Employment legal update #57 | August 2022

Our Employment & HR team brings its monthly review of new legislation, guidance and case law.

News: 

The Social Security (Medical Evidence) and Statutory Sick Pay (Medical Evidence) (Amendment) (No. 2) Regulations 2022 amend existing legislation expanding who can sign statements of fitness for work, or "fit notes", for SSP and social security claims. From 1 July 2022, the current regulations are amended to allow registered nurses, occupational therapists, pharmacists and physiotherapists to sign these statements. The regulations also insert a definition of "healthcare professional" which includes doctors and the four new professions. The hope is that this will make it easier for patients to see GPs by reducing their workloads.

On 6 June 2022, around 3,330 workers at 70 companies began a trial of a 4-day working week which is expected to last around 6 months. The trial is led by campaigning group 4 Day Week Global and is believed to be the largest of its type in the world.  The employers involved have agreed they will continue to pay 100% of pay in return for 80% of work provided the workers commit to 100% of productivity. The trial will be monitored by academics from Oxford and Cambridge Universities, and Boston College, and they will consider the impact on employees, the businesses concerned, and the environment.

The Menopause Experts Group has established through research that the number of Employment Tribunal cases citing menopause increased in 2021 by 44% on 2020. 16 cases were claims for disability discrimination, 14 for unfair dismissal and 10 included claims for sex discrimination. Furthermore, use of the word "menopause" increased by 75% in tribunal documents. This research augments other recent findings about the impact of the menopause on employees' experiences at work and the Menopause Experts Group has suggested that employers should offer their workforce training about symptoms, signs and side-effects of the menopause. It has been suggested that the House of Commons Women and Equalities Committee should advocate for employers to have a menopause policy or code of conduct.

The Department for Business, Energy and Industrial Strategy (BEIS) has confirmed that the draft Statutory Code of Practice on dismissal and re-engagement will be published for consultation in summer 2022. The code will reportedly set out good practice to help parties reach a negotiated agreement.

The much-awaited Employment Bill will apparently be delivered "when parliamentary time allows", although there are theories that the government is considering alternatives for delivering on its commitment in its’ manifesto outside the Employment Bill. For example, there is talk of an “alternative vehicle” for bringing forward legislation to introduce unpaid carers' leave, which it was anticipated would be in the Employment Bill.

ACAS has published the results of its survey into hybrid working. It found that 60% of employers have found hybrid working increasing since the pandemic and 52% have found an increase in staff working from home full-time. ACAS has published guidance for employers on hybrid working covering the following: –

• Hybrid working policies should explain how hybrid working can be requested, explain how job roles are assessed and how decisions will be made.
• Staff working remotely should have equal access to opportunities such as team building, training and social activities as those in the workplace.
• Transparency and fairness are important when deciding whether to approve staff requests for hybrid working. Other forms of flexible working may be considered as alternatives.
• Suitable equipment and information to facilitate safe at-home working is necessary.
• Employers must comply with the law on working hours. Staff working at home should take adequate rest breaks and look after their mental health.
• Trial periods to test hybrid working and enable an understanding of any necessary adjustments may be useful.
• There has been a lot of publicity regarding the menopause over the last several months; but the government has now confirmed that it has no plans to introduce it as an additional protected characteristic in the Equality Act. However, they have said they will consider whether there needs to be updated guidance around the menopause to assist employers and employees in understanding the law.

Following the recent largest rail strike for decades, the government has announced changes in the law to make it easier for employers to deal with strike action. It is proposing to introduce draft legislation to provide for:

• businesses to engage temporary agency staff via employment businesses during industrial action;
• increase the cap on damages which can be awarded against a trade union by a court where industrial action is found to be unlawful. For the largest unions, the maximum amount which can be awarded will rise from £250,000 to £1 million.

These changes are reportedly coming in during the next several weeks.

Commentary: 

Holiday pay calculation for part-year workers – Supreme Court decision

The case of Harpur Trust v Brazel concerns the calculation of holiday pay and entitlement for what are described as “part-year workers” – essentially those who work in the education profession and so are subject to working only during term times. This case has been making its way from the employment tribunal through the courts and arrived at the Supreme Court, which delivered judgment on 20 July 2022.

The claimant worked school term time only, as and when needed, providing music teaching. Her contract, which was a permanent one, provided for entitlement of 5.6 weeks paid leave to be taken during normal school holidays. The respondent calculated her annual leave entitlement in 3 equal tranches in the winter, spring and summer school holidays which accounted for 1.87 weeks of each school holiday for which she was entitled to be paid as annual leave. Before September 2011 the respondent worked out how much she had been paid during the preceding 12 weeks term time, divided that total by 12 and paid her 1.87 times that for holiday pay in each school holiday. If a term was shorter than 12 weeks, the respondent took the same number of weeks from the preceding term to make up a total of 12 weeks for calculation purposes.

In September 2011 the respondent changed the calculation to the percentage method, being 12.07% which is the proportion of the 52 weeks in the year which 5.6 weeks holiday represents (52 – 5.6 = 46.4, or 12.07% weeks, which is the proportion of annual leave to the total working year). The respondent calculated her hours worked at the end of each term, to 12.07% of that figure and paid her the hourly rate for that number of hours.

The new method of calculation used by the respondent gave her less pay since September 2011 than previously, so she brought a claim for unlawful deduction from wages by virtue of underpayment of her entitlement to holiday pay.

The tribunal dismissed her claim but the EAT allowed it, holding that there was no justification to depart from the statutory wording that workers should be paid a week’s pay for each of the 5.6 weeks leave to which they are entitled. The calculation of the average of the previous 12 weeks’ pay has since been extended to 52 weeks’ pay, excluding any weeks in which the claimant earned no pay. The Court of Appeal dismissed the respondent’s appeal and they appealed to the Supreme Court.

A complex judgement has boiled down to interpretation of the statute and the difference in the calculation of the amount of leave entitlement and the way in which it is paid. The respondent argued that the claimant should only be entitled to annual leave pro rata to the hours that she worked because, to do otherwise, would mean that she had proportionately more holiday than full time staff which would not be fair on them.

The Employment Rights Act sets out the calculation of a week’s pay for the purposes of determining the rate at which the individual should be paid for holiday under the Working Time Regulations (WTR). In short, full-time or part-time workers have their pay calculated in the same way, that is, the average of their weekly pay over the previous 52 weeks excluding any weeks when they did not work at all, to determine the pay entitlement whilst they on holiday. This is different to their entitlement to leave.

There is no provision in the WTR for the calculation of annual leave entitlement (as opposed to pay) to exclude weeks where no work is performed. The Supreme Court held that if the legislation had intended entitlement to be calculated excluding weeks when the individual did not work, they would have included a provision for this similar to the Employment Rights Act provision for the calculation of the week’s pay – but they did not. The section in the Employment Rights Act that deals with the calculation of average weekly pay is not replicated in the WTR when it comes to the calculation of the number of weeks leave to which an individual, whether full-time, part-time, or part-year, is entitled.

This is endorsed by the fact that calculation of accrued untaken leave where someone leaves partway through a year is dealt with on the basis of the amount of holiday they have accrued but not used to the termination date: not the amount of time they have worked during that period. Where someone starts part way through a year, their leave is calculated by reference to the amount of the year left, not the work actually done during that time. The regulations calculate leave entitlement according to the time not yet elapsed in the leave year, not the amount of work done in that leave year.

The conclusion come to by the Supreme Court was that there is nothing in either the European or domestic legislation to provide for calculating annual leave entitlement in accordance with the amount of hours they work. It therefore held that the amount of leave to which a part-year worker who is employed under a permanent contract is entitled should not be pro-rated to be proportional to that of a full-time worker. There is no provision in domestic law to require this.  Furthermore, there is nothing in European law preventing a member state (which the UK was at the time this case first came to court) from making a more generous provision than what is described as the ‘conformity principle’ (pro-rating holiday entitlement in accordance with the hours they work) would produce. It held that the calculation set out in the WTR, which is compliant with EU law, was the ‘calendar week method’.

There has been some concern that this case applies to part-time workers who work all year round and not just the education sector, who only work term time, because the Supreme Court judgment conflates, in many places, the term “part-year” and “part-time” . However, the clue appears to be in the first paragraph where it states:-

“This appeal raises an important issue about the statutory requirement for part-time workers who may also be described as part-year workers, namely workers who work for varying hours during only certain weeks of the year but have a continuing contract throughout that year. These workers neither work the full number of hours worked by full-time workers nor the full number of weeks worked by part-time workers.”

This description of the category of workers to which this case relates is interpreted as only applying to term time staff because of the wording “neither work the full number of hours worked… nor the form number of weeks worked…”.

It is likely, however, that it will also apply to zero hours workers on permanent contracts who work in much the same way i.e. who often go quite a few weeks in the calendar year without work but remain on a permanent contract.

High Court refusal to grant an injunction endorsed by Court of Appeal

In Planon Ltd v Gilligan the Court of Appeal considered that the High Court was correct to refuse to grant an injunction to enforce a non-competition covenant that would have prevented the employee from working for 12 months.

The claimant develops software for managing facilities for entities such as universities, hotels, and office buildings. The defendant joined as an account manager in 2015 with a 12-month non-competition covenant. He resigned in 2021 giving notice. The covenant provided that he must not work for a competitor which dealt with any of the work with which he had been involved to a material degree whilst working for the claimant in the 6 months prior to termination. He assured the claimant that he was not going to work for a competitor, including one specific competitor, and that he would abide by the covenants even though he considered them unreasonable.

He served just under 1 month on garden leave and as soon as his employment terminated, a week or so later, he started working for a competitor, the very one he had named as saying that he was not going to work for. The claimant sent a letter before action 3 weeks later, and one month after that, issued proceedings and an injunction application.

The High Court declined to grant an injunction in respect of the non-compete clause on the basis that there had been a delay between the parties’ initial correspondence and the issuing of the application (albeit this would not, of itself, be sufficient to prevent granting the application). More critically, it considered that the covenant was likely to be unenforceable because the defendant would effectively be unable to work for 12 months because he would find it very difficult to transfer his skills into another software area and so would effectively be unemployed for the entire period.

The High Court considered that the claimant did not have a good chance of enforcing the covenant. Furthermore, it considered that damages would not be an adequate remedy; for one thing, the defendant might not be good for the money but, if it turned out it was wrongly granted, it might be difficult to adequately compensate the defendant for his loss.

The claimant appealed to the Court of Appeal, which dismissed the appeal – but for reasons which differed to those of the High Court. The Court held that the High Court had not taken the correct approach when considering whether the non-compete clause was reasonable. However, because of the delay by the time the matter came before it, the Court did not consider it appropriate to give a preliminary view about the enforceability of the clause.

The effect of delay was considered. There was a difference of opinion between the judges on the effect of the delay which spanned from the date on which the claimant became aware of the facts, and the High Court hearing. One view was that the judge had reached a decision open to him on the facts while the other was that the judge would have been entitled to refuse an injunction on the ground of delay.

As for the issue of damages being an adequate remedy, one of the justices was of the view that, other than for very wealthy defendants, or where a claimant employer is offering paid garden leave for the whole period of the restraint, it was unrealistic to argue that damages would be an adequate remedy. There is no rule of law that damages are an adequate remedy if a covenant is found to be unenforceable.

Dismissal procedure relevant for proportionality in disability discrimination

In Department for Work and Pensions v Boyers, the EAT has held that an employment tribunal was correct to find that the claimant's dismissal constituted discrimination arising from disability under S.15 of the Equality Act 2010. It held that her dismissal was not a proportionate means of achieving the respondent's legitimate aims. The EAT held that the procedure used to carry out the dismissal can be relevant to the assessment of proportionality in a section 15 claim, especially where redeployment might be a less discriminatory alternative.

The claimant was an administrator officer at the Respondent's Middlesbrough base. She was confirmed as disabled but a few years later had issues with a colleague bullying and harassing her and she complained that the behaviour was exacerbating her disability. She repeatedly requested to move desks away from the individual or to a different floor, but this was refused. She eventually went off ill with stress and lodged a grievance, which was rejected.

Eventually she said she was willing to return to work but not at that office, so she trialled an alternative office. However, the respondent concluded that this had not been successful and ordered her to return to the Middlesbrough office. She went off sick again and was eventually dismissed for capability reasons. The timeframe between when she as confirmed as disabled, and her dismissal was some five years. She brought various claims, one of which was under s.15 of the equality act.

An employment tribunal found that the decision to dismiss the claimant fell foul of s.15 as dismissal was not a proportionate response for the purposes of s.15(1)(b). The respondent appealed successfully to the EAT, which remitted the case back for the same tribunal to access whether the dismissal was proportionate to the respondent's legitimate aims. The tribunal came to the same conclusions again and so the respondent again appealed  but this time the appeal was dismissed.

This time the EAT found that the tribunal had properly carried out the balancing exercise required of it and was entitled to find that the claimant's dismissal was disproportionate because the respondent had not properly assessed the trial of the different office which, if it had, might have avoided the dismissal.

The EAT's previous judgment is not authority for the proposition that the procedure leading to a dismissal is irrelevant to the balancing exercise, so long as the tribunal focuses on the question of whether the outcome of the decision could be justified. The respondent will find it more difficult to demonstrate proportionality when dismissing a disabled employee if there is no evidence as to how those who made the decisions considered dismissal would serve its legitimate aims; or whether they considered any less discriminatory alternatives. The EAT held that this case was a good exampled of how that failure in process can properly form part of the necessary balancing exercise.

The respondent tried to argue that the terms of the claimant's contract concerning where she worked, restricted it in moving her. However, this was considered to be contrary to the principle of protection for disabled people.

Ethical veganism is not a protected characteristic

In Free Miles v The Royal Veterinary College a tribunal held that a belief in ethical veganism which manifested itself in an obligation to break the law to relieve animal suffering was not a philosophical belief under section 10 of the Equality Act 2010.

The claimant was a veterinary nurse employed by the respondent who was arrested in connection with alleged burglaries by the Animal Liberation Front. A sick turkey was found at her home which she said she had rescued. She was summarily dismissed, principally because the respondent believed she was connected to an animal rights group that endorsed breaking the law; and she had participated in lawbreaking activities such as trespass and theft.

The claimant issued proceedings in the tribunal for, among other things, direct and indirect philosophical belief discrimination. She argued that her ethical veganism included a moral obligation to take positive action to reduce animal suffering, which action included trespass on property and removal of animals. By the time the hearing took place, the claimant had been charged with criminal offences relating to animal rights activities.

The tribunal held that if her belief in ethical veganism extended only to the belief that humans should not eat, wear, use for sport, experiment on or profit from animals it would certainly have held that this qualified as a philosophical belief. It even went so far as to say that if the moral obligation to take positive action to alleviate suffering was limited to action which was lawful it would have come to the same conclusion. The claimant’s undoing was her assertion that even unlawful action such as trespassing on private property and theft was justifiable in pursuance of her belief. The tribunal’s view was that her belief, manifested as it was, was not “worthy of respect in a democratic society” and as such did not fulfil the final category according to the case of Grainger Plc v Nicholson regarding the boxes which must be ticked in assessing what constitutes a philosophical belief.

Fundamental breach does not need intention to end employment relationship

In Singh v Metroline West Ltd the EAT has held that a fundamental breach for the purposes of constructive dismissal does not always need an intention by the employer to end the relationship.

The day after the claimant was invited to a disciplinary hearing, he went off sick. Whilst he was ill, an occupational health assessment took place but there was no suggestion that his illness was ungenuine. However, the employer thought he was trying to avoid the disciplinary hearing and so paid him SSP only and not company sick pay. He resigned in consequence, claiming that the failure to pay company sick pay constituted a fundamental breach of contract which he was entitled to accept and resign in the face of.

The tribunal found the respondent was contractually entitled to suspend claimant without pay if it found his sickness absence was not genuine; however, this entitlement had not been exercised. |The employer was also entitled, under the contract, to refuse to pay Company sick pay where absence was found to be ungenuine following an investigation. The employer, however, had not carried out any such investigation.

The tribunal found that there was a breach of contract in the withholding of company sick pay; however, this was not found to be a fundamental breach There was no indication, in the withholding of company sick pay, that the employer was evidencing that it did not consider itself bound by the contractual terms. The tribunal found that the employer’s motive in withholding company sick pay was to encourage the claimant to participate in the disciplinary process.

The claimant appealed, and the EAT upheld this. The EAT found that the tribunal was wrong to adopt the approach that, for a breach of contract to be fundamental, there must be evidence of an intention not to be bound by the contractual relationship. What needed to be shown was an intention by the employer to not comply with the terms of the contract that is so serious that it goes to the root of the contract: a fundamental breach. The EAT found that the deliberate withholding of company sick pay was such a breach as it went to the heart of the contract resulting in a reduction in earnings in circumstances where there were other methods for the employer to deal with suspicions about the claimant’s absence. This case establishes that it is possible to have fundamental breach which does not evidence intention by the employer to end the relationship.

Long Covid a disability

In Burke v Turning Point Scotland the tribunal has found that an employee who had Covid-19, with initially mild symptoms, was suffering from long Covid, the symptoms of which qualified as a disability under the Equality Act.

The claimant was employed as a caretaker. He developed Covid in November 2020, initially mildly, and subsequently he developed severe headaches and fatigue. He had to lie down and rest very frequently and struggled to stand for long periods. He was unable to undertake normal household duties. He had joint pain, loss of appetite and difficulty sleeping. His symptoms fluctuated in severity. Fit notes referenced long Covid and post viral fatigue syndrome, in contrast to 2 occupational health reports which stated he was fit to return to work and that the Equality Act was unlikely to be applicable.

However, he did not return to work and was dismissed nearly a year later for incapability due to ill health. He brought claims for, among other things, disability discrimination.

As a preliminary issue the tribunal had to determine whether he was disabled; and came to the conclusion that he was. It found that all the symptoms that he was experiencing ticked the component boxes of the definition of “disability”, and even the employer could not identify a feasible return to work date.

It appears in this case that the effect of long Covid was to trigger post viral fatigue syndrome, the symptoms of which qualified as the disability.