputed that Mrs Quinn satisfied the first limb of this test as she did have a physical impairment at the time of her dismissal. However, in relation to the second limb, although there was clear evidence that her symptoms had had a substantial effect on her ability to carry out day to day activities, the issue was whether it was long-term. Under the EA 2010, an impairment is long-term if at the relevant time it has lasted for at least 12 months or is likely to last for at least 12 months. Crucially, at the time of her dismissal, the effect of COVID had only lasted two and a half weeks. The ET further noted that Mrs Quinn had not been diagnosed with long COVID until six weeks after her dismissal. While the ET acknowledged that someone who contracts COVID is in theory at risk of this developing into long-term illness, it stated that `the substantial majority of people who contract COVID do not go on to develop long COVID and do not suffer from it for more than a year`. Owing to these reasons, Mrs Quinn failed to satisfy the long-term element and thus was not disabled at the time of her dismissal.This decision demonstrates that the timing of contracting COVID 19 is fundamental for determining whether an employee will be deemed disabled. This is what distinguishes the outcome of this case from previous cases where employees with long COVID were found to be disabled. However, while not every employee who has long COVID will be considered disabled, employers should nevertheless be mindful of employees who have been diagnosed or are displaying ongoing COVID symptoms and bear this in mind.