Employment legal update #65 | October 2023

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

News 

This months newsletter provides readers with new around:

1. Annual leave and holiday pay
2. Long-term sickness statistics
3. Neonatal Care (Leave and Pay)
4. Restraint of trade clauses
5. The Electronic Travel Authorisation (ETA) scheme
6. Employment tribunal awards for injury

Case commentary topics this month are as follows:

• Danger to health and safety claim over refusal to work during pandemic rejected
• Sole or joint discriminator in discrimination allegation
• Agreement for pay in lieu cannot mean lower pay than under WTR

1. Annual leave and holiday pay

Earlier this year the government launched consultation on reforming the calculation of annual leave and holiday pay; the record-keeping requirements under the Working Time Regulations; and the consultation requirements under TUPE. The consultation, which closed on 7 July 2023, is widely expected to change the method of calculating annual leave and holiday pay for atypical workers following the Supreme Court decision in Harpur v Brazel, which threw many organisations into confusion as to how to correctly calculate holiday entitlement and pay for part time, part year workers. The outcome, and any possible change in legislation, is eagerly awaited.

2. Long-term sickness statistics

The Office for National Statistics has produced figures showing that 2.55 million people in the UK are not working due to long-term sickness. This is a new record. Since the pandemic, there are more than 400,000 additional people outside the labour market due to ill health. There have been significant increases in conditions relating to mental health, particularly with younger people, and musculoskeletal issues.

3. Neonatal Care (Leave and Pay)

The Neonatal Care (Leave and Pay) Act 2023, Carer's Leave Act 2023 and Protection from Redundancy (Pregnancy and Family Leave) Act 2023 rkeceived Royal assent in May. The new neonatal leave and pay entitlements are expected to be delivered in April 2025 along with around seven new statutory instruments. Key points are as follows:

• • The Neonatal Care (Leave and Pay) Act provides for up to 12 weeks neonatal care where their baby is admitted to a neonatal care facility. This is in addition to maternity and paternity leave and has eligibility requirements.
  • A date for implementation of the provisions of the Carer's Leave Act 2023 is yet to be announced, with the key provisions to come into force on a day or days to be specified in regulations. It has been reported that this date will not be before April 2024. This provides a statutory entitlement to one week of flexible unpaid leave per year for employees who are caring for a dependant with a long-term care need.
  • The Protection from Redundancy (Pregnancy and Family Leave) Act 2023 will come into force at the end of the period of two months beginning with the day on which the Act was passed. Crucially, this allows for the extension of existing redundancy protections while on maternity, adoption or shared parental leave to also cover pregnancy and a period of time after a new parent has returned to work

4. Restraint of trade clauses

The government has published consultation on restraint of trade clauses and has confirmed that it will introduce a statutory cap on non-compete clauses of three months. The cap will apply to employment and worker contracts only, and not to other workplace contracts, such as LLP agreements or shareholder agreements. Where non-compete clauses last less than three months, the existing common law principles of enforceability will apply. There will be no cap for other restrictive covenants, such as non-dealing or non-solicitation clauses.

5. The Electronic Travel Authorisation (ETA) scheme

The Home Office has announced that the Electronic Travel Authorisation (ETA) scheme, a digital permission to travel similar to the ESTA scheme in the United States, will cost £10 per applicant (by way of comparison, the Visa waiver required to go into Canada from the UK costs $7.). It will be required by all those coming to the UK for up to 6 months who do not require a visa, including transit visitors and some creative workers. The ETA scheme will launch for Qatari nationals from 25 October 2023. From 1 February 2024, the scheme will be introduced for nationals of Bahrain, Jordan, Kuwait, Oman, United Arab Emirates and Saudi Arabia. By the end of 2024, the scheme will be a requirement worldwide.

6. Employment tribunal awards for injury

The annual increase to employment tribunal awards for injury to feelings (the Vento Guidelines) has been issued. It applies in respect of all cases presented on or after 6 April 2023 as follows:-

• a lower band of £1,100 to £11,200 for less serious cases;
• a middle band of £11,200 to £33,700 for cases that do not merit an award in the upper band;
• an upper band of £33,700 to £56,200 for the most serious cases, with the most exceptional cases capable of exceeding £56,200.

Commentary

Danger to health and safety claim over refusal to work during pandemic rejected

In Miles v Driver and Vehicle Standards Agency, the EAT has upheld an employment tribunal decision to dismiss a claim for health and safety detriment and dismissal of an employee with chronic kidney disease who refused to return to work due to COVID-19. It found that the individual did not hold a reasonable belief in any serious and imminent danger to himself, and his claims were ameliorated by the existence in the workplace of a health and safety representative. The fact that that representative was not at his workplace was found not to matter.
The EAT found against the tribunal on the employee’s decision not to return to work, which the tribunal found was based upon an ‘unreasonable belief’ for the purpose of establishing whether his condition amounted to a disability under the Equality Act 2010. The disability claims were remitted to the employment tribunal to decide whether the employee’s decision not to return to work was because of a substantial adverse effect on his health resulting from his kidney disease.

The claimant was a driving instructor and during the pandemic all bar essential driving tests stopped. When they restarted, the claimant, even though he was considered clinically vulnerable, was required to return to work. It was only those who were extremely clinically vulnerable who were not. A number of adjustments were instituted in addition to the employer’s usual practices but nonetheless the claimant still refused to return to work, and his pay was stopped. He resigned claiming constructive unfair dismissal and brought claims of health and safety detriment and dismissal, and disability discrimination.

