Legal briefing | Employment, Immigration, Brexit |

Employment Update - July 2020

Overview

Key employment and business immigration developments for employers.

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In the news

Black lives matter – what can employers do?

In the light of the #blacklivesmatter movement, many employers are taking stock to consider what more can be done to actively support and encourage BAME colleagues and job applicants.

Norman Pickavance, co-founder of the Financial Inclusion Alliance, has created a list of questions to help employers test their organisation's commitment to diversity in this area, including:

  • How many black people are represented in senior leadership at your organisation?

  • Would black employees say they are treated and paid equitably? Have you asked them?

  • Would reporting on the numbers of black people in your organisation at each level make you uncomfortable?

  • Is diversity and inclusion isolated to singular events? Do you know how you would actually change your culture so that black colleagues don't have to work doubly hard just to fit in?

When considering measures to improve diversity, employers should be mindful of the distinction between "positive action" and "positive discrimination".  Positive action is lawful and involves taking steps to address the underrepresentation of minority groups, such as targeting underrepresented groups for networking opportunities, encouraging them to apply for vacancies, offering scholarships or bursaries, or providing mentoring programmes.

In contrast, favouring someone from a protected minority in recruitment or promotion would constitute "positive discrimination" and is unlawful. Setting quotas, as opposed to soft targets, would also fall foul of the rules on positive discrimination. Employers must recruit and promote on merit. The only exception is a genuine "tie break" situation – employers can choose someone from an underrepresented group where they face a choice between two equally qualified candidates.

Employers are encouraged to think carefully and creatively in this area and, where necessary, take advice on possible initiatives. Employers should also ensure managers are aware of what they can do to support change through training and awareness on diversity, equal opportunities and unconscious bias. Employers may also wish to review their ethnicity pay gap figures and even consider publishing them voluntarily ahead of mandatory ethnicity pay gap reporting (see below). 

Ethnicity pay gap reporting

The Government has proposed introducing a requirement for employers with at least 250 employees to report on their ethnicity pay gap. A public consultation on the proposals closed on 11 January 2019 and the Government has not yet published its conclusions. However, the issue is now set to be debated in Parliament again as a petition calling for the introduction of mandatory ethnicity pay gap reporting passed 100,000 signatures. With the #blacklivesmatter movement and the recent petition, mandatory ethnicity pay gap reporting is likely to return to the agenda. Employers may wish to review their figures and what information they have in this area, as well as considering what measures can be put in place to address any pay gaps. We worked with a number of clients on audits of their pay systems when gender pay gap reporting was introduced, and ethnicity pay gap reporting is expected to mirror that regime. If you would like more information, please speak to your usual Employment department contact.

Immigration radar

Coronavirus: Visa and travel restrictions

Following recent lockdowns and travel restrictions globally, two key developments in relation to sponsored work visas will be of interest to employers:

  • Expiring visas: Earlier this year, the Home Office extended visas initially until 31 March and then until 31 May 2020 for anyone whose visa expired after 24 January 2020 but who could not leave the UK due to Covid-19 restrictions. This date has now been revised again so that anyone whose visa expires between 24 January and 30 July 2020 can now have their visa extended until 31 July 2020. Those already granted an extension until 31 May 2020 will have their visa extended automatically to 31 July 2020. Otherwise, affected employees must submit a form online to the UKVI Coronavirus Immigration Team to provide their details and explain how they have been impacted by travel restrictions. Such individuals will also be able to apply for new long-term visas from within the UK until 31 July 2020, including applications where they would normally be required to apply from their home country, provided they meet the relevant requirements. There is also a limited exemption to allow applications to be submitted from the UK for individuals whose visas expire after 31 July but who urgently need to apply but cannot leave the UK to apply from overseas.

  • New visas: Applicants for new UK visas normally need to attend an appointment at a Visa Application Centre (VAC) abroad to provide biometric details (digital fingerprints and facial digital photographs). VACs closed during lockdown making it impossible for applicants to book or attend appointments. However, some VACs are resuming services on a phased basis where local restrictions allow, meaning employers can press ahead with visa applications for new hires in these areas. Employers can check the status of the relevant VAC via the Home Office Covid-19 visa guidance.

Coronavirus: New UK border rules

The UK has introduced restrictions at the border which mean arrivals to the UK are required to provide contact and travel information. Arrivals will also be required to self-isolate in their own accommodation for 14 days after arrival, unless arriving on or after 10 July from a country on the 'travel corridors list' designated as lower risk. Arrivals from the Common Travel Area (CTA) who have been in the CTA for at least 14 days prior to entering the UK will be exempt.

