Key employment and business immigration developments for employers.
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Home Secretary Suella Braverman MP has come under the spotlight recently for sending official government documents to her personal email address. Ms Braverman initially resigned from her role as Home Secretary but was later reappointed by the new Prime Minister Rishi Sunak.
This raises the question – what can employers do where an employee sends confidential information to their personal email?
Sending confidential information to a private email account will usually amount to misconduct. Depending on the reasons for sending, and the amount and nature of the information sent, it could in some cases amount to gross misconduct, which would entitle the employer to dismiss without notice. In the case of Brandeaux Advisers (UK) Ltd v Chadwick the High Court ruled an employer was justified in dismissing an employee who sent a large amount of confidential information to her personal email account because she was worried about having a dispute with the employer or a regulator in future. This was held to be a breach of the implied duty of trust and confidence.
Despite the implied duty, employers can protect their position further by making it clear to staff that transferring confidential information in this way is a disciplinary matter that could lead to summary dismissal. This should be set out in relevant policies on confidential information or the use of email or portable devices.
In some cases, the transfer of confidential information might not be discovered until the employee has left and gone to work for a competing business. In these circumstances, the employer may wish to obtain an injunction to stop the ex-employee from misusing confidential information. Evidence of the transfer will be critical, so employers should ensure that relevant policies also make it clear that the employer has the right to search emails and portable devices where there is a suspected breach of confidentiality.
Chancellor Jeremy Hunt MP has confirmed that the off-payroll working rules are here to stay and will not be repealed next year. The Government had previously indicated in the September "mini budget" that the off-payroll working rules would be scrapped from April 2023. However, on 17 October 2022, the new Chancellor announced a reversal of a number of tax measures in the mini budget and confirmed that the off-payroll working rules will no longer be repealed.
The rules require large and medium sized businesses that engage contractors through a personal services company (PSC) to assess the contractor's tax status and, if appropriate, account for income tax and national insurance contributions on payments made to the PSC. In scope businesses should take this opportunity to review their compliance with the off-payroll working rules. In particular, businesses should ensure that any assessment of a contractor's tax status is kept under review to ensure it remains accurate, including assessments which have been issued under the rules to date.
Generally, employees on sponsored visas cannot have their pay reduced below the rate specified on the sponsorship certificate for more than four weeks in any year. There are limited exceptions, such as sick leave and maternity, paternity, adoption and shared parental leave. However, the Immigration Rules have now been amended to allow employers to reduce pay for employees on sponsored visas temporarily where they are not on sick leave but their hours are reduced for health reasons. With effect from 9 November 2022, employers can reduce pay for employees on sponsored visas:
In each case, the employer should keep a copy of the occupational health assessment on file and ensure the employee's hourly rate for any work done does not fall below the minimum rate which applied when the employee got their most recent visa. The change applies to all sponsored work visas, including the Skilled Worker visa, the Global Business Mobility visa, the Scale-Up visa and employees on historical Intra Company Transfer visas.
A recent case has considered whether a draft investigation report is privileged and whether it needs to be disclosed if an employee brings a Tribunal claim.
The case concerned an employee who raised a grievance against his line manager alleging bullying, harassment, discrimination and racial abuse. An independent member of staff was appointed to conduct an investigation and produced an investigation report which was issued internally. A couple of days later, the report was sent to external lawyers who suggested some amendments. The investigator then issued a revised version of the report incorporating the lawyers' changes, as well as some amendments of her own. The revised report noted that it had been amended and reissued following legal advice.
Meanwhile, the employee brought a claim of race discrimination and harassment. As part of that claim, the employer disclosed the final version of the investigation report but not the original version. The employee sought an order from the Tribunal requiring the employer to disclose the original, unamended version of the report. The employer argued if the original version was disclosed, it would be possible to infer what legal advice was given by comparing the two versions of the report, so the original report had to be protected by legal advice privilege.
The Employment Appeal Tribunal disagreed, and ruled that the original, unamended report should be disclosed. The report was not protected by privilege because it was not prepared for the purpose of obtaining legal advice, but rather for the purpose of investigating the facts around the employee's grievance. Even if it might have been possible to infer what legal advice had been given by comparing the two versions of the report, this did not make the earlier, unamended version privileged.
