Legal briefing | |

Employment Update - November 2019


Key employment and business immigration developments for employers.

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In the news

Equal pay claims

BBC presenter Samira Ahmed has brought an equal pay claim against the BBC, arguing she was paid “a sixth” of what Jeremy Vine earned in a “very similar job”. A former senior executive of TalkTalk has also brought a claim for equal pay after she reportedly discovered male colleagues earning up to 40 percent more in salary and 50 percent more in bonuses. These cases perhaps highlight an increasing trend of equal pay claims in the private sector.

Historically equal pay claims have been more common in the public sector with groups of predominantly female council workers (eg carers and caterers) comparing themselves to predominantly male groups (eg maintenance workers and refuse collectors). However, such claims have become more common in the private sector.

An employee can bring an equal pay claim whenever a colleague of the opposite gender is being paid more for doing the same job. Claims can also be brought where the colleague is doing a different job which has been rated as equivalent as part of a job evaluation or where the jobs are of equal value in terms of the demands and skills required. The employee only needs to identify one colleague of the opposite gender who is paid higher even if there are other colleagues who are paid the same or less. Successful equal pay claims can result in awards of up to six years of backpay.

Employers can defend an equal pay claim by showing that any difference in pay is due to something other than gender – in Samira Ahmed’s case, the BBC insists that the difference in pay is because her “Newswatch” show is a news programme whereas Jeremy Vine’s “Points of View” is entertainment. If the difference in pay has a disproportionate impact on a particular gender (eg rewarding long service disadvantages more women than men) the employer must also show this is justified. 

Employers can defend an equal pay claim by showing that any difference in pay is due to something other than gender…

Employers concerned about potential pay issues may wish to conduct an equal pay audit, to identify any pay discrepancies across the organisation and the reasons for them. We have been working with a number of clients on pay review exercises – please speak to your normal Employment Department contact if you would like more information.  

Immigration radar

Brexit delay

The EU has agreed to extend the date of Brexit to 31 January 2020, with the possibility of the UK leaving earlier if a withdrawal agreement can be approved by Parliament before then. Apart from the change in date, this does not change the position for EU national employees. All EU nationals and their family members in the UK as at the date of Brexit will be able to remain beyond Brexit by applying under the EU Settlement Scheme (see below). If the UK leaves with no deal, the deadline for applying will be 31 December 2020 – under the proposed withdrawal agreement, the deadline is extended until 30 June 2021. Deal or no deal, a new immigration system will apply from 1 January 2021 with transitional arrangements in place between the date of Brexit and 31 December 2020. Please see our September 2019 Employment Update for more details on the immigration position.  

Brexit and the EU Settlement Scheme

On 18 October 2019, the Government released the long-awaited iPhone App for EU nationals wishing to secure their status under the EU Settlement Scheme. All EU nationals (and their family members) in the UK as at the date of Brexit must apply under the EU Settlement Scheme to secure their ongoing right to live and work in the UK. As part of the online application process, applicants must verify their identity, which can be done via the App. Previously the App had only been available on Android but it is now available on both Android and iPhone devices.  

Case watch

Dismissals - avoiding confrontation

The employee in this case worked at a business selling children’s clothing. She had only three months’ service when the employer called her into a meeting and dismissed her without notice. The reason given was redundancy but the employee believed it was because of her race (she is of black African ethnicity). She raised a grievance and an appeal against her dismissal but the employer did not respond to either. The employee then brought a race harassment claim. In the Employment Tribunal, the employer initially argued that the reason for dismissal was redundancy but later said the real reason was suspected theft – designer clothes had been found concealed in the area in which she worked – and redundancy had been given as the reason to avoid confrontation.

The Employment Tribunal ruled that the dismissal constituted racial harassment and the Employment Appeal Tribunal agreed. The Tribunal inferred that race had played a part in the dismissal based on: (i) the employer’s failure to properly investigate the suspected theft; (ii) the refusal to address the employee’s grievance or appeal (both had raised race discrimination); and (iii) the fact that a false reason was given for the dismissal. Although the employer claimed it had given redundancy as the reason for dismissal to avoid confrontation, this did not explain why it had persisted with this explanation in Tribunal, when confrontation was no longer an issue. Even if the real reason was suspected theft, the employer could not show that racial prejudice played no part in its suspicion, having not investigated the circumstances.

