Welcome to our latest bitesize update on items of interest to HR professionals and managers with responsibility for employment practice within the workplace.
Should you wish to contact us in relation to any items mentioned within our updates please use the contact numbers and email addresses on the bottom of the update.
Pay Victory for Care Workers denied the Minimum Wage
In an earlier e-update we reported on a claim by care workers against Council Contractor, Sevacare for its failure to pay its workers the National Minimum Wage. The Sevacare workers were just one of many to bring complaints about wage underpayments and this has prompted the largest single investigation by HMRC into one individual sector. To date around 3,400 workers have received a total of £650,000 in back pay since the HMRC investigation began with around 130 care providers having been investigated.
Amazon workplace practices under the spotlight
The working practices at Amazon’s Dunfermline warehouse have come under scrutiny after an undercover investigation by the Sunday Times. The investigation found that the warehouse used a points system to penalise and discipline workers that took time off sick, made too many errors when producing orders, or were 30 seconds late for work or returning from a break. In addition, the Sunday Times suggested that some workers were required to walk 10 miles a day around the warehouse and were under such intense levels of pressure to meet targets, that they often suffered physical injury. This is not the first time that the working practices of Amazon have been criticised. The latest allegations come in the wake of the government’s recent launch of a review into insecure work.
Trade Union Act 2016; draft regulations published defining “important public services”
The Trade Union Act 2016 (“TUA 2016”) has amended several aspects of the Trade Union and Labour Relations (Consolidation) Act 1992 (“TULRCA”), although the majority of the amendments are not yet enforced.
One key change is in ballots of workers engaged in “important public services”, at least 40% of those entitled to vote must have voted in favour of the action.
Categories of public services falling within the definition are:
- Health Services
- Education of those aged under 17
- Fire Services
- Transport Services
- Decommissioning of Nuclear installations and management of radioactive waste and spent fuel.
- Border Security.
Separate draft regulations have now been published covering all of the services with the exception of nuclear decommissioning.
The draft regulations are stated to come into force with effect from 1 March 2017 or, if later, 21 days after the date on which the regulations are made.
Final draft of Gender Pay Gap Regulations published
The final draft of the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 has been published and will come into force on 6 April 2017, subject to Parliamentary approval. A number of important changes have been made following the consultation on a previous draft published in February 2016. In particular:-
- The introduction of the concept of a “full pay relevant employee”, to exclude those on sick leave or maternity leave from the hourly pay comparison.
- The exclusion of partners or LLP members.
- A change in the “snapshot date” to 5 April.
- A clearer definition of bonus pay and a requirement to publish the difference in both the mean and medium bonus figures for men and women.
- Clarification of how the quartile pay bands are actually calculated.
- There is still no expressed enforcement mechanism. However the explanatory memorandum suggests that the EHRC’s existing enforcement powers under Section 34 of the Equality Act 2010 will apply.
- The first gender pay gap reports (in respect of April 2017 pay date) will be due by 4 April 2018 and must be published for three years on the employer’s website and a central government website.
Draft Finance Bill 2017: Key Points for Employers
Key points of interest for employment practitioners and employers include changes to the taxation of termination payments which is intended to simply the tax and NI treatment of termination payments, changes to salary sacrifice benefits and the removal of the tax relief associated with employee shareholder status.
Termination Payments
As announced in the 2016 budget and confirmed in the 2016 autumn statement, the government has published legislation to implement its reforms of the tax and NIC’s treatment of termination payments. There are key changes in the following areas:-
All payments in lieu of notice will have to be treated as earnings subject to tax and class 1 NICs.
- Employer’s NIC will be payable on termination payments above the £30,000.00.
- Abolish Foreign Service tax relief (except in relation to sea farers). However, a new provision has been inserted to ensure that termination payments are not taxable unless there was a territorial connection with the UK (through the employee’s UK residence status, or the duties of the employment being performed in the UK.)
- Injury to feelings payments will no longer qualify for the tax exemption for injury payments, except where the injury amounts to a psychiatric injury or other recognized medical condition.
- Permit HM Treasury to vary the £30,000 .00 threshold by regulations.
These changes will take effect from 6 April 2018.
Far from amounting to a simplification the new provisions are complex in respect of how employers will be required to treat termination payments. Employers will need to split a termination payment between amounts treated as earnings and amounts benefiting from the £30,000.00 exemption.
Statutory and contractual redundancy pay (to the extent that contractual redundancy pay does not exceed the statutory amount) will always benefit from the £30,000.00 exemption. But otherwise the amount to be treated as earnings will either be:-
- The entire termination payment (disregarding redundancy pay) if “post employment notice pay” (broadly, the employee’s basic pay for the notice period assuming the employee had worked his or her notice period) is equal to or more than the termination payment.
- Post-employment notice pay, if post-employment notice pay is less than the termination payment.
Termination payments made in return for a waiver of claims will continue to qualify for the £30,000.00 exemption unless they are otherwise taxable as earnings as per the above changes.
Case Law Roundup
In Hampshire County Council –v- Wyatt UK EAT/0013/16 the Employment Appeal Tribunal considered whether medical evidence was necessary in order to make a personal injury award in a discrimination case in the Employment Tribunal.
