In this month's legal update, our Employment & HR team cover:

News:

• The Health & Social Care Act 2008 amendments
• Consultation on sexual harassment in the workplace
• Covid-19 guidance for employers
• Data can now flow freely from the EU to the UK
• Pregnancy and maternity descrimination protection
• Acas guidance on hybrid working for employers
• Caution should be adopted when using CEST
• The Government's National Disability Strategy
• More support for disabled apprentices

Commentary on recent employment law tribunal cases:

• Automatic unfair dismissal for remaining abroad in pandemic
• Career-long compensatory loss in discrimination appropriate
• ET3 accepted out of time in lockdown
• Success fee and insurance premium not taxable as employment income
• Prohibiting religious attire in workplace is not discriminatory
• Teacher fairly dismissed for possessing indecent images of children
• Burden of proof in discrimination claims

News

The Health and Social Care Act 2008 (Regulated Activities) (Amendment) (Coronavirus) Regulations 2021) Regulations come into force on 11 November 2021. These regulations make it mandatory for staff employed in registered care homes to be fully vaccinated unless they are exempt. The Regulations are the result of a consultation which ran from April to May 2021. The exemptions, however, are vague, and neither is it clear about the position of staff who may work in care homes but are not frontline workers, i.e. back-office staff such as HR who may never go into a care home. These are likely to raise considerable issues for employers running care homes because of the possible need to dismiss staff who refuse to be vaccinated and, for those who will be, there is a very tight deadline between now and the Regulations coming into force for staff to get their second vaccine. The Government is reportedly considering whether vaccinations should also be compulsory for healthcare and domiciliary workers. This is on the back of the recent announcement that the effectiveness of the vaccines deteriorates after 6 months…

Following the consultation on sexual harassment in the workplace, the Government has announced that it will introduce a duty on employers to prevent sexual harassment, as well as explicit protections from third-party harassment, and will consider extending the time limit for claims under the Equality Act 2010 from three to six months. It seems that many of the respondents to the consultation supported a new duty to prevent harassment, and felt that this would encourage employers to take positive steps. The response does not set out any detail of the proposed new duty, nor of the 'explicit protections from third-party harassment'. These changes will be introduced when parliamentary time allows – so may not be any time soon.

Public Health England has issued new guidance to employers on Covid-19 vaccination which includes information and resources to help them support their staff and promote the Covid-19 vaccination programme. The guidance recommends that employers encourage and support their staff to be vaccinated and includes an Employers' Communication Toolkit. The guidance also recommends that:

• Employers could post articles or blogs about the importance of vaccination on their intranet, or in emails or newsletter communications.
• Employers should consider using departmental champions to promote vaccination and encourage senior staff to share their vaccination experiences.
• Employers should consider allowing workers to take time off to be vaccinated, and sick leave policies and procedures should be reviewed to ensure that they do not dissuade workers from being vaccinated.
• However, importantly, the guidance does not specify that workers should be entitled to paid time off to attend vaccination appointments.

The European Commission has formally adopted the two UK adequacy decisions under the General Data Protection Regulation and the Law Enforcement Directive. This means that personal data can now flow freely from the EU to the UK as the UK offers an equivalent level of protection to personal data as under EU law. The Department for Digital, Culture, Media and Sport has updated its guidance to confirm the decisions.

There is still no timeframe on when the Government will bring in legislation to broaden the scope of pregnancy and maternity discrimination protection. The only guidance provided is that it will be "when parliamentary time allows" or "as soon as parliamentary time allows". The legislation proposed will extend the redundancy protection period for six months after a new mother returns to work, which was promised in the 2019 Queen's Speech. However, no details are available.

Acas has published new guidance on hybrid working to help employers consider whether it could be an option for their workplace and how to fairly introduce it. It includes advice on how to:

• Consult with staff on the practical considerations regarding introducing hybrid working.
• Support and manage staff who are hybrid working and ensure all hybrid workers are treated fairly.
• Create a hybrid working policy.
• Handle hybrid working requests from staff.
• Consider whether technology could assist hybrid working, and issues such as health and safety, data privacy, cybersecurity, onboarding new joiners, and how teams will communicate remotely.

In a salutary lesson for private employers over the new teeth acquired by HMRC regarding IR35, the Department for Work and Pensions faces a tax bill of £87.9 million, in respect of missed tax and national insurance contributions between 2017 and 2021, when it wrongly assessed the tax status of its contractors. What is alarming is that they relied on the HMRC's Check Employment Status for Tax (CEST) tool. Now that the same rules apply to the private sector, it would appear that caution should be adopted when using CEST. Apparently the Home Office also faces a £33.5 million tax bill over the "careless" application of the IR35 rules.

The Government's recently published National Disability Strategy sets out a number of steps that it will take to remove barriers faced by disabled people in all aspects of their lives. The strategy addresses multiple areas, including disabled people's access to justice, politics, transport, housing and leisure services. Given that only just over half of the 7 million disabled people of working age in the UK are currently employed, work is a key focus and the Government is committing to make work more accessible and inclusive. Key commitments include:

• Setting up a new online advice hub for employers, run by BEIS in conjunction with Acas - available from the end of July 2021.
• Improving the Access to Work scheme, including piloting a new Access to Work Adjustment Passport in 2021 to help disabled people move more freely between jobs.
• Launching consultations before the end of 2021 on workforce disability reporting and on making flexible working the default.
• Setting out, by the end of 2021, the next steps to introducing up to one week of unpaid carers' leave.

Following on from the above, the Government has committed to providing more support for disabled apprentices. This will include investigating the difficulties disabled people find in undertaking apprenticeships and how to address them. The results are due to be published in February 2022. A workforce development programme will also be created for apprenticeship providers, and further support given to employers, to focus on the gap in attainment between apprentices who declare a disability and those who do not.

Commentary

Automatic unfair dismissal for remaining abroad in pandemic

In the Employment Tribunal decision of Montanaro v Lansafe Ltd, the claimant was found to have been automatically unfairly dismissed for health and safety reasons, having travelled abroad prior to the first lockdown for his sister's wedding and the pandemic having then broken out, resulting in lockdown in Italy.

Italy went into lockdown the day he arrived, 9 March 2020. He reasonably believed that he had the permission to take the holiday and, when the rules were updated in the UK to 14 days isolation on return, he contacted his company for advice. He was told to keep his mobile on and wait for instructions. When none came, he contacted the client for whom he was working and was instructed to continue working remotely. Despite knowing he was in Italy, his company sent him a letter to his London address to the effect that he had been dismissed with effect from 6 March for unauthorised absence. On 1 April he was sent his P 45.

He brought a successful claim that he had been automatically unfairly dismissed in accordance with the Employment Rights Act because there were circumstances of danger which he reasonably believed to be serious and imminent, namely the catching of coronavirus. The Tribunal found that, when he was in lockdown in Italy, he communicated with his employer and asked for instructions. He kept them advised of the situation in Italy and, when he heard nothing, he continued to carry out work for the client to which he was assigned. The Tribunal also found that the reason for his dismissal in the dismissal letter had nothing to do with his absence from the UK as a result of the pandemic but instead was to do with alleged unauthorised absence and failure to follow company procedure, when in fact he had been taking reasonable steps to protect his health.

Career-long compensatory loss in discrimination appropriate

In Secretary of State for Justice v Plaistow, the EAT has upheld an Employment Tribunal's decision to calculate compensation for direct sexual orientation discrimination and harassment on the basis of career-long loss. The claimant's condition of PTSD, depression and symptoms of paranoia was considered likely to be life-long and, as such, this is a rare case where a career-long loss assessment was appropriate.

Appeals against other aspects of the calculation, including the Tribunal's decision to only apply a 5% discount for the possibility of employment being curtailed for a different reason, and the 20% uplift for failure to follow the Acas Code of Practice on Disciplinary and Grievance Procedures without considering the totality of the award, were dismissed.

The claimant started work as a prison officer in 2003, initially at HMP Feltham and subsequently transferred to HMP Woodhill. Shortly after the move, he was subjected to harassment related to his actual, or perceived, sexual orientation, including physical and verbal abuse and enquiries about his sexuality; which carried on until he was dismissed two years later. He brought successful employment tribunal claims of direct sexual orientation discrimination, harassment and victimisation.

The Tribunal awarded compensation under various heads, including £41,000 for injury to feelings, £15,000 for aggravated damages and £8,000 for exemplary damages. The financial loss was assessed as being career-long. There was agreed medical evidence that the claimant had suffered PTSD, depression and paranoia, and had functional impairments. However, the experts disagreed on future prognosis, one view being that his condition would be life-long, the other that there was insufficient evidence to conclude that it was permanent.

The Tribunal concluded that career-long loss was the appropriate criteria on which to calculate the award. It applied a 5% discount to reflect the likelihood of the claimant voluntarily leaving employment early or being able to return to some form of employment in the future. It also awarded an uplift of 20% in respect of the prison service’s failure to follow the Acas Code in relation to the claimant’s dismissal, which had been stated as gross misconduct. The prison service appealed to the EAT challenging, among other things, the career-long basis for the award and the 20% uplift.

The EAT allowed the appeal in part but rejected the prison service's challenge to the career-long basis for the award. The Tribunal had been entitled to find that the claimant's condition was likely to be life-long. The EAT also rejected some aspects of the prison service's challenge to the 5% discount but accepted that the Tribunal's reasons did not reflect more overall considerations of uncertainties involved in predicting loss, such as the likelihood of obtaining alternative employment or voluntarily leaving, or other unforeseen circumstances. Because the Tribunal did not take these into account when settling on 5% as a discount, the appeal was allowed against this aspect of the award.

The EAT also allowed the prison service's appeal against the 20% uplift under the Acas Code and remitted the questions of discount and uplift to the Tribunal.

ET3 accepted out of time in lockdown

In Fyfe v Arcadis Human Resources Ltd the Tribunal has accepted the respondent's argument that it did not receive the ET1 because of the first lockdown and allowed it to submit its ET3 out of time due to the unprecedented circumstances of the pandemic.

The claimant lodged his claim, citing breach of contract and age discrimination, during the first lockdown. However, the Respondent did not receive the Tribunal's notification of the claim, even though its postroom was staffed by a skeleton staff. The first the respondent knew of the claim was when the claimant sent his evidence before a final hearing scheduled for two days later. The respondent immediately instructed a solicitor who went on the record, requested copies of the ET1, advised that the respondent wanted to defend the claim, and applied for an extension of time to do so. The following day the solicitor sent to the Tribunal a written application and draft ET3, and the hearing the following day was converted to a preliminary hearing to hear the application.

The Tribunal accepted that these events occurred at an unprecedented time, when many individuals and organisations were adjusting to new working practices, and that the respondent had not been notified of the claim. It noted that the respondent had acted immediately on becoming aware of the claim, and considered the balance of prejudice. The claimant would not now get a default judgment, even though he might ultimately win. However if the respondent was unable to participate, it might have a judgment against it relating to serious matters. On the grounds of the overriding objective and interests of justice the extension of time was allowed.

The bar to having an extension of time application accepted is quite high but clearly in the early days of pandemic this was considered an exceptional situation and rightly so. Whether the Tribunal would grant the same latitude 18 months later is debatable but it would depend on the facts.

Success fee and insurance premium not taxable as employment income

In Murphy v HMRC the Upper Tier Tribunal held that a success fee and insurance premium paid under a settlement agreement were not taxable as earnings.

The claimants settled a group action against the Metropolitan Police (MET), for unpaid overtime and other allowances. Under the agreement, the MET paid a principal settlement (which included a success fee and a litigation insurance premium) and legal costs. HMRC accepted that the legal costs, which were not part of the main settlement, were not earnings but the success fee and insurance premium were; and therefore were taxable as earnings. The claimants appealed this decision to the Upper Tier Tribunal.

While the Upper Tier Tribunal acknowledged that there was no authority which directly addressed the "profit" issue, it referred to various cases as authorities for the propositions that:

• An amount received in respect of costs incurred to obtain payment of a settlement is not employment income.
• A payment made to compensate an employee for losses incurred in consequence of the employee's employment is not employment income (as opposed to a payment made to an employee to compensate them for losses unconnected with their employment).

The Upper Tier Tribunal found that the amounts paid by the MET to reimburse the claimants' costs were not profits of the claimants and were therefore not taxable as earnings even if they could derive from their employment.

The case highlights the importance of clearly identifying and separating out the different payment elements in a settlement agreement because failure to separate out the component parts caused HMRC to assume that all aspects of the settlement were taxable, which was not the case.

Prohibiting religious attire in workplace is not discriminatory

In a judgment which will now no longer bind the UK courts because of Brexit, but to which they may have regard the ECJ, in IX v WABE eV; MH Müller Handels GmbH v MJ, has held that preventing workers from wearing visible signs of political, philosophical or religious belief in the workplace is not direct religion or belief discrimination under the EU Equal Treatment Framework Directive – as long as the rule is applied in a general way which does not differentiate. In addition, the Court held that the indirectly discriminatory effect of the rule could be justified if the employer has a genuine business need to pursue a policy of political, philosophical and religious neutrality in respect of its customers or users to take account of their legitimate wishes.

The first claimant was employed in Germany by WABE as a special needs carer in a child day care centre. The respondent applied a policy of 'political, philosophical and religious neutrality', which meant that employees were not allowed to wear any signs of their political, philosophical or religious beliefs which could be seen by parents, children and third parties in the workplace. The claimant wore an Islamic headscarf to work on a number of occasions and was given warnings and suspended.

The second claimant was employed as a sales assistant and cashier in a store in Germany. She was asked to remove her Islamic headscarf; however she refused and was sent home. She was told to attend her workplace without 'conspicuous, large-sized signs' of any political, philosophical or religious beliefs. They both brought claims.

The German courts in both cases referred questions to the ECJ, asking whether the treatment comprised direct religion or belief discrimination under the Framework Directive and, if the treatment constituted indirect discrimination, whether it could be justified.

Dealing with direct discrimination first, the ECJ noted that according to established case law, a rule prohibiting the wearing of certain items of clothing or jewellery in the workplace because of religious belief does not constitute direct discrimination provided it deals with any manifestation of such beliefs without distinction and treats all workers in the same way. Since it is possible that every person may have a religion or belief, provided the rule is applied consistently across the board, it does not mean that there is differential treatment based on religion or belief.

The Court then looked at whether the indirectly discriminatory effect of the rule could be justified by the employer’s stated policy of political, philosophical and religious neutrality in respect of its customers or users to have regard to their legitimate wishes. However, a desire for this policy is not enough to prove objective justification. This can only be established if there is a genuine need for the policy. A genuine need can be taking account of the rights and legitimate wishes of customers or users, i.e. parents' right to ensure their children are educated in accordance with their own religious beliefs and the children are not exposed to the different beliefs of those looking after them. Two other points for objective justification were that the policy must be applied in a consistent and systematic way and limited to what is strictly necessary to achieve its ends.

With the second case, the ECJ had to consider whether, in respect of the ban on visible signs of political, philosophical or religious beliefs in the workplace with the aim of ensuring a policy of neutrality, the ban could be justified only if it covered all visible forms of expression or whether it can be limited to 'conspicuous, large-sized' signs. The ECJ considered that a ban only on large items of clothing/jewellery, allowing small items to be worn, would be liable to constitute direct discrimination on the ground of religion or belief, since it would have a greater effect on people whose beliefs required them to wear, for instance, large-sized head coverings. As such, it held that indirect discrimination arising from such a ban could only be justified if the ban extends to all visible forms of expression of political, philosophical or religious beliefs.

Teacher fairly dismissed for possessing indecent images of children even though not prosecuted

In L v K, the Inner House of the Court of Session in Scotland has held that a teacher was fairly dismissed for "some other substantial reason of a kind such as to justify dismissal of an employee holding the position which the employee held" (SOSR) when he was charged with possession of indecent images of children, but was not prosecuted.

The teacher admitted that a computer in his home was found to contain indecent images but could not explain them. His son and his son's friends also had access to the computer. His employer found that there was insufficient evidence to conclude that the teacher was responsible for the images, but it could not establish that he had nothing to do with them. Consequently there were safeguarding concerns, reputational risk, and the resulting conclusion that he was an unacceptable risk to the children. He was therefore dismissed.

An Employment Tribunal dismissed the teacher's claim for unfair dismissal on the basis that the reason for dismissal was SOSR and dismissal was within the band of reasonable responses. On appeal, the EAT found that the teacher had been unfairly dismissed for misconduct in circumstances where the employer did not have a reasonable belief in the teacher's guilt.

Allowing an appeal against the decision of the EAT, the Court of Session restored the tribunal's order that the unfair dismissal claim failed. It held that the Tribunal had made clear that the reason for dismissal was SOSR, so a reasonable belief in the teacher's guilt was therefore not necessary. The employer no longer placed trust and confidence in the teacher, not because it was satisfied that he was guilty, but because there was a real possibility that he was an offender.

Supreme Court ruling: Burden of proof in discrimination claims

In Royal Mail Group Ltd v Efobi, the Supreme Court has ruled on s.136 of the Equality Act in relation to the burden of proof in discrimination claims. It has held that this section does not alter the burden of proof, which is on the claimant to prove, on the balance of probabilities, facts from which, in the absence of any other explanation, a tribunal could infer were unlawful acts of discrimination. The Court also held that the employment tribunal was right to refuse to draw an adverse inference from the failure of the respondent to call the relevant decision-makers to give evidence. Tribunals should be free to draw, or decline to draw, inferences in the case before them using their common sense.

The claimant was a black Nigerian and Irish citizen who held graduate and post-graduate qualifications in information systems. While he worked as a postman, he applied for over 30 IT posts with RMG Ltd over 3 years. He did not tailor his CV to the positions for which he was applying, and in all of them, he put details of his origin and where he lived. The applications were dealt with by external recruiters overseen by a manager employed by the respondent. When none of his applications were successful, he filed a tribunal claim alleging that the failure of his applications was direct race discrimination.

The respondent did not call any of the recruiters or managers involved in the process as witnesses or provide any evidence regarding the race and national origin of the other applicants. Those witnesses it did call gave evidence that the successful candidates all had considerably longer and more relevant experience than the claimant, and had produced more detailed and relevant CVs. This evidence was accepted by the tribunal. The tribunal could make no finding of fact, whether inference or otherwise, regarding any real or hypothetical comparators, and the claimant had not proved facts from which the tribunal could conclude, in the absence of other evidence that his failure was due to direct race discrimination; so his claim failed.

The EAT allowed the claimant's appeal, whereupon the respondent appealed to the Court of Appeal, which overturned the EAT decision. The claimant then appealed to the Supreme Court.

The Supreme Court dismissed the appeal. It rejected the claimant’s argument that the change of wording in s.136 Equality Act changed the law to remove any burden on a claimant to prove anything at the first stage. The interpretation of the previous provisions required the court to consider evidence from all sources at the first stage, just not any explanation by the employer. The change in wording makes clear that all the evidence, whether claimant or respondent, should be considered at the first stage. However, general law dictates that a court or tribunal may only find that something is a fact if either it is admitted, or evidence demonstrates it is more likely than not to be true. As such, it remains the law that the burden of proof will only shift to the employer to explain the reason for its treatment if the claimant can prove, on the balance of probabilities, facts from which (in the absence of any other explanation) an unlawful act of discrimination can be inferred. The Supreme Court therefore held that, in adopting this approach to the evidence, the employment tribunal did not make any error of law.

The Supreme Court held that the tribunal was free to draw, or decline to draw, adverse inferences from the refusal to call what should or could have been relevant witnesses as it saw fit. There were a number of considerations to bear in mind, not least the relevance of the evidence which the person could give, and their availability. In this case, there was no evidence to suggest that, had certain witnesses been called, the result would have been any different.