UNIVERSITY OF DUNDEE V CHAKRABORTY
This case demonstrates some of the complexities around legal privilege and investigation reports. It also highlights the importance of seeking legal advice early on in the investigation process. The employer in this case sought legal advice on the investigator's report after it had been issued by the investigator. However, had the investigator sent a draft report directly to the lawyers, seeking legal advice on it before issuing the report, it would arguably have been privileged and would not have had to be disclosed. Employers should, where possible, seek advice on the investigation process and issues such as privilege as early as possible, ideally before commencing a grievance or disciplinary investigation, particularly where the matter is likely to lead to litigation or an external regulatory investigation.
Where there is a TUPE transfer, all rights and obligations arising under or in connection with the employment contract transfer. But what does this mean for discretionary benefits like employee share plans?
The employee in this case participated in an all-employee tax advantaged share incentive plan with his employer which allowed him to acquire shares in the employer's parent company. The plan was not mentioned in the employment contract and the plan itself stated that it was non-contractual. The employee's employment transferred under TUPE to a new employer. The new employer said that it was not going to provide an all-employee share incentive plan but that employees would instead receive a one-off payment as compensation. However, the employee applied to the Employment Tribunal for a ruling that he was entitled to participate in an equivalent share incentive plan with the new employer.
The Employment Appeal Tribunal ruled that the share incentive plan was part of the employee's overall financial package as an employee. Even though it was non-contractual, it arose "in connection with" the employee's contract of employment and therefore transferred under TUPE. Accordingly, the new employer was required to put in place a share incentive scheme that was substantially equivalent to the old scheme.
PONTICELLI UK LTD V GALLAGHER
This case shows that discretionary benefits like a share scheme can transfer under TUPE even if they are not contractual, as they could be considered as arising "in connection with" the employment contract. For share schemes, this creates real practical difficulties because employees can no longer participate in the old employer's scheme once they have transferred and the new employer might not be able to put in place an identical scheme. The obligation on the new employer is therefore to put in place a scheme which is "substantially equivalent" to the old scheme.
In many cases, the new employer should have the right to terminate a share scheme which transfers under TUPE. Where a share scheme transfers, it does so on its existing terms. If, as is usually the case, the terms of the plan gave the former employer the right to amend or withdraw it, then the same right would arguably apply to the new employer.
A recent case highlights the importance of consulting with the employee at an early stage in a redundancy process when they can still potentially influence the outcome.
The case concerned a redundancy process in the research unit of a hospital. There were two nurses in the unit at the same level and both were on fixed term contracts. The employer selected for redundancy the nurse whose contract was due to expire first. This was the sole criterion used, so she was placed at risk and made redundant after no suitable alternative roles were identified. She then brought an unfair dismissal claim arguing that her selection for redundancy was unfair. She initially lost but ultimately won on appeal.
The Employment Appeal Tribunal (EAT) ruled that the redundancy selection was unfair. Selecting based on the expiry date of the employee's contract effectively placed the employee in a pool of one and meant she was chosen for redundancy before any consultation took place. The employer had not properly considered whether the nurses should be pooled and both put at risk, or whether other selection criteria should be applied. While a pool of one can be fair in appropriate circumstances, the EAT said it should not be considered, without prior consultation, where there is more than one employee performing the same role. The consultation, which focused on alternative employment, was not at a stage where the employee could influence or potentially affect the outcome of her redundancy, so the dismissal was unfair.
MOGANE V BRADFORD TEACHING HOSPITALS NHS FOUNDATION TRUST
This case highlights the importance of consulting with employees at risk of redundancy at an early stage when the employee can still potentially influence the outcome. Where there is more than one employee performing the same role, the safest option is to put all employees at risk, then consult on proposed selection criteria before making the redundancy selection. This allows more scope for consultation when employees can still influence the outcome. However, in some circumstances, an employer might conduct a provisional selection and only put the employees provisionally selected at risk of redundancy. This can help minimise disruption but is less safe legally as it risks arguments that selection was predetermined, as this case shows. Ultimately the best approach will depend on the circumstances, but employers should always ensure, wherever possible, that consultation happens when there is still time for employees to potentially affect the outcome.