One of the three remedies in a successful claim for unfair dismissal is compensation, which is largely based on financial losses flowing from the dismissal. Compensation is also the principle remedy in successful discrimination claims. However, unlike unfair dismissal compensation, discrimination compensation can also include an award for injury to feelings and a separate award for personal injury where the Claimant can prove that a pre-existing medical complaint has worsened, or a new medical condition has developed as a result of the discriminatory treatment.
When assessing personal injury, Tribunals will ordinarily refer to the Judicial College Guidelines for the Assessment of General Damages in personal injury cases (“the guidelines”). Under the guidelines, cases for psychiatric injury are classified as severe, moderately severe, moderate, or less severe and each classification has a suggested range for compensation.
Establishing that the employer is responsible for the injury and the amount which the employer is to blame can be troublesome issues for Tribunals who are required to consider making an award for personal injury. If there are competing causes for the injury the Tribunal has to consider whether the injury is legally attributable to the discriminatory actions of the employer, or another lawful cause.
Another very difficult area for Tribunals in making awards is that it is not always easy to distinguish an employee’s claim of injury to their feelings, from a claim for personal injury and Tribunals are required to avoid over compensating claimants.
In this case Ms Wyatt was employed by the Council as a carer. She was lawfully suspended from work as a result of disciplinary allegations against her. The suspension triggered depression which the Council conceded was a disability within the meaning of section 6 of the Equality Act 2010. The Claimant was also disabled by reason of dyslexia.
Ms Wyatt was too unwell to return to work. The Council initially sought to pursue the disciplinary investigation, then switched to performance managing Ms Wyatt before commencing an absent management procedure which ultimately resulted in Ms Wyatt’s dismissal.
Ms Wyatt issued proceedings in the Employment Tribunal, successfully claiming disability discrimination and unfair dismissal. The Tribunal held that whilst it had not been unlawful to suspend her, the way in which the Council had conducted the suspension meeting amounted to unlawful disability discrimination because the Council did not explain matters more carefully and slowly to the Claimant. This meant that, because of her dyslexia, the Claimant did not understand what was happening to her at this meeting and thought she was losing her job. There were then findings of a number of further serious discriminatory acts arising from the manner in which the Council conducted its internal processes with the Claimant, including her dismissal.
At the remedy hearing the Tribunal determined that Ms Wyatt’s depression meant that she was unable to work and at the stage were the remedy was determined this could reasonably be expected to continue to be the case for 9 months beyond the hearing. It awarded her loss of earnings for unfair dismissal on that basis.
In relation to the disability discrimination, the Tribunal awarded £15,000.00 for injury to feelings. It also decided that Ms Wyatt had suffered personal injury (that is, her depression) in consequence of the Council’s discriminatory acts and accordingly made a separate award of £10,000.00 for personal injury.
In making the personal injury award, the Tribunal classified her depression as moderately severe under the guidelines. A range of suggested awards for this classification within the guidelines was £15,000.00 to £44,000.00. The Tribunal awarded less than this range because it took account of the level of award it had made to Ms Wyatt in respect of her injured feelings.
The Council appealed the decision to award 9 months future financial losses and the personal injury element of the award. The Council argued that both awards were excessive in the absence of medical evidence as to causation for the personal injury and prognosis for Ms Wyatt’s recovery. The Council’s appeal to the EAT was unsuccessful.
Both the EAT and the Tribunal commented that it was unusual for there not to be any medical evidence from either party at the remedy hearing but the EAT said that this was not an absolute obstacle to making an award for personal injury; instead the Tribunal must consider all the evidence available to it. Subject to the facts of the given case, the evidence might be sufficient to find a personal injury award without the need for medical evidence and this was one such case. The EAT did make clear in its Judgment that it is advisable to obtain medical evidence and that it is the Claimant who might be most at risk from not having medical evidence as the absence of such evidence could lead to a lower award, or no award being made. However this case demonstrates that there could equally be a risk to Respondents who should not assume that the absence of medical evidence from the Claimant will entitle Respondents to argue that no award for personal injury should be made.
The case is also a reminder that employers may need to make adjustments to internal procedures such as suspension meetings, for disabled employees.
In Bellman -v- Northampton Recruitment Limited [2016] EWHC3104 (QB) the High Court held that an employer was not vicariously liable for a violent assault on an employee by the employer’s Managing Director at an impromptu drinking session that followed the office Christmas Party.
An employer is usually held vicariously liable for the acts of an employee committed “in the course of employment”. The test is whether the acts were “so closely connected with the employment that it would be fair and just to hold the employers vicariously liable”.
In this case Mr Major was Managing Director of Northampton Recruitment Limited, the Defendant. In 2010 he recruited the Claimant, Mr Bellman, a childhood friend, as a Sales Manager.
The company Christmas Party in 2011 took place at a golf club. All employees plus their partners were invited and 24 people in total attended. Following the party, half of the guests including Mr Major and Mr Bellman, went on to a hotel where some were staying. This was, as the Judge described it, an “impromptu drink”, not a planned extension of the party. However, since the company paid taxi fares for all party guests, it paid for taxis to the hotel.
