April 2023 Bulletin

Welcome

Rate increases

The Government has announced the employment law rate changes that come into force in April 2023.

From 1 April 2023:

• National Living Wage for workers aged 23 and over increased to £10.42 per hour
• For workers aged 21-22 the rate increased to £10.18 per hour
• For workers aged 18-20 the rate increased to £7.49 per hour
• For workers aged 16-17 and those on apprenticeships the rate increased to £5.28 per hour

From 2 April 2023 Statutory Maternity Pay, Statutory Paternity Pay, Shared Parental Pay, Statutory Parental Bereavement Pay and Statutory Adoption Pay all rose to a maximum of £172.48 per week.

From 6 April 2023:

• Statutory Sick Pay increases to £109.40 per week
• A week’s pay for statutory redundancy pay (and basic award for unfair dismissal) purposes rises to a maximum of £643.
• The Compensatory Award cap increases to £105,707 (previously £93,878).

For Employment Tribunal claims for discrimination presented on or after 6 April 2023, the Vento bands which the ET uses to assess the level of compensation for injury to feelings in discrimination cases increase to:

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

Communicating dismissal in ‘without prejudice’ correspondence

You might think that it would be tricky for an employer to dismiss an employee without meaning to. A recent Employment Appeal Tribunal decision highlights the importance of careful drafting when making offers of settlement to an employee.

In Meaker v Cyxtera Technology UK, Mr Meaker’s employer sent him a letter on 5 February 2020 which was marked ‘without prejudice’. The letter said there would be a mutual termination of Mr Meaker’s employment on 7 February 2020. No agreement had actually been reached with Mr Meaker. The letter went on to make an offer of an ex gratia payment to the employee if he signed a settlement agreement. Mr Meaker did not sign the settlement agreement.

The Employment Appeal Tribunal held that this letter was a dismissal letter and that the employee’s employment ended on 7 February. The fact that the employee did not sign the settlement agreement did not change this.

Ironically, in this case, something which was obviously an error on the part of the employer actually helped them, as an effective date of termination of 7 February meant that the employee’s unfair dismissal claim was out of time. However, it is a reminder to employers of the need for careful drafting when making offers of settlement to an employee. A dismissal in the manner set out in the letter of 5 February would undoubtedly have been unfair. If the full offer (including termination of employment) had been stated to be conditional upon the signing of a settlement agreement then, if the offer had not been taken up, the employer would still have had the possibility of dealing with dismissal openly (and fairly).

How to judge whether misconduct ‘arises from a disability’

Under section 15 Equality Act 2010, ‘discrimination arising from a disability’ occurs where an employer treats a candidate or employee ‘unfavourably’ because of something arising in consequence of a disability and it is not able to objectively justify that treatment.

This form of discrimination recognises that it is often the knock-on effect of a person’s disability which leads to problems in an employment context rather than the disability itself.

As an employer it is not always easy to know what behaviour ‘arises from’ a disability. The words ‘arises from’ a disability have been described by the Employment Appeal Tribunal themselves as ‘deliciously vague’ (Land Registry v Houghton, 2014). This does nothing to help employers who are trying to stay on the right side of the law.

Mental impairments are particularly difficult to assess. Cautious HR teams often worry about taking disciplinary action against an employee where their behaviour could be linked to a disability. It is also easy to fall into the trap of relying upon the employee’s ‘self assessment’ – if they say that their behaviour arises from a disability the employer often just takes their word for it. However, this approach, whilst obviously reducing the risk of discrimination claims, can result in a worrying loss of ability to control employee conduct.

A recent EAT decision helps employers struggling with how to assess whether behaviour ‘arises in consequence of a disability’. It makes it clear that distinctions can be drawn between behaviour arising from a disability and misconduct. In McQueen v The General Optical Council, Mr McQueen was employed as a registration officer. He suffered from dyslexia, Asperger’s syndrome, neurodiversity and hearing loss. He was disciplined for a pattern of aggressive behaviour at work.

He brought a claim alleging that he had been treated unfavourably for this aggressive behaviour, which he claimed arose from his disabilities. The medical evidence stated that his disabilities meant that he was more likely to lose control when stressed. Despite this, the Employment Tribunal decided that the aggressive behaviour which led to the alleged unfair treatment was not something which arose from his disabilities at all.