The case highlights the dangers of giving a false reason for dismissal even if this is simply to avoid conflict or to ‘sugar coat’ the dismissal for the employee’s benefit. It also shows the potential risks associated with not following any process or hearing an appeal, even when dismissing someone with less than two years’ service. While employees need two years’ service to claim unfair dismissal, they do not need any service for discrimination or whistleblowing claims. In such cases, the onus is squarely on the employer to prove it had a non-discriminatory reason for the dismissal (or a reason not related to whistleblowing). Where there is a risk of discrimination or whistleblowing being raised, or the employee has raised this, following a process may help establish the real reason for the dismissal.


Third party harassment

The employee in this case was a mental health nurse for an NHS trust. He was assaulted and racially abused by a patient who had a known history of racist behaviour. He brought claims of race discrimination and harassment against the Trust arguing that it had failed to take steps to prevent racial abuse from patients.

The Employment Appeal Tribunal (EAT) ruled that the Trust was not liable for the racial harassment from the patient. The EAT said that the Trust could have done more to prevent the harassment – it had a policy requiring staff to record incidents of racial abuse but this was not enforced, which contributed to the abuse of the employee in this case. However, the Trust’s failure to act was in no way related to race. An employer can only be liable for racial harassment of employees by third parties where its own conduct or inaction is related to race.

The case appears to limit the circumstances in which employers can be liable for the harassment of employees by third parties, such as customers, clients and contractors. However, the case is likely to be appealed so it may not be the final word on the issue. In addition, the Government recently ran a public consultation on whether new legislation should be introduced to make employers liable for third party harassment and, if so, in what circumstances. The consultation closed on 2 October 2019 and the Government is considering feedback before announcing its proposals.

In any case, employers should still take action to protect staff where there is evidence of harassment or potential harassment by third parties. Not only is this the right thing to do but it is also part of the employer’s general duty to protect the safety and health of employees, and failure to do so could give rise to a constructive unfair dismissal claim from an employee who has at least two years’ service. The appropriate steps will depend on the particular circumstances and should ideally be taken in consultation with the employee to ensure the employee is not penalised by, for example, being taken off a particular client contract or excluded from client events to avoid contact with the offender.  


New law

Confidentiality provisions

The Equality and Human Rights Commission (EHRC) has published guidance on the use of confidentiality agreements in discrimination, harassment and victimisation cases. The guidance is not binding on employers but is intended to set out best practice.

The guidance states, among other things, that:

  • employers should not include confidentiality provisions as standard in template settlement agreements but should consider in each case whether there is a clear reason for the confidentiality provision and the impact on the culture of the organisation

  • large and multi-site employers should keep a central record of settlement agreements to monitor any systemic discrimination issues

  • confidentiality provisions should make it clear they do not prevent employees from reporting matters to the police, regulators, lawyers, medical professionals or immediate family members and, where necessary, potential employers

  • employers should pay for employees to receive independent advice on the terms of a settlement agreement, including any confidentiality provisions, even if the employee ultimately decides not to sign.

The Government has previously said it will introduce legislation to require confidentiality clauses in employment contracts and settlement agreements to set out their limitations clearly and require individuals to take advice on confidentiality provisions in settlement agreements. However, the legislation will stop short of requiring employers to pay for such advice and it is not yet clear when the legislation will be introduced.  

Financial services changes

The Senior Managers and Certification Regime (SMCR) comes into effect for all FCA-solo regulated firms on 9 December 2019. SMCR replaces the approved persons regime and has applied to banks, building societies and other financial services organisations jointly regulated by the FCA and the PRA since March 2016, and is now being extended to all FCA-solo regulated firms. SMCR will have implications for a number of HR processes throughout the employment lifecycle from recruiting and onboarding new employees, to appraisal processes and exit arrangements with regulatory references.

