Welcome to the September edition of the ESP Solicitors monthly newsletter. In this update, we explore the new employment rights and employment cases, offering key takeaways and insights for HR professionals. To receive this update directly in your inbox, please sign up via the box on the right.

Sweep of new employment rights announced

July’s King’s Speech unveiled Labour’s legislative agenda for their early months in government.

It was employment-law heavy with the speech announcing two new employment bills. The Prime Minister’s accompanying briefing note provided some details indicating Labour’s commitment to fully implementing their ‘New Deal for Working People’.

The ambitious proposed changes include:

• 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;
• ending ‘fire and rehire’ by reforming the law and replacing the statutory code;
• eliminating the lower earnings limit and waiting period for Statutory Sick Pay;
• flexible working as the default for all workers from day one (which employers must accommodate so far as 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.

Not all of Labour’s election pledges require primary legislation to take effect, such as their 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.

Clearly, a lot of reform is on the menu, which this bulletin will aim to update on as and when such changes come into practice.

1. Code of Practice on fire and re-hire now in force

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

Key provisions include:

• That ‘fire and rehire’ should only be used as a last resort and employers must explore alternatives to ‘fire and rehire’.
• A requirement to consult ‘for as long as reasonably possible’, but, unlike collective redundancy consultation, there is no minimum time period.
• Once the employer becomes aware that any proposed changes are not agreed, these should be re-examined, considering 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, as a former conservative party policy, the Code may not be in force in this form for very long as Labour have pledged to replace and strengthen the Code in the near future.

2. New employer duty to prevent sexual harassment in the workplace

On 26 October 2024, the Worker Protection (Amendment of Equality Act) Act 2023 comes into force introducing a new positive duty on employers to take reasonable steps to prevent sexual harassment in the workplace.

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

1. In claims for sexual harassment the Employment tribunal can increase compensation by up to 25%; and
2. The Equality and Human Rights Commission (“EHRC”) 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 of law, the ECHR have issued updated guidance on sexual harassment at work. The guidance is not binding 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.

In summary, employers should consider the risks of sexual harassment occurring in the course of employment in their specific business including the risk of sexual harassment by third-parties as well as their employees and workers for whom they are responsible. Once the risk has been assessed, employers should consider steps to reduce these. Such steps must be reasonable, bearing in mind its size and the resources available to the employer.

Although the duty to prevent sexual harassment extends to harassment by third parties, employers are not currently liable for actions of third parties at the employment tribunal. The UK did previously have provisions relating to third-party harassment, but these were repealed in 2013 and a recent attempt to re-introduce them was unsuccessful. 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 the EHRC for failure to prevent third-party harassment of employees. However, to date, they have undertaken enforcement action quite rarely.

Next steps: In advance of October, employers should therefore carry out a risk assessment, consider steps to reduce those risks and implement them. The risk assessment and resulting actions should be kept under regular review. 

You may be interested in our preventing sexual harassment in the workplace checklist. It intends to help HR professionals assess and decide upon the most appropriate steps to avoid harassment in the workplace and ensure the safety of employees. Download the checklist here.

3. When is sending a birthday card harassment?

The Times Online 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 innocuous  as this would not fall foul of employment law, however, for the specific reasons in this case it did.

Facts: In Toure v HMRC, the Claimant went off on long-term sick leave with stress. She later claimed against her employer for disability and race discrimination. Whilst she was off sick, she asked her then manager to keep contact to a minimum. In particular, she asked not to 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 race harassment.

Analysis: Context was essential in this case; – it was not merely the birthday card which formed the basis of the harassment; – the Claimant’s manager had also emailed her eleven times in a month against her specific request to keep contact to a minimum whilst she was off sick.

An interesting point raised by this case is how should an employee’s request for minimum contact co-exist with the employer’s need to manage absence? It is unlikely to be reasonable for an employee to expect no contact whatsoever whilst off sick. Employers must take employees’ wishes into account as regards frequency and type of communication where such requests have been made (or in line with any internal policies). Despite this, employers need not shy away from contacting employees with reasonable management instructions (e.g. attendance at sickness absence meetings) and where they must contact employees by law, for example, where a redundancy or TUPE transfer is proposed. Employers who find themselves in this situation would do well to refer to ACAS guidance and seek HR advice, particularly where the employee on sick leave may also be considered disabled under the Equality Act (i.e. because their condition is sufficiently long-term and serious to meet the statutory test).

4. Race discrimination – when does the burden of proof shift to the employer?

Facts: In Parmar v Leicester City Council, the Claimant was temporarily moved from her role on the basis that there was a disciplinary investigation against her. However, the allegations were vague, and after several interviews with the Claimant it was found by the employer that there was no case to answer. The Claimant, who was of Indian origin, brought a claim of race discrimination against the Respondent. The Claimant noted that conflicts were common where she worked, but formal investigations had only targeted her.

The Law: there is a two-stage process in discrimination claims. First, a tribunal must consider if the Claimant raised facts from which discrimination could be inferred. Second, if such facts have been raised by the Claimant, the burden shifts to the Respondent to disprove discrimination. Here, the tribunal found that discrimination was a possible explanation for the facts raised by the Claimant, therefore the burden of proof had shifted to the Respondent. The Respondent had failed to discharge that burden and the Claimant’s claim succeeded.

On appeal: The Respondent appealed, arguing that the tribunal had been wrong to find that the burden of proof had shifted. It argued that the tribunal should have used the two-stage test for each allegation of discrimination, rather than taking an overall view. It also contended that the tribunal had erred in finding that the fact of a difference in treatment between the Claimant and others was sufficient to shift the burden of proof.

The Employment Appeal Tribunal disagreed, finding that a blanket approach to the assessment of the shifting of the burden of proof was acceptable in this case. The tribunal had correctly found that a difference in treatment of other colleagues in similar circumstances, where those colleagues were of a different race, was evidence that could support a claim of race discrimination. The tribunal had correctly looked at all the evidence.

Take-away: Employers need to be mindful that this approach to multiple allegations at the tribunal is common; – if the burden of proof has shifted for one allegation, it is likely to be found that it has shifted for all. Employers should therefore be prepared to proactively defend all allegations against them.

5.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.

Facts: In Wharton v Sheehan Haulage & Plant Hire, the Claimant brought claims alleging deductions from notice pay and holiday pay.  The tribunal dismissed these on the basis that the claim form was presented out of time, holding 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 out of time.

On appeal: 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. Therefore, the tribunal had been wrong to consider the claim out of time.

Take-away: For employers who receive notification of a tribunal claim (or the commencement of Acas early conciliation), make sure 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, an easy trap to fall into, as happened in this case, is to focus on their termination date. However, where the claim relates to unlawful deductions, the time limit will run from the date that the deduction is made which is the last pay-date. Given that many employees are paid in arrears, this date will often fall later than the termination date.

6.Religion or belief discrimination – when are third parties liable for the actions of an employer?

Overview: Not many cases focus on Section 111 Equality Act 2010, 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.

Facts: In the recent case of Bailey v Stonewall Equality, 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 critical 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.

Decision: The tribunal found that the Respondent Stonewall’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 liable for inducing the discrimination.

On appeal: 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:

1. 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
2. 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 with GCC only. 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.

7.Is time spent travelling from home to third-party sites by minibus caught by the National Minimum Wage?

Overview: The National Minimum Wage (“NMW”) is payable to workers whenever they are carrying out ‘time work’. The question of whether travel time is ‘time work’ for the purposes of NMW was recently considered in the case of Taylor’s Services Limited v HMRC.

Facts: 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 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 NMW. The employment tribunal agreed with this position.

On appeal: 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 unless there is ‘work’ being done while ‘travelling’, the time spent on that activity cannot be ‘work’ for the purposes of Regulation 30. The fact that the workers here were obliged to travel on the minibus by the employer did not turn the travel into work.

However, the regulations do state that 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”.

Take-away: NMW 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. NMW is also not payable just because the employer exercises control over the method of travel; and/or the travel takes a long period of time.

8. Discrimination against part-time workers only occurs where less favourable treatment is solely because of part-time status

Overview: Part-time workers are protected against less favourable treatment under the Part-Time Workers (Prevention of Less Favourable Treatment) Regulations 2000. Workers are protected in relation to their terms of employment, and also if they are subject to any other detriment on the ground of their part-time status. This is unless that treatment can be justified by the employer.

The Employment Appeal Tribunal recently looked at how the test of whether treatment is ‘on the ground of’ part-time status should operate.

Facts: In Augustine v Data Cars, the Claimant was a part-time taxi driver. He was required to pay a flat weekly circuit fee of £148 to the Respondent. The same fee was payable by all drivers, regardless of the hours they worked. The Claimant alleged part-time workers discrimination because he was required to pay the full fee each week. The Tribunal dismissed his claim, holding that the Claimant had not established that he was treated less favourably than a comparable full-time worker, as they both had to pay the fee. The tribunal further concluded that, even if the Claimant had been able to establish less favourable treatment, the charging of the full circuit fee was not on the sole ground that he was a part-time worker, so his claim would still have failed.

On appeal: The Employment Appeal Tribunal disagreed with the tribunal but found that the outcome remained correct. It held that:

By charging a flat fee to all employees, the Respondent was not treating part-time and full-time employees in the same way. Once the fee had been deducted from take-home pay the Claimant was clearly receiving proportionately less pay than full-timers.

On considering whether this less favourable treatment was because of the Claimant being part-time, the Employment Appeal Tribunal found that, although its own view was that the correct test should be whether part-time status was an effective cause of the treatment (rather than the sole cause), it was bound by the judgment of the Scottish Court of Session in McMenemy v Capita Business Services. This case held that less favourable treatment would only be ‘on the ground’ of being a part-time worker if the treatment was solely for that reason. The tribunal had therefore been correct to apply the ‘sole reason’ test (although it had made an error in the way it had done so).

9. 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 accompanying statutory Code of Practice comes into force on 1^st October 2024.

Key features of the Tips Act include:

• employers must 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 must 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 is not 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.