Although the tribunal found that there were circumstances which he reasonably believed were harmful or potentially harmful to his health and safety, it also found that there was a health and safety committee and a representative for the claimant’s office with whom he reasonably could have raised his concerns. As such, these claims were rejected. His argument that the health and safety representative or committee must be based at his place of work was rejected.

The claimant’s other claims also failed, the tribunal finding that the claimant did not hold a reasonable belief in a serious and imminent danger to himself, as required by those provisions. Additionally, his disability discrimination claims were rejected, with the tribunal considering that his impairment did not have the required constituent parts for a disability.

The EAT upheld the tribunal’s decisions in respect of the health and safety claims on the basis that a representative did not need to be at the individual’s place of work and the fact that there was one precluded him from bringing the relevant claims. However, the disability claim decision was overturned and remitted back to consider the issue of disability.

Sole or joint discriminator in discrimination allegation

In Alcedo Orange Ltd v Ferridge-Gunn, the EAT has held that an employment tribunal was wrong to find that the dismissal of a pregnant employee was discriminatory when it was not clear whether the eventual decision maker (the business owner) made the decision to dismiss alone or in conjunction with the employee’s line manager. As such it could not be determined whether the decision to dismiss was motivated by her pregnancy. It was the claimant’s case that her line manager had considerable influence over the business owner’s decision to dismiss, which was stated to be poor performance. The EAT held that an analysis should have taken place to identify whether there was a sole decision maker here; or whether that sole decision maker was influenced by others; or whether it was a joint decision. An earlier Court of Appeal decision had held that an employer can only be liable for discrimination where an employee has done an act which of itself satisfies the definition of discrimination. In other words, the employee (or employees) who did the act complained of must have been motivated by the protected characteristic. The act cannot be discriminatory on the basis of someone else’s motivation, if the person carrying out the act (in this case, the decision to dismiss) is unaware of any discriminatory motivation.

The claimant started her new role as a recruitment manager but after 2 weeks, her line manager and the MD raised some areas of concern regarding her performance. The following week she told her line manager that she was pregnant. After a follow-up meeting which demonstrated some improvement, she was off sick with morning sickness. During her absence her line manager discovered she had not processed some documents and told the MD that she had misled him when she said that she had made progress at their recent meeting.

The crucial point here is that the accusation was unfounded because the failure to process the documents was because she away unwell with morning sickness. On her return, her line manager asked her some unsympathetic questions about her morning sickness (including whether it was contagious…) and the following day the MD and her line manager told her that her employment was being terminated because her performance was “below par”.

The claimant brought an employment tribunal claim that her dismissal constituted pregnancy discrimination, and this was upheld by the tribunal. It considered that she had demonstrated facts which showed that the decision to dismiss was because of her pregnancy and the employer could not demonstrate otherwise. It held that, since the MD was the owner of the business, his was the final decision to dismiss. However, that decision had been influenced by the line manager’s view, incorrectly relayed to the MD, that her performance was not improving when in fact the failure to process the documents concerned was because she was away with morning sickness which was pregnancy related.

The employer appealed on the basis that the tribunal was wrong in not separating the role of the MD, who made the decision, and the line manager who provided the information to him and that it had not considered the reason why the MD took the decision to dismiss.

The EAT took the view that the tribunal had not analysed the earlier Court of Appeal decision concerning the motivation of the decision-makers in the light of the guidance in that case. This made the decision unsafe. The EAT found that the line manager was influenced by the claimant’s pregnancy; but it was unclear whether the MDs conversation with the line manager before dismissing demonstrated his awareness of the pregnancy-related reason for the line manager recommending dismissal. The appeal was therefore allowed and remitted to the tribunal to reconsider.

Agreement for pay in lieu cannot mean lower pay than under WTR

In Connor v Chief Constable of the South Yorkshire Police, the EAT has held that an employer cannot pay an employee in lieu of accrued untaken annual leave on termination at a rate which is lower than the calculation specified in the Working Time Regulations, just because there is a relevant agreement providing for a different calculation. It held that the meaning of the phrase ‘relevant agreement’ must be to an agreement providing for a formula in keeping with the right to annual leave and pay conferred by the WTR.

The claimant was dismissed having been on long-term sick and was entitled to a payment in lieu of accrued untaken holiday. His contract included a term to the effect that payments in lieu would be based on 1/365th of his annual salary for each day of holiday. He worked a regular 37.5 hour week. Had he been at work he would have received the same payment for a week’s holiday the same as when he was at work. However, the pay in lieu calculation in his contract meant that he was paid less than if he had taken a holiday, because he was paid in lieu. This gave rise to the employment tribunal claim.

The tribunal found that his holiday pay had been correctly calculated in accordance with the contract term and that the Working Time Regulations provide for a payment in lieu being, “such sum as may be provided for the purposes of this regulation in a relevant agreement”. If there is no relevant agreement the sum must be calculated by a formula set out in the regulations. The tribunal considered that the contractual term was a ‘relevant agreement’ for this purpose.

The Claimant appealed to the EAT which allowed the appeal. After analysing the relevant regulations and the purpose of the right to take holiday and to be paid for it, they determined that a method of calculation which allows for the individual to receive less pay than they would have if they had been working and taken holiday, undermined the purpose of taking holiday. If the method of calculation in a relevant agreement produces an outcome which is more than the calculation in the Working Time Regulations this would be permissible. However, if such a calculation results in a lower amount, then this is not in accordance with the purpose of holiday pay and will be unlawful.