The majority of the group continued to drink alcohol and it was expected that the company would pay for at least some of the drinks. The conversation was initially on social topics but by about 2:00am turned to work matters. A controversial issue arose concerning whether a recently appointed employee ought to be based at the Northampton office, or the Nuneaton office, and Mr Major lost his temper. He began to lecture the employees present on how he owned the company and made the decisions. When Mr Bellman challenged him, in a non-aggressive manner, Mr Major swore at Mr Bellman and punched him. Another employee tried to hold him back but Mr Major broke free and punched Mr Bellman a second time. The second blow knocked Mr Bellman to the floor, fracturing his skull and rendering him unconscious. Later medical reports confirm severe brain damage and that it was unlikely Mr Bellman would work again.
Mr Bellman brought a claim for damages against the company on the basis that it was vicariously liable for Mr Major’s conduct. His claim, if successful, would ultimately be met by the company’s insurers. No claim was brought against Mr Major as it was believed he would lack the means to satisfy any Judgment.
The High Court dismissed the claim and held that the company was not vicariously liable for the assault.
The key finding in the Court’s reasoning was that this was an “impromptu drink” which was not itself part of the work Christmas Party. The fact that the assault had followed a discussion of work matters did not mean that it was necessarily “in the course of employment” and the High Court was satisfied on the facts that there was sufficient distinction between the two events for the Company to avoid liability for the actions of the MD.
On the facts of this case the outcome must be questionable and it is entirely possible that an appeal could be successful given the life changing injury the claimant sustained. Employers should approach this decision with caution. The decision does not change the law, nor does it establish that post Christmas Party drinks will always be outside the scope of employment for vicarious liability purposes.
In Eiger Securities LLP V Korshunova UKEAT/0149/16 the EAT held that a Tribunal had made a mistake in law when it found that the Claimant had made a protected disclosure.
An employee is automatically unfairly dismissed if the reason, or principal reason, for their dismissal is that they have made a protected disclosure.
A protected disclosure must meet certain requirements, including that:
- It is a disclosure of information which must be more than just an allegation; it must also provide facts in support of the allegation.
- The information must relate to one of six types of relevant failure by the employer which include the breach of a legal obligation.
- The worker must have a reasonable belief both that there has been a relevant failure and that the disclosure is in the public interest.
The employer in the case is a broking business. Ms Korshunova was employed as a sales executive between 1 April 2013 and her dismissal for gross misconduct on 25 July 2014.
The employer used a chat forum to liaise with traders in its client banks. Staff would have a number of screens to conduct live chats and there was a practice of brokers sharing passwords in order to conduct chats.
In May 2014 Ms Korshunova challenged the Managing Director, Mr Ashton, who was also the firm compliance officer, about using her screen without identifying himself to her clients.
Mr Ashton responded to inform her that changing her password without notifying him would be an act of gross misconduct.
Ms Korshunova was invited to a disciplinary hearing in July for a failure to follow instructions and poor performance concerning two trading errors. Prior to the disciplinary hearing she was suspended following an argument with Mr Ashton. She closed her computer before leaving and a further charge of changing her password without permission was added to the initial charges.
Ms Korshunova was subsequently dismissed for gross misconduct stated to be for her insubordination in changing her password and closing her computer down without permission and incorrect price quoting to customers leading to financial loss.
Ms Korshunova brought a Tribunal claim that she had been subjected to a detriment (when two of her client accounts were taken off her and given to more junior brokers) and then automatically unfairly dismissed because she had made a protected disclosure to Mr Major in May 2014 when she complained about him not identifying himself to her clients when he logged in and traded in her name when she was away from the office.
The Tribunal found in her favour in respect of both her claims but the EAT has allowed the employer’s appeal and the case has been remitted back to a new Tribunal for consideration.
The case went back to a fresh Tribunal because the EAT was satisfied that the original Tribunal had made an error of law in failing to identify the legal obligation that Ms Korshunova said that Mr Major had failed to comply with which is a necessary first step in a determination of whether Ms Koshunova had a reasonable belief that the obligation had not been complied with.
In relation to the detriment claim the EAT agreed with the Employer that the Tribunal had failed to ask itself, as it ought to have done, whether the decision to reallocate a client to a more junior broker had been materially influenced, not by the disclosure itself but by the way Ms Korshunova showed her objections to Mr Ashton’s conduct by repeatedly challenging him and changing her password.
Whistleblowing is a complex area of law. In some cases it will be clear what the breach of legal obligation is asserted to be without the need to identify it further, or verify it by reference to statute, or regulation but this was not such a case. The identification of the obligation did not need to be detailed or precise but needed to amount to more than a belief by an individual that certain actions on the part of the employer were wrong.
If you would like to discuss any matters raised in this issue or any other aspect of Employment Law please contact a member of our team.
mfoster@jacksons-law.com 01642 873 727
jdalzell@jacksons-law.com 01642 356 510
swest@jacksons-law.com 01642 873 758
pclark@jacksons-law.com 0191 206 9626
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