Employment Law Bulletin - September 2022

Welcome

Employees are entitled to 5.6 weeks’ holiday under the Working Time Regulations 1998 (WTR). Calculating the holiday pay of someone with no normal working hours can be tricky. Some employers have adopted a percentage approach, by assuming that holiday accrues at a rate of 12.07% of hours worked. This is based on the following calculation: 52 weeks – 5.6 weeks’ holiday = 46.4 weeks; and 5.6 weeks is 12.07% of 46.4 weeks. The Supreme Court has looked recently at whether this is the right thing to do and what happens when an employee is both part time and only works at certain times of the year, for example on a term time only basis.

In Harpur v Brazel Trust, the employee was a visiting music teacher. She had a zero hours contract and her hours varied. She worked only during the school term which varied from 32 to 35 weeks. She was entitled to 5.6 weeks’ annual leave which she had to take during school holidays. No particular weeks were identified as being her holiday weeks, and she was paid in three chunks at the end of each term. The employer used the 12.07% method to calculate her holiday pay. The employee disagreed with how her holiday pay was calculated and brought a claim for unlawful deduction from wages and part time worker discrimination. Instead of the 12.07% method, the employee said the employer should have used the method contained in the WTR which involves calculating average pay over the previous 12 (now 52) weeks.

The Supreme Court said the averaging exercise set out in regulation 16 was a policy decision. Sometimes it would result in lower holiday pay, if calculated after a period of low hours, but this was ameliorated by the requirement to ignore weeks where no pay was received and look back further in time for a week where the employee was paid. The Court also confirmed that part-year workers, such as term time only workers, do not have their holiday entitlement pro-rated down from 5.6 weeks just because they don’t work all the weeks in the year.

The percentage method for calculating holiday pay has now been roundly rejected by the Supreme Court so employers should no longer use it. Holiday pay is calculated according to the WTR method, now an average over 52 weeks. Holiday entitlement accrues on the basis of the passage of time, not how much work is done. That means that there is a rather incongruous situation where weeks that are not worked (here, the school holidays) count for the purposes of accrual of holiday but are disregarded for any holiday pay calculation because the employee receives no pay.

Tim Lang

Whistleblowing

Employers must not treat an employee badly because they have made a protected disclosure. An employer can avoid liability for whistleblowing detriment by showing that the treatment was not ‘materially influenced’ by the whistleblowing.  If the detriment in question is dismissal, the employee can also bring an unfair dismissal claim. If the main reason for dismissing an employee is that they made a protected disclosure, the dismissal will be automatically unfair. The Court of Appeal has looked at a case which involved both unfair dismissal and detriment claims, in Kong v Gulf International Bank.

The employee made protected disclosures about a legal agreement for a financial product. The person who had drafted the agreement, the bank’s Head of Legal, confronted the employee, who queried the Head of Legal’s knowledge of the relevant issues. The Head of Legal complained to HR and the CEO that the employee had questioned her professional integrity (rather than her legal knowledge). She gave the impression that she couldn’t work with the employee anymore and minimised their contact. There had been other issues about the employee’s interaction with colleagues so HR and the CEO decided the employee should be dismissed and persuaded her manager that this was the right decision. They told the employee that she was being dismissed because of her manner and approach with colleagues, not her whistleblowing. The employee brought claims for whistleblowing detriment, unfair dismissal and automatic unfair dismissal.

The employment tribunal upheld the ordinary unfair dismissal claim. The detriment claim – for her treatment by the Head of Legal - would have won if it had been lodged in time. However the tribunal dismissed the automatic unfair dismissal claim. The decision makers – HR, the CEO and the employee’s manager – had decided to dismiss based on the employee’s conduct, not the protected disclosures. The Head of Legal’s motivations could not be attributed to the employer who had made the decision to dismiss for different reasons. The EAT agreed. The issue here was not the employee’s views on the legal agreement – the whistleblowing – but the way she had conveyed them, and her history of similar conduct. The employee appealed to the Court of Appeal, which upheld the decision. An employer can take action against a whistle blower if they make their disclosure in an unreasonable or unacceptable way. The key question is what the decision makers have in mind when making their decision. The tribunal must establish whether the reason for the treatment is separable from the whistleblowing. In this case, the reason for the dismissal was not the whistleblowing itself, or the content of the disclosure, but the employee’s lack of emotional intelligence and insensitivity in her dealings with the Head of Legal. She didn’t have to personally criticise the Head of Legal in order to blow the whistle.

Although this case seems like a win for the employer, they were still found to have unfairly dismissed the employee and the detriment claim - relating to her treatment by the Head of Legal – would have won had it been lodged with the tribunal within the time limit. However, this case shows that whistleblowers who behave unreasonably can still be sanctioned by employers in an appropriate way. Unless employees have behaved obviously unreasonably, employers should beware because tribunals will require strong evidence that the detrimental treatment relates to something other than the whistleblowing.