The case also shows the importance of choosing fair and objective selection criteria – the EAT criticised the use of contract expiry date as the sole criterion in this case because it led to an entirely arbitrary outcome.
Currently, employees who are made redundant during maternity, adoption or shared parental leave must be offered a suitable alternative vacancy if there is one. The Government has recently confirmed that it plans to extend this protection so that it begins when an employee notifies the employer she is pregnant and ends 18 months after the child's birth. This would effectively extend the protection from the point the employee notifies of her pregnancy up until six months after her return from maternity leave where the mother has taken a full year. A woman who is at risk of redundancy at any point during this period would need to be offered a suitable alternative vacancy if there is one. This extended protection would also cover parents taking adoption or shared parental leave, as well as mothers who suffer a miscarriage before notifying the employer they are pregnant. The Government has recently backed a private members' bill that would allow it to introduce regulations extending the protection. However, it is not yet clear when those regulations are intended to come into force.
The Government has recently confirmed that it plans to introduce a new right to unpaid carer's leave. The right would be available from day one of employment and would enable employees with caring responsibilities to take up to a week of unpaid leave per year. Employees would be able to use the leave to provide or arrange care for a dependant with long-term care needs (broadly defined as care needs relating to a disability, old age or an illness or injury requiring at least three months' care). Eligible employees will be able to take leave in periods of a day or half-day. There are likely to be notice requirements for taking the leave, but the intention is that employees will not have to provide evidence regarding a leave request. The Government has supported a draft Carer's Leave Bill, which is making its way through Parliament, and hopes to introduce carer's leave in 2024.
The Government has published draft legislation that would enable minimum service levels to be introduced for strikes in the transport sector. Minimum service levels would essentially require sufficient employees to work during a strike, to minimise the disruption caused to commuters. The Transport Strikes (Minimum Service Levels) Bill has been introduced to Parliament and, if enacted, would require employers and trade unions to negotiate to set minimum service levels in certain transport services. If no agreement can be reached, the Central Arbitration Committee (CAC) would impose such levels. The Secretary of State could also introduce minimum service levels through regulations, which would apply where there has been no agreement or determination by the CAC. The Bill is currently making its way through Parliament, and it is not yet clear when it would come into force. In addition, the Trades Union Congress has indicated it would seek to challenge any minimum service levels in the transport sector as undermining the right to strike.
Exclusivity clauses in contracts for lower paid workers will be banned with effect from 5 December 2022. An exclusivity clause is any clause in a contract that prevents the worker from working for another employer. Exclusivity clauses in contracts for zero hours workers are already unenforceable under existing rules. The Government has now introduced regulations extending these rules to exclusivity clauses in any contract of a worker whose weekly income is at or below the Lower Earnings Limit (currently £123 a week). The change will come into force on 5 December 2022.
The Information Commissioner's Office (ICO) has published draft guidance on monitoring employees at work. The draft guidance is open for consultation until 11 January 2023.
The draft guidance covers all forms of monitoring employees, including camera surveillance, measuring productivity or tracking internet and email usage. The guidance emphasises that:
Employers may wish to build in a review of their monitoring policies and practices once the final guidance is published next year.
The Government has published draft legislation which, if passed, would mean most EU derived laws would be revoked automatically on 31 December 2023 (with a possible extension of this date until 31 December 2026). The Government would have the power to "save" such laws from revocation by replacing them with UK legislation, in equivalent or amended form. This would include a number of employment laws, including:
The passage of this draft legislation through Parliament remains uncertain and, even if passed, the Government has not said how it intends to deal with EU derived employment rights. However, it has been suggested that there would be a review of the relevant EU derived laws over the course of 2023 to decide what, if any, changes will be made. It is important to note that the draft legislation was published under Liz Truss MP's premiership, and it is not yet clear what the change in prime minister will mean for this review. Employment Update will report developments.
Since the last Employment Update, our work has included: