Employment Law Bulletin - September 2024

July’s King’s Speech unveiled Labour’s legislative agenda for their early months in government. Two employment bills were announced. The Prime Minister’s accompanying briefing note provided some details, indicating Labour’s commitment to fully implementing their ‘New Deal for Working People’.

According to the briefing note, the Employment Rights Bill will likely include the following:

granting parental leave, sick pay, and protection from unfair dismissal from the first day of employment (with special rules for probationary periods);
prohibiting zero-hour contracts, ensuring workers have to a right to a contract that reflects their regular hours;
ending ‘fire and rehire’ and ‘fire and replace’ by reforming the law and replacing the statutory code;
eliminating the lower earnings limit and waiting period for Statutory Sick pay;
making flexible working the default for all workers from day one and requiring employers to accommodate this as far as is reasonable;
making it unlawful to dismiss a woman for six months after they return from maternity leave (with certain exceptions);
creating the Fair Work Agency to enforce workplace rights;
introducing a Fair Pay Agreement in the adult social care sector;
repealing the law on minimum service levels for industrial action
simplifying the process of statutory recognition for trade unions;
introducing a right for workers and union members to access a union within workplaces.

Separately, a draft Equality (Race and Disability) Bill proposes to “enshrine the full right to equal pay law” for disabled people and ethnic minorities. The same bill also proposes mandatory ethnicity and disability pay gap reporting.

The King’s Speech also referred to reforming the apprenticeship levy. During the election campaign, Labour spoke about relaxing the rules in relation to the levy so that half of it could be used to train existing staff.

Some of Labour’s election pledges do not require primary legislation to take effect. One of these is the pledge to provide a genuine living wage for working people. The first steps have already been taken to introduce this, with the Government altering the Low Pay Commission’s remit at the end of July, to require it to factor in the cost of living when recommending minimum wage rates.

We now await the draft legislation itself.

New law on allocation of tips and accompanying Code of Practice in force from 1^st October 2024

The Employment (Allocation of Tips) Act 2023 (the Tips Act) and its accompanying statutory Code of Practice will come into force on 1^st October 2024. This was confirmed by commencement regulations for the Act and Code of Practice which were laid before Parliament in July.

Key features of the Tips Act include:

employers are required to pass on tips in full to workers;
tips must be allocated in a fair and transparent way;
employers of businesses where tips are left more than occasionally are required to have a tipping policy in place;
tips must be distributed within one month following the month in which they were received;
cash tips, which are paid directly to the worker by a customer, together with tips a customer pays direct to workers digitally via an app where the employer has no involvement, are not ‘employer-received’ and are therefore outside the scope of the regulation of the Tips Act;
workers have a right to request a copy of their tipping record in order to enable them to bring a claim to Employment Tribunal where they believe they are not receiving the tips they should be;
employers are required to maintain a record of how every tip has been dealt with for three years from the date the tip was paid; and
Employers must have regard to the new statutory Code of Practice when distributing tips. The Code of Practice isnot legally binding but will be taken into account by employment tribunals in proceedings where relevant.

The Code recommends consultation in advance with workers regarding the content and implementation of a tips policy. This is not a legal requirement but will help businesses to encourage employees to buy-in to the approach being taken to tip allocation. Employers considering taking this step should prioritise putting together a draft tipping policy and consulting employees on it now, before the Tips Act comes into force on 1^st October.

Code of Practice on Fire and Re-hire now in force

The statutory Code of Practice on Dismissal and Re-engagement came into force on 18^th July 2024. More commonly known as the Code of Practice on ‘fire and re-hire’, there is no stand-alone claim for breach of its provisions. However, the Code must be taken into account by employment tribunals in relevant cases, including unfair dismissal. The Code gives tribunals the ability to uplift compensation in unfair dismissal cases by up to 25% if an employer unreasonably fails to follow it. The uplift does not apply to protective awards for failure to inform and consult in collective redundancy situations.

Key provisions include:

‘Fire and rehire’ should only be used as a last resort.
A requirement to consult ‘for as long as reasonably possible’, but — unlike collective redundancy consultation — there is no minimum time period. Employers are told to contact Acas at an early stage, before they raise ‘fire and rehire’ with the workforce.
Employers need to explore alternatives to ‘fire and rehire’.
Once the employer becomes aware the proposed changes are not agreed, they should re-examine them. The employer should consider feedback from employees and/or their representatives.
Employers should not threaten dismissal if it is not actually envisaged.
Employers must not use threats of dismissal to coerce employees into signing new terms and conditions.

It is worth noting that the Code may not be in force in this form for very long. Labour have pledged to legislate to ‘end fire and re-hire’ and to replace and strengthen the Code.

Religion or belief discrimination

You will not find many cases which focus on Section 111 Equality Act 2010. It is a rarely used provision which states that it is unlawful for a person to instruct, cause or induce someone to discriminate against, harass or victimise another person, or to attempt to do so.

Third parties can, in this way, be held liable for discrimination by employers, but only if the relationship between the third party and the employer is also one in which discrimination is prohibited.

In the recent case of Bailey v Stonewall Equality, the Employment Appeal Tribunal were called-upon to consider s111 EqA. The Claimant was a tenant of Garden Court Chambers (GCC). GCC signed up to the Diversity Partners programme run by Stonewall. It was accepted that Stonewall was a service provider to GCC such that s111 was engaged.

The Claimant held gender critical views. She made tweets about her objection to what she saw as Stonewall’s ‘trans-extremism’. She also tweeted in support of the LGB Alliance, which promoted gender crucial principles. GCC received a number of complaints as a result, specifically about a viewed incompatibility of her views with trans rights. Stonewall also made a complaint. GCC made a public statement that it would investigate. As a result of the investigation, GCC held that two of the tweets should be deleted.

The tribunal found that the Respondent’s announcement of the investigation and its outcome were both detriments suffered by the Claimant because of her protected gender critical beliefs. The tribunal did not find Stonewall was liable for inducing the discrimination.

The Claimant appealed the finding in relation to Stonewall. The EAT, dismissing the appeal, set out its understanding of causing or inducing claims under s111 EqA:

A claimant must show that, but for the intervention of person A (here, Stonewall), the act of discrimination by B (GCC) would not have occurred; and
Having regard to all the facts, making person A (Stonewall) liable for that discrimination would be ‘fair or reasonable or just’, those adjectives being interchangeable.

The EAT held that responsibility for determining the complaint in a discriminatory way lay only with GCC. For that reason, although Stonewall’s complaint was the ‘occasion’ for it happening (and so could be regarded as causing it in a ‘but for’ sense), and although there was a nexus between the Claimant’s protected views and the making of the complaint, it would not be reasonable to hold Stonewall liable for that discriminatory outcome.

Time spent travelling from home to third-party site by minibus did not have to be paid at National Minimum Wage

The National Minimum Wage is payable to workers whenever they are carrying out ‘time work’. The question of whether travel time is ‘time work’ for the purposes of National Minimum Wage was considered recently by the Employment Appeal Tribunal in Taylor’s Services Limited v HMRC. In this case, zero-hours workers travelled to farms around the country providing poultry services.

They were picked up by their employer’s minibus from their home addresses. HMRC issued a notice of underpayments of national minimum wage (NMW) to their employer. HMRC concluded that time spent by the workers travelling by minibus, to and from their home addresses to the various farms, ought to be paid at national minimum wage. The employment tribunal agreed with this position.

The Employment Appeal Tribunal disagreed. It held that time spent ‘just’ travelling is not “time work” for the purposes of Regulation 30 National Minimum Wage Regulations 2015, unless it is deemed to be such by Regulation 34. Regulation 34 states that travel from home to place of work is not time work. Unless there is ‘work’ being done while ‘travelling’, the time spent on that activity cannot be ‘work’ for the purposes of Regulation 30. The mere fact that the travel is travel that the worker is obliged by the employer to undertake – using their minibus - does not turn the travel into work.

Regulation 34 states that travel from home to place of work is not time work, but travel from a place of work onwards to a third-party site would be time work. The EAT did comment that this led to an injustice: “If the employer requires the employees to be collected from, and returned to home, then they are not (on my analysis) entitled to NMW, but if the employer requires them to come to its premises first, then the subsequent travel is deemed by regulation 34 to be “time work” and the NMW is payable”.

This case is a helpful one for employers – a reminder that National Minimum Wage is not payable for travel from a worker’s home address to their place of work even if:

that place of work is a third-party site; and/or
the employer exercises control over the method of travel; and/or
the travel takes a long period of time.

Equality and Human Rights Commission publish draft changes to guidance on sexual harassment

Big changes are afoot for the law on sexual harassment. On 26 October 2024, the Worker Protection (Amendment of Equality Act) Act 2023 comes into force. It introduces a new positive duty on employers to take reasonable steps to prevent sexual harassment in the workplace.

If employers breach the new duty, then there are two potential consequences:

In claims for sexual harassment the Employment tribunal can increase compensation by up to 25%; and
The Equality and Human Rights Commission can take direct action against employers (in the form of unlawful act notices and, ultimately, fines) who they find, on investigation, have breached the new duty.

The new duty applies to preventing sexual harassment. It does not apply to preventing sex-based harassment or harassment for rejecting or accepting sexual advances.

In advance of this change in the law, the Equality and Human Rights Commission (EHRC) have issued updated guidance on sexual harassment at work. The guidance is not binding on employers but does give a good indication of what sorts of things will be looked at when considering whether an employer has taken ‘reasonable steps’ to prevent sexual harassment.

The guidance is light on detail. In summary:

Employers should consider the risks of sexual harassment occurring in the course of employment in their specific business.
Consideration of the risk of sexual harassment should not be limited to the risk posed by colleagues, but should extend to encompass the risk of third- party harassment (see below).
Employers should, having assessed the risk, consider what steps it could take to reduce those risks and prevent sexual harassment of workers.
Any steps should be passed through the filter of reasonableness – the employer should consider, bearing in mind its size and the resources available to it, which of those steps would be deemed as reasonable to take and then implement them.

The draft guidance includes multiple references to the duty to protect employees from harassment by third parties. The duty as set out in the Act is clear: “An employer (A) must take reasonable steps to prevent sexual harassment of employees of A in the course of their employment”. This harassment could be carried out by a colleague, but it could equally be carried out by a third-party (for example, a customer or client).

Although the duty to prevent sexual harassment extends to harassment by third parties, employees themselves do not currently have the right to bring claims of harassment against their employer where the act in question was carried out by a third party. We did have previous provisions relating to third-party harassment, but these were repealed in 2013 and a recent attempt to re-introduce them did not go anywhere.

This means that the 25% uplift would not be, at the present time, a risk where harassment is carried-out by a third party. What remains a risk is the potential for enforcement action to be taken by EHRC for failure to take steps to prevent third-party harassment of employees.

It is quite possible that Labour, having come to power following the general election in July, will seek to resurrect the previous proposal to introduce a free-standing claim for employees who suffer harassment by third parties at work. If they do, then the power to uplift claims by up to 25%, for failure to comply with the duty to prevent sexual harassment, would clearly apply to such a claim.

In advance of October, employers should be carrying out a clear and detailed risk assessment, focused on the risk of sexual harassment in the workplace. Once any risk areas have been identified, employers should consider what steps they could take to reduce those risks – and implement them. The risk assessment, and resulting actions, should be kept under regular review.

Three-month time limit for unlawful deductions claims runs from date of deduction not termination date

A recent Employment Appeal Tribunal decision looked at the correct date from which the time limit should run in unlawful deductions cases. In Wharton v Sheehan Haulage & Plant Hire, the employment tribunal dismissed the Claimant’s claims for unlawful deduction from wages on the basis that the claim form was presented out of time.

The Claimant had brought claims alleging deductions from notice pay and holiday pay. The tribunal held that the relevant time limit ran from the date of termination of his employment. The Claimant had failed to contact Acas to commence early conciliation within three months of the termination date, so his claim was found by the tribunal to be out of time.

The Employment Appeal Tribunal, setting aside this decision, held that the tribunal had been wrong to conclude that the Claimant commenced Acas early conciliation too late. In unlawful deductions from wages claims, the three-month time limit runs from the date of deduction. The Claimant was paid weekly in arrears meaning that his last pay date (where, it was alleged, the deductions were made) fell nine days after the termination date. Acas early conciliation had been commenced within three months of this later date and the claim form had been presented to the tribunal within one month of the Acas early conciliation certificate being issued. The tribunal had been wrong to assess the claim as being out of time.

It is always important for employers who receive notification of a tribunal claim (or the commencement of Acas early conciliation) to do the maths and check whether the employee has brought their claim or taken the necessary preliminary steps in time. Where an employee has left employment, it is an easy trap to fall into, as happened in this case, to focus on the termination date. However, where the claim relates to unlawful deductions, the time limit will run from the date that the deduction is made. This will be the last pay-date. Given that many employees are paid in arrears, this date will often fall later than the termination date.

And Finally...

The Times Online have reported that HMRC has been held liable for harassment for sending one of its employees a birthday card! You would hope that something as seemingly innocent as sending a card to an employee wishing them a ‘happy birthday’ could not fall foul of employment law but, on the facts of this case, it did. In Toure v HMRC, the Claimant went off sick with stress, claiming disability and race discrimination.

Whilst she was off sick, she asked her then-manager to keep contact to a minimum. In particular, she asked that she not be sent a birthday card (as was the employer’s custom). A different manager, who was unaware of this instruction, sent her a birthday card the following year. This action formed the basis of one of her many complaints of disability and racial harassment.

It's important to note that it wasn’t just the birthday card. The Claimant’s manager had also emailed her eleven times in a month. Clearly, he was not keeping contact to a minimum. The tribunal found that the constant contacts from her employer (including the birthday card) amounted to harassment. The contact was unwanted, and she had expressly said that she didn’t want it.

There are important questions raised by this case:

How does an employee’s request for minimum contact co-exist with the employer’s need to manage absence? It is not likely to have been reasonable for the employee to expect no contact whatsoever whilst she was off sick.

Although this case concerned race and disability discrimination, does it indicate a potential age discrimination issue with the sending of birthday cards at work? If an employee is sensitive about their age, then receiving a card from work could amount to unwanted conduct, especially if the card is ‘humorous’ and refers to age. A bland birthday greeting is unlikely to give rise to a serious risk of age discrimination (it’s unlikely for an employee to be able to successfully argue that it was reasonable for them to be offended) but if the employee has specifically asked not to receive one, or if the message included in the card could be perceived as offensive (even if the sender didn’t mean it to be taken this way), then we are not a million miles away from age-related harassment.