Mills & Reeve: HR Law Live

Are you prepared for the changes to employment law on 6 April 2020?

A number of changes are coming in on 6 April 2020, which have been in the pipeline for some time. 

Good work plan

The first set of changes implement parts of the Government’s Good Work Plan of 2018, which came out of the Taylor Review. In summary:

• Extended right to a written statement: Workers – not just employees – will be entitled to a written statement explaining certain terms of their employment and other information. It must be provided on or before the date on which they start. There is a list of new information you must set out (for both workers and employees), which includes things like how a worker’s hours or days of work might vary and how any probationary period works.
• Change to reference period for statutory holiday pay: You will need to calculate statutory holiday pay for workers without regular working hours based on the average weekly pay received in the 52 weeks before their holiday (rather than 12).
• Change to trigger for statutory information and consultation agreement: The threshold required for a request to set up an agreement to consult on employment-related matters will be reduced from 10% to 2% of the workforce (subject to a minimum of 15 people).
• If you use agency workers: They will be entitled to be paid the same as comparable direct recruits after 12 weeks (and to be informed the previous provisions no longer apply by 30 April).  Employment agencies must also provide them with a “fact sheet” with certain information about their work arrangements.

We anticipate that a number of other measures coming out of the Good Work Plan will be covered by a new Employment Bill, expected later this year.

Other changes

Five other 6 April changes to note are:

• Employment tribunal limits: The limit on a week's pay will rise to £538 and the cap on the compensatory award will increase to £88,519.  See here for full details of all the increases.
• Tax treatment of termination payments: All termination payments above £30,000 will be subject to employer NICs.
• IR35: The off-payroll working rules will be extended to all medium and large businesses. Those businesses will now need to decide whether contractors are required to pay income tax and NICs and, if they do, to pay HMRC. There will also be changes to the off-payroll working rules for public bodies. We explain more about the changes, in particular the new requirements of a “status determination statement” for public bodies, in this article.
• The NMW rules: Various changes are being made for salaried hours workers, who can now be paid in additional equal instalments. Employers can choose a calculation year and make premium payments for basic hours. The NMW naming scheme will also start again.
• Parental bereavement leave and pay: Working parents will have a statutory right to take leave following the devastating loss of a child, so they can grieve away from the workplace. We explain everything you need to know, including the steps you should take to prepare, in this article.

Amy O'Brien, Professional Support Lawyer

 

[Edited on 4 March to include details of new employment tribunal limits.]

Two key policy objectives drive July’s rush of consultations

Five new employment law consultations were published in July, as well as two responses to consultation.  They can all be linked two overlapping themes which were priorities during Theresa May’s tenure at number 10: promoting “good work” and tackling gender inequality in the workplace.

Good Work

Three of the consultations are directly connected with the Government’s Good Work Plan, itself a response to the wide-ranging Taylor Review which Theresa May commissioned soon after she became Prime Minister and which reported in 2017.

Consultations earlier this month on workplace health and enforcement of employment law rights (brief details here) have been followed by a further consultation on “one-sided flexibility” which closes on 11 October. This explores how best to introduce new rules which would oblige employers to give minimum notice of work schedules, and to provide compensation if they are cancelled at short notice. The consultation does not address a proposed new right for workers on irregular hours to request a “more predictable and stable contract”, but the Government says remains committed to bringing forward new legislation to introduce this right, which is likely to be modelled on the right to request flexible working.

Gender equality

Gender equality could be considered as part and parcel of good work, but it is a wide topic in its own right.  At its broadest it extends from eliminating gender-based harassment and discrimination in the workplace to tackling the root causes of the gender pay gap.

Earlier this month the Government set out its plans to tackle sexual harassment in the workplace (see our earlier blog here for more details). This has been followed by a wide ranging consultation on reforming family-friendly leave:

• The first part of the consultation (which runs until 29 November) considers the “benefits, costs and trade-offs” of the four main types of statutory leave: maternity leave, paternity leave, shared parental leave and parental leave.
• The second part of the consultation explores proposals for giving an additional period of leave to the main carer of babies who require neo-natal care (closing date 11 October).
• The third and final part (also closing on 11 October) looks at measures to increase the transparency of what employers offer by way of flexible working and family-related leave and pay.