The EAT agreed that this assessment could stand. It noted that the test of whether behaviour ‘arises from’ a disability is a wide one and does not require the disability to be the sole or main reason for the behaviour, but found that there was no need for the ET to look at multiple factors contributing to the behaviour in this case as they had concluded that the disabilities had no impact on the behaviour – so did not ‘arise’ from them at all.

This case, as with all cases looking at discrimination arising from a disability, is fact specific and employers should exercise caution in this area. There are some useful points which can be taken away:

• You do not have to accept your employee’s self-assessment of their impairment and what arises from it. Obtaining occupational health support will give you a more objective view.
• It will not always be possible to reach a clear-cut conclusion that behaviour does not ‘arise’ from a mental impairment. It does not have to be the only reason for the behaviour in order to ‘arise’ from it. It is therefore wise to exercise caution where the position is not clear.
• Employers will not be liable even if they treat an employee unfavourably for something arising from a disability if they can show the treatment was a ‘proportionate means of achieving a legitimate aim’. This is an important caveat, especially in cases where it is unclear whether the conduct ‘arises from’ a disability.

Is there really a risk that TUPE might be sailing off into the ‘sunset’?

The Retained EU Law (Revocation & Reform) Bill, which is currently rumbling through the House of Lords, will lead to the removal of EU-derived secondary legislation at the end of this year unless it is specifically preserved – the so-called ‘sunsetting’ provisions. The Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) is one of the significant pieces of employment legislation which would be vulnerable to removal.

Under TUPE, when a business or part of a business is sold, employees assigned to the business (or the part of it) being sold become employees of the new owner on the same contractual terms they had before the transfer and with their continuity of employment preserved.

What would happen to employees on business transfers if TUPE was revoked?

• Employees assigned to the business that had been bought would remain employed by the seller. Their employment would not transfer.
• The seller would have no use for them (having sold the business that they were assigned to) so they would be at risk of redundancy (with the seller being on the hook for full redundancy costs)
• The buyer, by contrast, would have bought a business but with no trained workforce to run it!

The absence of TUPE creates a situation that neither party will want. In practice, what happens to employees would become a matter for negotiation between the parties and would need to be recorded in the corporate documentation. Considerations would include:

• An obligation on the buyer to offer jobs to the seller’s employees and the terms of those offers.
• A plan for dealing with any employees who choose not to take-up the buyer’s offer of employment including any obligation on the seller to redeploy; and
• An agreement for who will bear redundancy costs.

In terms of steps to be taken now, it is probably best to sit tight and wait to see the Government’s position. If a sale or purchase is likely in the coming months, you should advise management of the current uncertainty and the advantages of completing any business sale or purchase before the end of December 2023.

If you are providing HR support on a sale or purchase which may take place after this date you should advise those negotiating the corporate documents that alternative provisions should be included to deal with what will happen to employees if TUPE is revoked and not replaced.

A sensible limit on implied terms

Credit Suisse have been in the news for all the wrong reasons over the last few weeks after financial woes led to a last-ditch merger with UBS. However, the Court of Appeal did deliver them some good news in the form of their judgment in the case of Benyatov v Credit Suisse (Securities) Europe Limited.

Mr Benyatov held a senior position in the UK with Credit Suisse. As part of his role he was asked to assist with a project in Romania involving the purchase of a state-owned electricity company. He was later arrested when on a work trip to Romania, convicted and sentenced to 4.5 years in prison for disclosing confidential state information in connection with the project. Credit Suisse conducted their own internal investigation and concluded that Mr Benyatov had done nothing wrong. However, the conviction, in practice, prevented him from working as a regulated financial professional.

He brought a claim of breach of contract against Credit Suisse claiming £66 million in loss of earnings. He alleged breach of what he argued was an implied term in the employment contract that Credit Suisse would indemnify him for any losses (including career-long loss of earnings) he suffered as a result of carrying-out work under their instruction during his employment. The Court of Appeal concluded that such a wide indemnity could not be implied into his contract of employment and he wasn’t entitled to be indemnified for the loss of earnings.

The Court of Appeal’s decision is comforting for employers in general. The Court accepted that there is an implied term in employment contracts that the employer will indemnify the employee for expenses incurred in carrying out their duties but declined to extend this to cover lost income resulting from acts carried-out at work. If the claim had succeeded then employees could have potentially claimed under the employment contract for losses flowing from any act occurring whilst working (for example, if they were injured). This would have cut across other legal protections (such as personal injury claims and insurance) and would have led to significant potential financial exposure for employers.