Brexit and the new points-based immigration system

The deadline for extending the Brexit transition period has now passed, with no extension being sought. The transition period will therefore end on 31 December 2020, with the Government's new points-based immigration system expected to take effect from 1 January 2021. Under the new system, employers will need to hold an immigration sponsor licence to sponsor the visas of new EU employees who arrive in the UK after the end of the transition period. Employers who do not yet hold sponsor licences should consider applying now if they plan to employ EU employees under the new system.

Existing EU employees and any EU nationals who arrive in the UK before the Brexit transition period ends on 31 December 2020 will be covered by the EU Settlement Scheme. They will need to apply to be granted either settled or pre-settled status by the deadline of 30 June 2021, which is now less than a year away.

Case watch

TUPE – can changes to contracts be made?

The employees in this case were directors of an estate management company. The company's only client decided to switch to another management company, triggering a TUPE transfer. Before the switch, the employees decided to revise their employment contracts by increasing their notice periods, giving themselves a bonus of 50% of salary and introducing a termination payment based on their length of service. The employees transferred under TUPE to the new management company but were dismissed for gross misconduct. They claimed that the new management company was obliged to pay the new termination payments under their revised employment contracts, as these terms had transferred under TUPE. 

The Employment Tribunal and the Employment Appeal Tribunal ruled that the employees were not entitled to the termination payments. The payments had been introduced by the employees to compensate themselves for loss of the client contract and had been introduced dishonestly, knowing that the liability would transfer to the new management company under TUPE. As the reason for the changes was the TUPE transfer, the changes were void.

FERGUSON AND OTHERS V ASTREA ASSET MANAGEMENT LTD

This case is helpful for employers that inherit staff on a TUPE transfer. It suggests that where the outgoing employer has sought to enhance terms and conditions prior to the transfer, so that employees benefit from the transfer, the changes will not be binding on the incoming employer. However, the difficulty which arises more commonly in practice is where the incoming employer wants to make changes to the terms and conditions of employees it inherits under TUPE. Such changes would be void if the reason for making them is the transfer itself. Employers in these circumstances must be able to point to a reason other than the transfer for the changes or, alternatively, consider other practical solutions, such as encouraging employees to agree to the changes voluntarily by offering some sort of incentive.

Settlement agreements – enforcing confidentiality against employees

The employee in this case brought claims against his former employer, which were settled under an Acas-conciliated COT3 settlement agreement. The employer agreed to pay the settlement sum in weekly instalments over a number of weeks, and the employee agreed to waive all claims and keep the settlement agreement and its terms confidential. However, the employee told a former colleague about the settlement agreement and how much he was being paid. The employer therefore stopped making any further payments under the agreement. The employee sued to recover the outstanding settlement money.

The employee succeeded in his claim. The High Court ruled that, although the employee breached the confidentiality provision, the employer was still obliged to pay over the outstanding settlement money. The confidentiality provision was not a condition of the settlement agreement; the purpose of the settlement agreement was for the employee to waive claims against the employer. In addition, the breach of confidentiality did not cause any loss to the employer (beyond a small risk it might encourage other employees to bring claims in order to get a pay-out). Accordingly, the employee's breach of confidentiality did not relieve the employer of its obligation to pay the remaining settlement money.

DUCHY FARM KENNELS LTD V STEELS

This case is unhelpful for employers. It suggests that a confidentiality provision will not always be regarded as a fundamental term of a settlement agreement. This means that if the employee breaches confidentiality, the employer will not necessarily be relieved from paying any further settlement money owed. However, this will depend on the facts of the case and the terms of the agreement. It is possible for a settlement agreement to provide expressly that, if the employee breaches the confidentiality provision, they will lose the right to any further payments and will have to pay back any money already paid over under the agreement.

New law

Changes to the Coronavirus Job Retention Scheme

On 1 July 2020, changes were made to the Coronavirus Job Retention Scheme (CJRS) to introduce a new system of flexible furlough. A new Treasury Direction has also been published which sets out the legal framework for the CJRS.

Under the CJRS, employers can place workers on furlough (paid leave) provided the worker receives at least 80% of their regular wages up to a maximum of £2,500 per month. Currently the Government funds the 80% of wages up to the £2,500 cap. The key changes are:

  • Flexible furlough: As of 1 July 2020, employers can now allow workers to work reduced hours during furlough, but the employer must pay normal wages for any hours worked. The CJRS Government subsidy is only available, on a pro-rata basis, for "furloughed hours", i.e. any part of the worker's usual hours they are not working. Employers do not have to use the flexible furlough element of the CJRS and can continue to keep staff fully furloughed.