There are two other groups of proposals where consultation was completed earlier this year, and the Government has recently published its response:

• Pregnancy discrimination: the Government is proposing that special redundancy protection for new mothers should be extended for six months after they return to work. Those returning from adoption leave will be given the same protection.
• Non-disclosure agreements: legislation will be passed “as soon as Parliamentary time allows” which will provide that a confidentiality clause cannot prevent an individual from disclosing information to the police, regulated health and care professionals or legal professionals. Such clauses will need to “clearly set out” these and other limitations to their scope (for example in relation to the rights of whistleblowers).

Next steps

No implementation timetable has been published for any of these proposals. That is understandable in the light of the current political uncertainties. 

Court of Appeal takes new look at Equality Act exceptions for pregnancy and childbirth

Last month’s decision from the Court of Appeal should dispel any remaining doubts about whether employers are legally required to pay fathers taking shared parental leave as generously as mothers on maternity leave. In two related appeals from last year’s decisions in the Employment Appeal Tribunal, the Court of Appeal has said that no breach of the Equality Act is involved in giving birth mothers enhanced pay while they are on maternity leave, but only paying statutory shared parental pay to fathers taking shared parental leave.

The first of these cases (Ali v Capita Customer Management) was a claim for direct sex discrimination. In the second (Hextall v Leicestershire Police) there was an issue as to whether the proceedings should have been framed as an indirect discrimination or equal pay claim. In both cases the Court of Appeal ruled that the employers could rely on the Equality Act exception which states that where the claimant is a man “no account is to be taken of special treatment afforded to a women in connection with pregnancy or childbirth”.

The Court of Appeal was not impressed with arguments that periods of statutory maternity leave with enhanced pay in excess of the compulsory two week period should not be regarded as connected with pregnancy and childbirth. It is possible, however, that it might have been more open to such arguments if the period of enhanced statutory pay had been significantly in excess of the 14 week protected period guaranteed by the Pregnant Workers’ Directive (the period of full pay was 14 weeks in Ali and 18 weeks in Hextall).

It also rejected arguments that it was significant that the childbirth and pregnancy exception does not appear in the definition of indirect discrimination in the Equality Act. As well as more technical observations about the selection of the pool for comparison purposes, it said that it would be “very odd” if arrangements which fell within the exception in relation to direct discrimination and equal pay would still need to be scrutinised under the Act’s provisions on indirect discrimination.

Subject to any final appeal to the Supreme Court, it does now seem that the arguments about the lawfulness of enhancing statutory maternity pay (certainly for the first 14 weeks of leave) while failing to enhance statutory shared parental pay have been settled. However, that doesn’t mean that all arrangements with regard to shared parental leave will necessarily be given a clean bill of health, or that the pressure to give fathers caring for new-born children better rights will diminish.

Special redundancy protection to be extended to pregnant women and maternity leave returners

The Government is consulting on plans to extend the redundancy rights currently enjoyed by women on maternity leave to pregnant women and women returning to work after maternity leave. There is also a possibility of giving similar rights to parents returning to work from adoption or parental leave.

The fact that women on maternity leave are better protected against being made redundant than pregnant women or new mothers who have recently returned to work is an unexplained anomaly in UK employment law. As well as the broad protection against sex and pregnancy related discrimination which all women enjoy, mothers on maternity leave have an additional right to be considered for suitable alternative vacancies in a redundancy situation, in preference to anyone else under threat of redundancy.

The Government is now planning to create a consistent regime to protect pregnant women and new mothers by extending these special redundancy rights. The proposal is that these additional rights would apply to all mothers from the point they tell their employer they are pregnant to the end of a defined period after they return to work from maternity leave. That is likely to be six months, though the Government is consulting about the exact period.

The Government is also consider according similar rights to parents returning from other types of leave including adoption leave, parental leave and shared parental leave. Some of the issues around timing and eligibility are quite complicated for these additional types of leave. As well as seeking views through the consultation process, the Government plans to refine its thinking by using a specialist task force.

The consultation closes on 5 April 2019, but no implementation timetable has yet been published.

Top ten employment law topics for 2019

To mark the start of 2019, we have put together our review of the past year. We have selected the topics that we think have most engaged employment lawyers and human resources practitioners over the past 12 months and will continue to be significant in the year ahead.

The review starts with an explanation of the new immigration arrangements that are likely to apply post-Brexit, though many details are still unclear. Other topics covered include #MeToo, the gig economy and the implications of the latest case law on the interpretation of employment contracts.

Conference season provides impetus for new employment policy

A number of new employment policy initiatives have been launched by the Government to coincide with the Conservative Party conference last week. These include:

• Tipping: new legislation will be introduced to ensure that all tips left for workers will go to them in full. At the moment this depends on how the tip is paid and on the precise agreement reached between staff and restaurant owner.
• Parental pay transparency: the Government will be consulting on new legislation which would require employers with more than 250 staff to publish their parental leave and pay policies. Currently this is voluntary, and many employers (in both public and private sectors) do not make this information publicly available.
• Flexible working: the Government will consider creating a duty for employers to consider whether a job can be done flexibly, and make that clear when advertising.  These plans appear to extend to all employers, not just the larger ones.
• Apprenticeships: an extra £90 million of funding has been announced to enable employers to invest 25% of their apprenticeship levy in creating apprenticeships for people working in their supply chains. Under the funding rules as presently drafted, they are only allowed to spend these funds on training their own employees, or those of an associated company.

At last month's Labour Party conference it was the Shadow Chancellor’s employee share ownership proposals which caught the headlines. Although short of detail at the moment, the outline of the plan is as follows:

• Companies with over 250 staff would have to place 1% of their shares each year (up to a maximum of 10%) into an “inclusive share ownership fund”.
• The dividend income going to each worker would be capped at £500, with the rest going into a fund to pay for public services and welfare.
• The funds would be held and managed collectively, with a bar on selling or trading.

These share ownership plans have already attracted a great deal of comment, much of it unfavourable. However, even if there is a change of government, there is still a fair way to go before they can be translated into employment policy.

Paid bereavement leave for parents to be implemented in 2020

The Act laying down the framework for two weeks’ statutory leave for bereaved parents received Royal Assent last month.  It is due to come into effect at some point in 2020, since the Government wishes to give employers and payroll providers at least 18 months to prepare.

The full details of the new right will be set out in regulations which have not yet been made.  However, the Act lays down this broad framework:

• Bereaved parents of a child under 18 will have a “day 1” right to take up to two weeks’ leave from their employment in the 56 days after the child’s death.
• In addition, employees who have completed at least 26 weeks’ continuous service will be entitled to parental bereavement pay at the statutory flat rate (currently £145.18 a week) or 90% of their average weekly earnings (whichever is lower).
• The right will extend to parents of stillborn children if the stillbirth occurs after 24 weeks of pregnancy.  The Government has said that existing maternity and paternity rights in relation to children who die while parents are already accessing these rights will remain.
• If more than one of their children dies before the age of 18, a bereaved parent will be entitled to leave in respect of each child.
• There will be similar provisions to those applying to other types of statutory leave when it comes to overlapping contractual rights, continuation of employment, protection from detriment and the like.

These proposals started off as a private member’s Bill. Although they have now been adopted as Government policy, their relatively tentative start may reflect differing views about whether a new type of statutory leave was necessarily the best approach.

Clearly it is not possible to have a different type of statutory leave to match each type of circumstance in which an employee may legitimately need time off work for family reasons. What this new right does is to supplement the existing right to reasonable unpaid time off “in consequence of the death of a dependant” to provide an enhanced entitlement where that dependant is a child.

Many employers are already considerably more generous and flexible in terms of paid compassionate leave than this new statutory scheme. Equally, the introduction of this scheme will not preclude the need for HR departments to engage with requests for leave in a variety of personal circumstances, including other types of bereavement which may have an equally traumatic effect on an employee as the loss of a child.

Could employers’ arrangements for parental pay be indirectly discriminatory?

Last month we had a clear ruling from the Employment Appeal Tribunal that failing to pay men on shared parental leave the same as women on maternity leave was not direct sex discrimination. Now have we have a second decision on similar facts which confirms this position, but raises the possibility that such arrangements could be indirectly discriminatory against men.

The argument is that while such arrangements are not directly discriminatory against men (in part because they also apply to women taking SPL) they nonetheless put men at a “particular” disadvantage. It is suggested that this is because, unlike at least some women, they do not have the option of claiming maternity leave as the birth mother. 

The EAT has decided that this issue was not properly addressed at the employment tribunal, so it has been remitted for reconsideration by a newly constituted tribunal. Among other things, it will need to decide whether there is sufficient evidence that the arrangements do indeed put men at a particular disadvantage, bearing in mind that some women who are not birth mothers are also eligible for SPL. If the claimant wins on this point, the employer will still be able to argue that the arrangements can be justified as a proportionate means of achieving a legitimate aim.

Although the employment tribunal’s decision on this point will not bind other tribunals, it is likely to provide useful guidance to employers, particularly now that the EAT has intervened to formulate the questions it will need to address.

Failing to enhance statutory shared parental pay was not discriminatory

The EAT has overturned an employment tribunal’s decision that failure to provide a period of full pay to a man taking shared parental leave amounted to sex discrimination. The EAT said that it was not possible to make a comparison for these purposes between a man on shared parental leave and a woman during the first six months of her maternity leave, so it was lawful to treat Mr Ali differently.

The mother of Mr Ali’s child had ended her maternity leave two weeks after the birth, and transferred the balance of her maternity leave to him under the statutory shared parental leave scheme. His employer provided 14 weeks’ basic pay for women on maternity leave. He argued that he should have the same entitlement while on shared parental leave, since failure to match a mother’s entitlement in these circumstances amounted to unlawful sex discrimination.

His argument succeeded before the employment tribunal, but failed to convince the EAT.  The EAT said that the purpose of maternity leave and pay was primarily to protect the health of the mother. This contrasted with adoption and shared parental leave, where the primary purpose was care of a child. So to evaluate whether denying the father enhanced pay was discriminatory, the appropriate comparator was a women taking shared parental leave, not a mother taking maternity leave. Since a woman taking shared parental leave would not be entitled to enhanced pay either, Mr Ali’s claim of direct sex discrimination failed.

While this decision will come as a relief to employers, three points are worth adding:

• Firstly, this decision is about the arrangements made to support women during ordinary maternity leave. It is possible that tribunals would take an different approach in relation to additional maternity leave, where is arguable that the purpose of the leave is different.
• Secondly, while this decision confirms that there is no legal compulsion to do this, a strong business case can still be made for enhancing statutory shared parental pay and adoption pay.
• Finally, the EAT heard another appeal on a similar point earlier this year (Hextall v Chief Constable of Leicestershire Police) and we are still waiting for the decision to be published. We are assuming the EAT will take the same approach in this later case!

Failure to enhance male pay during shared parental leave was direct sex discrimination

An employment tribunal has decided that failure to enhance statutory shared parental pay for a male employee starting shared parental leave was direct sex discrimination. He successfully argued that he was entitled to the same pay as a female employee on maternity leave.

Mr Ali’s partner was suffering from post-natal depression and was proposing to return to work two weeks after the birth, based on medical advice. Mr Ali wished to take shared parental leave from that point but was told he would only receive statutory shared parental pay. Female employees, who, like Mr Ali, had been transferred to their current employment under a TUPE transfer, were entitled to 14 weeks’ enhanced maternity pay.

It has been hotly debated as to whether companies with enhanced maternity packages should match those benefits for anyone taking shared parental leave (SPL). There is no statutory requirement to do so. In bringing a direct discrimination claim, many lawyers would argue that the appropriate comparator for a male employee taking SPL is a female employee taking SPL (rather than a woman on maternity leave).

In this case, the Tribunal held that Mr Ali could compare his treatment with a hypothetical comparator, that being a female employee who had a baby at the same time, taking leave to care for her child after the 2 week compulsory maternity leave period.

It was not accepted that after compulsory maternity leave, the additional 12 weeks’ enhanced pay could be exclusive to mothers. The Tribunal agreed that fathers now have an increased role in caring for children and in these circumstances, Mr Ali was in the best position to do so. In denying Mr Ali the enhanced pay usually paid to women on maternity leave, he had been subjected to less favourable treatment due to his sex and his discrimination claim succeeded.

This decision follows an employment tribunal ruling last year involving Network Rail, where the employer conceded that failure to enhance pay during shared parental leave for men as well as women amounted to indirect (though not direct) sex discrimination. However this case was different because neither male nor female employees were entitled to enhanced pay during SPL. In addition, very similar arguments failed in another employment tribunal claim last year, this time involving a police officer in the Leicestershire police force.

This judgment will therefore come as a surprise to many HR professionals, particularly given the Government’s position that no enhancement to statutory shared parental pay needs to be offered. Some commentators believe the decision to be wrong.

It has been reported that the employer will appeal the decision. The Leicestershire police case is also being appealed. Any appeal decisions will be important for employers offering enhanced maternity packages.

Pending the results of these appeals, employers should review their family friendly policies and may wish to consider enhancing shared parental pay if they do not already do so. However they should also be aware that this latest ruling does not bind other employment tribunals and is also inconsistent with earlier decisions at this level.

Lindsey Hooper, Associate