Less favourable treatment of part-time workers

It is not easy to imagine that the grumblings of a group of judges about their pay and conditions could be of wider relevance to other employers, but the recent case of Ministry of Justice v Dodds is an exception.

The claimants in the Employment Tribunal had been chosen as representatives of judges at various levels who had brought similar claims. Each of the claimants occasionally sat as judges at a higher level than their usual position (known as ‘sitting up’). For example, circuit judges were asked to ‘sit-up’ as high court judges on occasion. They claimed that, when sitting up, they were part-time workers and should not be treated less favourably in terms of pay than comparable full-time judges in the higher court. Their pay was lower than that for full-time judges in the higher court and they didn’t get a pro-rata uplift for the time they spent ‘sitting up’. The ET found in their favour.

However, the Employment Appeal Tribunal disagreed with these findings. In particular, the EAT did not agree that the judges were part-time workers in the roles which they were asked to ‘sit-up’ in in higher courts. They therefore could not claim less favourable treatment as part-time workers and compare their rate of pay whilst ‘sitting up’ with that of permanent full-time judges in the higher court. Crucially, the EAT considered that acting-up in a higher court on occasion was not a distinct employment which could be looked at separately from their main role.

If a different decision had been reached this could have had far-reaching consequences for all employers with employees whose role may, on occasion, involve them acting up in a higher (and better paid) position. Employers would be faced with either having to increase the pay of such persons every time they temporarily took on some more senior duties or avoid the possibility of them having to act-up at all (something which would make life very difficult practically speaking). Luckily ‘justice’ appears to have been done!

Mitigation of Loss in Unfair Dismissal cases

Compensation for unfair dismissal normally includes loss of earnings flowing from the dismissal. When looking at this, Employment Tribunals will consider whether the employee has taken reasonable steps to mitigate their loss of earnings. A recent Employment Appeal Tribunal decision provides a helpful reminder to employers of the test that Tribunals will apply.

The ET in Edwards v Tavistock and Portman NHS Trust had applied a percentage reduction to Mr Edwards’s compensatory award to reflect its conclusion that he had failed to mitigate loss of earnings. The EAT found that the Employment Tribunal had been wrong to do this and confirmed that the Tribunal should have identified what steps should have been taken to mitigate; the date on which that step would have led to a job and, thereafter, to reduce the amount of compensation by the amount which would have been earned.

The EAT confirmed that the employer has the burden of demonstrating that the employee has failed to take reasonable steps to mitigate their loss. This serves as a helpful reminder to employers . The concept of mitigation of loss can often by overlooked when a claim is first received. However, it is an area which the employer can, from a tactical perspective, use as part of settlement negotiations. It can also reduce the award made if the case is lost.

As soon as an employee brings proceedings, the employer should gather evidence of the job market in the relevant sector as it existed at the point that the employee lost their job.

This information is not always easy to secure retrospectively so it is useful to start compiling evidence early. Recruitment consultants can be contacted and lists of vacancies obtained. All of this information should be kept. It can then be used in settlement discussions with ACAS (especially if the employee is claiming that they are struggling to find work and are going to have on-going loss of earnings) and, ultimately, if a finding of unfair dismissal is made, as part of a submission that the employee has failed to take reasonable steps to mitigate their loss. Being able to point to vacancies which the employee failed to apply for will help the Tribunal in its consideration of what steps it was unreasonable for the employee not to have taken.

And finally…

And finally, the New York Times has reported on an indirect economic benefit being felt in the USA as it embraces a post-COVID remote working culture: a surge in demand for daytime cosmetics, pampering and leisure services. The report cites examples of 55 people playing golf at Chelsea Pier before 4pm on a Monday afternoon and customers holding zoom meetings whilst having their hair done. The picture is likely to be similar in the UK. This is great news for the leisure industry. The amount of time people could devote to leisure was previously constrained by the 9 to 5 grind. The flexibility of remote working means that employees are pushing back work into the evening and taking leisure time during the day. From an employer’s perspective there are undoubtedly benefits to embracing these possibilities in terms of engagement and wellbeing but, if the relaxation of the working day is taken too far, they could struggle to get employees back to their desks at all!!