Age Discrimination

In an age discrimination claim, an employee must show that they have been treated less favourably than a real or hypothetical comparator who is in a different ‘age group’. The employment appeal tribunal (EAT) has considered what ‘age group’ means in the context of an age discrimination claim.

In Citibank v Kirk, the employee was 55 and had been employed for 26 years. He was one of three managing directors in his department. The bank decided to reorganise the work and have a single managing director instead. The employee was told that he was ‘old and set in [his] ways’. In redundancy meetings, the employee was told several times that he needed to be more ‘agile’. A female colleague, Ms Olive, who was 51, got the job. The employee brought an age discrimination claim against both the employer and the managers involved in the decision-making process.

The employment tribunal said the employee had been unfairly dismissed, that his dismissal was direct discrimination and that he had been subject to ageist comments. The employer appealed on various grounds but including that the tribunal had not properly considered the employer’s non-discriminatory explanations for the dismissal, the marginal age difference between the employee and the successful candidate, and the evidence of the managers that they considered the employee and Ms Olive were in the same age bracket. The EAT allowed the appeal, saying that the tribunal had not properly considered the explanations for the difference in treatment between the employee and Ms Olive. Being ‘set in your ways’ was not necessarily ageist as younger people could also be resistant to change. There was also no evidence that decision makers felt the employee was old compared to Ms Olive. The EAT felt it would be odd to equate the ‘agility’ comments with a suggestion that the employer would favour a 51-year-old over someone who was 55. The evidence of the decision makers that there was no perceived difference in age between the two employees needed proper consideration by the tribunal, but the judgment did not show that. The EAT said that a marginal difference in age was not necessarily fatal. However, the smaller the relevant age difference, the less likely it may be that the treatment in question is because of age. The case was sent back to the tribunal to reconsider the employer’s reasons for their treatment of the employee.

This case shows that direct age discrimination can still happen even if the age gap is narrow. However, proving discrimination where the difference is only a few years, between people in their 50s, will necessarily require cogent evidence and close tribunal scrutiny. As always, keeping careful notes of the reasoning in any decision-making  process is vital. It is then the tribunal’s job to give that evidence the consideration it deserves.

Unfair Dismissal

In the absence of an express term in the contract of employment, or a fiduciary duty, there is no requirement for an employee to disclose their own misconduct to their employer. In Pubbi v Your-move.co.uk, the EAT examined the fairness of a dismissal in a case where there was no express term about such disclosures. The employee was employed as a financial consultant by an estate agency, Your Move, which also arranged mortgages and insurance. The employer also acted as appointed representative for another company, First Complete, which set out terms for that working relationship. The employee went off sick and was made bankrupt as a result of the consequent financial difficulty. He did not disclose his bankruptcy, but the employer found out. First Complete terminated the employee’s authorisation because they considered that a bankrupt was not a ‘fit and proper person’ according to the FCA handbook. There was no contractual obligation to do so, but the employer dismissed him for gross misconduct for deliberately failing to disclose his bankruptcy and because he had lost his authorisation with First Complete, either or both of which resulted in a  breakdown in trust and confidence. The employee brought an unfair dismissal claim.

The tribunal said the dismissal was fair. The employer was entitled to expect high standards from its financial advisers and that they would adhere to FCA rules even if they were not expressly referred to in contracts. Although it was not a direct FCA requirement in his role, and there was no express contractual term, the employee had been made aware at the start and during employment that any bankruptcy would need to be reported. Bearing in mind the industry, the sector and the standards expected by the employer, the employer was entitled to treat his conduct as gross misconduct. The procedure was fair overall, even if the decision to dismiss was harsh. The employee appealed.

The EAT agreed that the dismissal was fair. On the facts, the tribunal had found that the employer had communicated to the employee its expectations to disclose factual matters such as bankruptcy and the employee knew or should have understood this. He was dismissed because the employer had concluded that he had deliberately failed to disclose his bankruptcy when he should have appreciated the need to do so.
This case shows that an express term requiring the disclosure of misconduct may not be necessary in cases where the employer is able to evidence that expectations were both communicated to and understood (or ought to have been) by an employee. Employers would be wise to include express terms about the disclosure of misconduct in order to minimise the risk of having to argue the point in tribunal.