We have been helping a number of clients with their preparations for SMCR, including advising on how the new regime will impact upon employees and what changes might be needed from an HR perspective. Alongside our Financial Services and Markets team, we have also designed a toolkit to assist our clients with the key elements of the new regime. Please speak to your usual Employment Department contact for information about the toolkit or to discuss the impact of SMCR on your business.

Watch this space

Changes to taxing contractors

As reported in the July 2019 Employment Update, the public sector off payroll working rules are being amended and extended to the private sector from 6 April 2020. The off payroll working rules will require large and medium-sized businesses to review their relationships with contractors who provide their services through personal services companies and, in certain circumstances, operate payroll for them. HMRC has published a new briefing note on the changes, which states that:

  • further guidance on the reform will be available by the end of the year, at which point HMRC will also launch a revised version of its online Check Employment Status for Tax (CEST) tool. However, HMRC says that businesses do not need to wait until the revised CEST tool goes live as it will stand by the results of the tool given now, provided the information entered is accurate and it is used in accordance with HMRC guidance

  • HMRC will only use information resulting from the changes to open a new enquiry into earlier years if there is reason to suspect fraud or criminal behaviour. This is intended to give contractors comfort that if their employment status for tax purposes changes as a result of the reforms, HMRC will not necessarily seek to recover tax if the analysis has been wrong in the past.

The HMRC briefing note is available here.

The off payroll working rules will require large and medium-sized businesses to review their relationships with contractors who provide their services through personal services companies…

Election 2019

A general election has been announced for 12 December 2019. Set out below are some of the key pledges on employment made by the Conservative and Labour parties earlier this year.

Key pledges from the Conservative Party so far include:

  • increasing the national living wage to £10.50 per hour by 2024 and lowering the age threshold to 23 in 2021 and then 21 by 2024 (currently the national living wage is £8.21 and applies to workers aged 25 and over)

  • requiring employers to pass on all tips and service charges to workers in a fair and transparent way in accordance with a new statutory code of practice

  • implementing the government’s Good Work Plan on worker rights including measures designed to address one-sided flexibility in worker contracts and introducing a single enforcement body for employment rights

  • implementing a new immigration regime from 1 January 2021 which would apply equally to EEA and non-EEA citizens.

Key pledges from the Labour Party so far include:

  • introducing a statutory real living wage of £10 per hour by 2020 for all workers aged 16 and over (currently the national living wage is £8.21 and applies to workers aged 25 and over)

  • banning unpaid internships and zero-hours contracts

  • creating a right to flexible working for all from day one of employment (instead of a right to request flexible working after 26 weeks' service)

  • creating a new Secretary of State for employment rights and a Workers’ Protection Agency to enforce worker rights, standards and protections

  • introducing sectoral collective bargaining to set minimum employment terms, conditions and standards for a particular sector

  • increasing statutory maternity pay from nine to twelve months and requiring large employers to provide training for managers on supporting staff going through the menopause

  • reducing the length of the average full-time working week to 32 hours within a decade, with no loss of pay.
Our work

Since the last Employment Update, our work has included:

  • advising on an investigation and next steps in response to a sexual harassment allegation raised by a former employee of a financial services firm against a senior manager, including associated notification and regulatory reference implications

  • advising on the scope of, and process to respond to, a Data Subject Access Request (DSAR) made by an employee of a client

  • advising on alternatives ways of engaging contractors, including statement of work and outsourcing models, in view of the upcoming changes to the off payroll working rules in the private sector

  • advising on the TUPE implications for a client taking over as service provider on a second generation outsourcing and the contractual protections to be sought from their client

  • advising on a dispute regarding a reference issued under the SMCR reference rules

  • considering options to mitigate the impact of the upcoming changes to the off payroll rules and the removal of the Swedish derogation for a business reliant on agency workers and contractors

  • advising on an EMEA-wide policy review exercise.

For further information, please contact

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