  • Notice pay: The new Treasury Direction states that employers must use the CJRS subsidy to "continue the employment of employees" whose activities have been adversely affected by coronavirus. This addition has led some to question whether employers can use CJRS payments to pay wages during an employee's notice period. However, Jesse Norman MP, Financial Secretary to the Treasury, has confirmed that employers can continue to claim under the CJRS for employees serving a notice period. This is consistent with Government guidance that employees can be made redundant during furlough, subject to the usual rules on redundancy.

  • Tapering of subsidy: From August 2020, the Government subsidy under the CJRS is being tapered. Currently the Government funds 80% of wages for furloughed workers up to £2,500 per month, plus employer NICs and the minimum automatic enrolment employer pension contributions on this amount. However, the Government funding is being tapered so that, from 1 August 2020, employer NICs and pension contributions will no longer be funded. The Government subsidy will also drop to 70% of wages for September and to 60% for October, with employers having to make up the shortfall to ensure workers receive 80% of wages for any furlough hours (up to the £2,500 monthly cap). The CJRS is due to close on 31 October 2020.

We have produced a Q&A guide on how these changes to the CJRS and the system of flexible furlough will work. If you would like to discuss how the changes will impact on your business and workforce planning, please speak to your usual Employment contact. 

Statutory sick pay

The statutory sick pay rules have been amended to support the Government's new test and trace service. As of 28 May 2020, workers who are self-isolating because they have been notified by the NHS or public health authorities that they have come in contact with someone with Covid-19 are entitled to statutory sick pay. Workers in these circumstances are entitled to statutory sick pay from day one of the absence. This follows changes to the rules earlier this year which make statutory sick pay payable from day one for workers who are: 

  • shielding in accordance with an NHS notification due to be extremely clinically vulnerable to Covid-19

  • self-isolating because they or someone they live with has symptoms of Covid-19.

As of 6 July 2020, the statutory sick pay rules have also been amended so that workers are now also entitled to statutory sick pay if they are self-isolating because someone in their household "bubble" has symptoms of Covid-19.

Employers with fewer than 250 employees are also now able to reclaim statutory sick pay for the first 14 days of any Covid-19 related absence through the Coronavirus Statutory Sick Pay Rebate Scheme.

Covid-19 and data protection

The Information Commissioner's Office (ICO) has issued revised guidance on data protection in the recovery phase of the Covid-19 pandemic. The guidance covers the collection of health information on staff, e.g. through temperature checking or Covid-19 testing, as well as the use of surveillance by thermal cameras or CCTV to monitor compliance with health and safety measures. The ICO recognises that employers may need to collect health information and share information quickly in the current climate and advises employers to take a proportionate approach. Employers implementing such measures should conduct a data protection impact assessment to ensure the measures are necessary and implemented in a proportionate way. The guidance sets out six steps or principles for employers to consider:

  • Only collect and use what is necessary by asking questions such as: will testing actually help provide a safe environment and is there a less intrusive way to achieve the same result?

  • Where it is necessary to collect data, keep the information collected to a minimum.

  • Be clear, open and honest with staff about their data.

  • Treat people fairly and avoid discrimination when making decisions based on the information collected.

  • Keep people's information secure.

  • Inform staff of their rights in relation to their data, such as the right of access to, or rectification of, data.

Watch this space

Job retention bonus

The Chancellor has announced a job retention bonus scheme aimed at incentivising employers to retain their furloughed employees as the Coronavirus Job Retention Scheme winds down between August and October.  A £1,000 bonus will be paid to UK employers for each returning furloughed employee who remains continuously employed until 31 January 2021.  In order to qualify, returning employees must be paid an average of £520 per month between 1 November 2020 and 31 January 2021.  The bonus payments will be made to employers from February 2021.  Further details of the scheme will be announced by the end of July.

Our work

Since the last Employment Update, our work has included:

  • advising on TUPE considerations on a first generation outsourcing

  • helping a client respond to a union's application for collective bargaining as a precursor to statutory recognition

  • advising a financial services business on handling a whistleblowing complaint raised by an executive at risk of redundancy

  • helping businesses with largescale collective consultation exercises in relation to restructurings and redundancies

  • advising a tech business on the cross-border employment and tax implications of employees requesting to work from home on an ongoing basis in various European jurisdictions

  • strategic advice in relation to executive level exits
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