Religious Discrimination

Article 9 of the European Convention on Human Rights allows people the right to freedom of thought, conscience and religion. However, this right is limited if necessary to protect the rights and freedoms of others. Earlier this year, gender critical beliefs (that sex is immutable) were found to be protected by the Equality Act 2010 in a case called Forstater v CGD Europe. In that case, the EAT said that that the bar for protecting beliefs must be set low in a pluralist society. In order for a belief to be protected, the employee must only establish that it does not in effect destroy the rights of others  The EAT has recently looked at whether a doctor's religious beliefs could 'trump' the right for transgender people to be addressed by their chosen pronouns.

In Mackareth v DWP, the employee was a Christian and a doctor. He believed that God creates people as men or women and opposed ‘transgenderism’. He believed that it would be irresponsible for a doctor to accommodate or encourage transgenderism. He was recruited by the DWP to be a Health and Disabilities Assessor. When he refused to agree to the DWP's rules regarding respect for transgender service users' desired pronouns, he was dismissed. He brought claims for discrimination based on his Christian religion and beliefs and his treatment up to and including his dismissal. The employment tribunal said his Christian belief was protected by the Equality Act 2010. However, his beliefs in relation to transgenderism were not protected because they were incompatible with human dignity and conflicted with the fundamental rights of transgender people. The tribunal also said that refusing to address someone by their preferred pronouns would be discriminatory under the Equality Act 2010. Anyone who refused to do this would have been treated in the same way by the employer, regardless of their beliefs. The doctor appealed.

Applying the principles set out in Forstater, the EAT said the tribunal had made legal errors in relation to the doctor’s beliefs, which were protected. Among other things, the tribunal had set the ‘worthy of respect in a democratic society’ threshold for protecting a belief too high.  Minority beliefs must be protected in a democratic, pluralist society, even ones which might be offensive to others. The employee’s ‘lack’ of belief in transgenderism was also protected. However, the EAT upheld the tribunal’s decision on discrimination. Despite the mistakes they made in relation to protected beliefs, the tribunal’s legal conclusions were sound based on the facts. The employee had complained that he had been called out of work and suspended, which he said was discrimination or harassment, but the tribunal decided these things had not happened. The tribunal had also been right to distinguish between the doctor’s beliefs and how they manifested – any doctor who was not prepared to refer to people by their preferred pronouns would have been treated the same way, so it was not direct discrimination. They also upheld the employer’s justification of indirect discrimination, that the measures adopted by the employer were necessary and proportionate to meet the needs of potentially vulnerable service users.

The EAT decision in Forstater came after the tribunal decision in this case but before the EAT judgment. The employee’s successful appeal on the belief points in this case are therefore not surprising. This case shows how difficult it can be for employers to balance competing interests in the workplace. Although the employee’s beliefs were protected after all, it was not discriminatory for his employer to object to the way those beliefs manifested (his refusal to use chosen pronouns). They also reiterated the Forstater principle that offensive beliefs can be protected. However, employers have the right to restrict the manifestation of such a belief where they have a legitimate reason for doing so (treating people with respect, equal opportunities) and the way they do it is necessary and proportionate.

Unfair Dismissal

Normally an employee needs two years’ continuous service to bring an unfair dismissal claim. There are some exceptions to this rule, including if the reason for the dismissal relates to the employee’s political opinions or affiliations (section 108(4) Employment Rights Act 1996). The EAT has looked at this exception recently in Scottish Federation of Housing Associations v Jones.

The employee was employed as Head of Membership and Policy for a short period. The employer dealt with government and other political parties and needed to be politically neutral. The employee’s employment contract contained a clause which did not stop her from being a member of a political party but did prevent her from taking up a ‘formal’ political role. The employee wanted to stand as a Scottish Labour MP in upcoming elections. The employer did not give consent and she withdrew from the race. She was dismissed a short time later, for a variety of reasons but not her request to stand as a Scottish Labour MP. The employee said she had been dismissed for this reason and brought an unfair dismissal claim, relying on section 108(4) in order to get around the requirement for two years’ service.

The employment tribunal said that if the employee could show that she was dismissed because she had tried to stand for election, she could rely on section 108(4) – her political opinions and affiliations were ‘related to’ her dismissal as without them she wouldn’t have tried to stand as a Scottish Labour MP. The EAT disagreed. Section 108(4) was designed to address dismissals relating to the content of a person’s political opinions or their affiliation with a particular political party. The exception does not apply where a person’s political opinions or the political party they want to stand for do not form part of the reason for dismissal nor does it apply if someone is dismissed for not being political neutral or acting in a way which undermines their political neutrality. The EAT said that political neutrality was the opposite of the issue that section 108(4) was designed to address.

