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Farrer & Co | Employment law 2018: a wrap up

As the festive season gets into full swing, we thought it would be an appropriate time to review the main developments in employment law this year.

Employment status

A raft of high-profile cases dealing with employment status have continued to emerge from the courts this year. In these cases, individuals have argued that they are workers or employees, rather than self-employed contractors, and as such are entitled to rights including holiday pay and national minimum wage.

Thus far, the courts have tended to find in favour of worker status – this has been the case in claims brought against Uber, CitySprint, Hermes, Pimlico Plumbers and, most recently, Addison Lee. The findings in these cases were largely due to the degree of control exercised by the company and the existence of a requirement for the individual to provide personal service. One exception to this trend is Deliveroo; in this case, it was found that Deliveroo drivers were not workers as they had a right to appoint substitutes (although this case was not in front of the employment tribunal, and significantly, Deliveroo reportedly settled an employment rights claim by 50 couriers in June this year).

Despite the trend towards findings of worker status, the tribunal still decides each case on its facts, having regard to the reality of working arrangements in addition to contractual provisions. Inevitably this approach can make it hard to provide employers with any hard and fast rules for determining the status of those they engage.  In order to provide greater certainty and clarity for businesses on this issue, earlier this year the Government consulted on proposals about employment status set out in the Taylor Review of Modern Working Practices. This consultation closed in June and the Government is currently analysing the feedback, so – Brexit permitting – hopefully its response should be published sometime next year.

Disability discrimination

Recent case law has highlighted some interesting points in this area, which can often be tricky for employers to navigate:

Davis v Scottish Courts and Tribunal Service made clear that employers must have regard to the actual symptoms of an employee’s health condition and the effects the symptoms have on them before deciding which steps to take in relation to the employee. We considered this case more fully in our recent blog post.

DL Insurance Services Ltd v O’Connor is also considered in the above blog post. This case highlighted the importance of an employer having a clear justification for the appropriateness of any disciplinary action taken in respect of an employee with a disability. Employers should also avoid making generalisations when dealing with sickness absences.

City of York Council v Grosset considered discrimination arising from disability in the context of conduct cases. The Court of Appeal held that an employer will be liable if it:

- treats an employee with a disability unfavourably

- knows about the disability, even if it does not know that the particular misconduct is caused by that disability, and

- it cannot show that the treatment is a proportionate means of achieving a legitimate aim.

Therefore, where an employee with a disability has conduct issues, an employer should take care to investigate carefully whether those conduct issues could potentially be connected to the disability before taking disciplinary action.

Brexit

Although there is considerable uncertainty about most matters involving Brexit, the Government provided some clarity in August about the post-Brexit employment landscape with its “workplace rights if there’s no Brexit deal” guidance. This set out that most workers’ rights will stay in place after 29 March 2019 (at least initially). There may be potential changes in relation to employee protection against the insolvency of an employer and European Works Councils, details of which are set out in the guidance.

Parental bereavement leave

The Parental Bereavement (Leave and Pay) Act 2018 became law in September and is expected to come into force in 2020. The Act will entitle parents who lose a child under the age of 18 or who suffer a stillbirth after 24 weeks of pregnancy to two weeks’ leave and statutory parental bereavement pay, provided they meet the eligibility criteria.

Taxation of PILONs

From 6 April this year, all payments in lieu of notice became taxable as general earnings, regardless of whether they are contractual or non-contractual. Prior to that date, only contractual payments in lieu of notice were definitely taxable. As a result of this change, the tax and national insurance contributions consequences for departing employees are now the same for everyone, irrespective of how the employment contract is drafted or how the termination payments are structured. Employers of departing employees being paid a PILON will now need to follow the statutory formula for calculating post-employment notice pay to check whether any tax is due. For more detail see our blog post here.

Holiday pay

The courts have held that voluntary overtime can qualify as “normal remuneration” for the purpose of calculating holiday pay under the Working Time Directive, provided it is paid with sufficient regularity over a period of time. This is considered more fully here.

Gender equality in the workplace

We have seen a number of initiatives intended to improve equality of opportunity in the workplace this year:

  • The Harvey Weinstein scandal and the rise of the #MeToo movement last year shone a light on the problem of sexual harassment in the workplace, and steps that employers should be taking to prevent harassment has moved high up the work agenda. The Women and Equalities Commission published a report on sexual harassment in the workplace in July. This recommends various protections for employees subjected to sexual harassment, together with extra duties for employers in terms of preventing harassment. It is now for the Government to consider these and decide which (if any) to implement. In the meantime, we have considered steps employers can take to guard against harassment here.

  • The House of Commons Business Committee produced a report on gender pay gap reporting in August, which recommended that reporting obligations should be extended to organisations with 50 or more employees. Currently only organisations with 250 or more employees are subject to mandatory reporting. This recommendation reflects evidence that the gender pay gap is higher in smaller businesses. The report also called for further steps that employers subject to mandatory reporting should be taking to close their gender pay gaps, including publishing an explanation for any gap and an action plan to close that gap.

  • An update to the Hampton-Alexander review into women on boards was published in November. This review was initiated in 2016 to ensure better representation of women on FTSE boards and in senior executive positions. The review sets a target of 33% of board positions being filled by women by 2020, and the November update makes it clear that there is significant work to be done if this is to be met; although FTSE 100 companies are on track to meet the target, the current figure for FTSE 350 companies stands behind where it should be if these companies are to meet the target. Strikingly, if FTSE 350 companies are to reach the target by 2020, half of all board appointments within those companies will need to go to women in the next two years.

Employment tribunal fees

As a final note, I wanted to briefly consider the dramatic effect that the Supreme Court’s abolition of employment tribunal fees last year has had on the number of tribunal claims. The Ministry of Justice’s tribunal statistics for the period from April to June 2018 show:

  • a 165% increase in the number of single claims lodged with the tribunal, and a 344% increase in the number of multiple claims, compared to the same period in 2017, and

  • between October 2017 to 30 June 2018, 14,500 applications for refunds were received by the tribunal fee refund scheme and 12,400 refund payments made, totalling £10,615,000.

Interestingly, however, there has been a recent suggestion from the Permanent Secretary of the Ministry of Justice, Richard Heaton, that the Government is considering reintroducing tribunal fees in a more “proportionate and progressive” form. While no details of this are yet available, and there don’t seem to be any immediate plans to do anything, this is certainly a space to watch.

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