The employee accepted that she had not been dismissed because she was a member of the Scottish Labour party or because of her political opinions, but because she wanted to stand as an MP for the party. The EAT accepted that she would not have been dismissed had she not wanted to stand as an MP, and her dismissal related to her political opinions and affiliations in a literal way. However, her political beliefs and affiliations were not the reason or principal reason for her dismissal. She was dismissed because she wanted to be a political candidate, and – in the absence of not being for her membership or political opinions, which the employee accepted – the only possible reason left for her dismissal was that she was not willing to remain politically neutral. That did not fall within section 108(4) so she could not bring her unfair dismissal claim. However,  the EAT confirmed that a belief in participatory democracy – that those with the relevant skills, ability and passion should participate in the democratic process - is a protected philosophical belief under section 10 of the Equality Act 2010.

This case is good news for employers and confirms that the section 108(4) exception to the two-year service requirement for bringing an unfair dismissal case will be construed narrowly by the courts. An employee can only use this section if the reason for dismissal is their political opinions or affiliation to a political party. In this case, the employee was dismissed because she wanted to stand as an MP when there was a contractual clause preventing her from taking up a formal role of a political nature. The reason for her dismissal was not her political opinions or affiliations but the fact that she wasn’t willing to be politically neutral, and this was not protected by section 108(4).  

Discrimination

The EAT has given some helpful guidance on sex and disability discrimination in relation to Covid related absence. In Cowie v Scottish Fire and Rescue Service, the employer had a non-contractual ‘special leave’ policy where employees would be entitled to paid leave for family or care responsibility reasons. They also had a TOIL (time off in lieu) policy where an employee could ‘bank’ up to 32 hours from working overtime which could be taken with management approval. During the pandemic, the employer made interim changes to manage the impact of the pandemic by extending the ambit of ‘special leave’ but saying that TOIL or annual leave had to be used first. This meant that staff who could not work due to childcare issues, or people who were shielding, could be paid special leave (indefinitely) but only after they had used up their TOIL and annual leave. Two groups of employees brought claims for discrimination, the first on grounds of sex (indirect discrimination) and the second on the basis of disability. Both groups said that it was discriminatory for the employer to require them to use up TOIL and annual leave before being granted special leave.

The employment tribunal dismissed the sex discrimination claims, because there was no evidence of any group disadvantage to women. However, they upheld the disability discrimination claims, saying that the requirement to use up TOIL and annual leave whilst shielding before being entitled to special leave was ‘unfavourable treatment’ because of ‘something’ arising from disability. That ‘something’ was the requirement to use the special leave policy because of government shielding advice. The treatment was not justified. The employer appealed.

The EAT allowed the appeal. They said that the employees had not suffered any unfavourable treatment (for the disability claims) or disadvantage (for the sex discrimination claims). The requirement to exhaust TOIL and annual leave only arose in relation to the granting of paid special leave to accommodate covid related working difficulties, which was clearly favourable treatment. In relation to the disability claims, the ‘something arising’ in consequence of disability was the inability to attend work, not the use of paid special leave. The special leave policy had conditions (using up TOIL and holiday first) but that did not detract from its obviously favourable nature.
This case shows that positive treatment – here the entitlement to indefinite paid leave – can never be unfavourable treatment or a disadvantage for the purposes of a discrimination claim. This is the case even if the treatment could have been more favourable, as in this case, if conditions had not been applied to the right to take special leave.

And Finally...

Britain basked in unusually hot weather this summer. As a result, the TUC and some MPs have called for a maximum workplace temperature to be introduced – 30 degrees Celsius, or 27 for strenuous work. The UK currently only has guidance on minimum rather than maximum temperatures (16 degrees, or 13 for vigorous activity) and they are not a strict legal requirement. Health and safety legislation already obliges employers to set ‘reasonable’ workplace temperatures and assess any health and safety risks presented by extremes of heat or cold. Is setting a maximum legal temperature a good idea?

On the one hand, legal maximum temperatures would incentivise employers to plan ahead and take early active steps to address heat in the workplace. This would ensure workers are comfortable and productive throughout any hot spells so would benefit everyone. On the other hand, air temperature is just one aspect of a working environment. Clothing, humidity, the job itself and measures taken to keep employees cool are all relevant and can’t always be measured on a thermometer. The HSE points out that some workplaces such as foundries or glassworks, are naturally hot, and appropriate measures can be adopted to ensure work in that kind of warm environment remains safe.

With heatwaves becoming more common, the introduction of a maximum workplace temperature at some point in future is more likely than ever. In the meantime, it’s worth taking active steps to cool your employees down if hot weather is forecast. If you don’t have air-con, shade staff and windows to avoid heat transfer and move staff away from known hot spots. Open windows and doors and use fans to create air movement. Ensure cold water is on tap and allow extra breaks to cool off and rehydrate. Relax dress codes so employees can wear lighter clothing. Most importantly, take direction from your employees – if lots of them are complaining, there is probably an issue to address, regardless of what the mercury says.