In January this year, we reported on a decision from the Scottish Court of Session which held that employers can settle future claims which are unknown at the time of entering into a settlement agreement, even if the basis for the claims has not yet arisen (Bathgate v Technip Singapore Pte Limited):  https://www.mayerbrown.com/en/insights/publications/2024/01/the-unknown-unknowns-settling-future-employment-claims-in-the-uk.

The English employment tribunals are not obliged to follow Scottish decisions and so it was unclear whether they would or not.  Last month, that uncertainty was removed when the English Employment Appeal Tribunal (EAT) adopted the same position in the case of Clifford v IBM United Kingdom Limited.

In this case, Mr Clifford had been on long-term sickness for a period of years.  In 2012, he raised grievances about IBM’s failure to put him onto its permanent health insurance (PHI) scheme and his lack of salary increases during his absence.  He claimed his treatment amounted to disability discrimination.  The grievances were resolved in 2013 and a settlement agreement was entered into, as part of which Mr Clifford was put onto IBM’s PHI scheme.  The settlement agreement provided that it settled all of Mr Clifford’s claims arising in connection with his employment, “whether or not they are or could be in the contemplation of you or IBM at the date of this Agreement”.  The agreement also included a long list of employment claims that were being settled, which included “any claim for discrimination, harassment or victimisation related to disability, failure to make adjustments or any other claim under the Disability Discrimination Act 1995 or the Equality Act 2010”.  There was a carve-out for claims arising after the date of the settlement agreement but only in relation to claims that were not connected to the matters set out in the grievance or which did not relate to Mr Clifford’s transfer to the PHI scheme.

In 2022, Mr Clifford issued proceedings in the Employment Tribunal, complaining that, during his participation in the PHI scheme, he had not received salary reviews or increases, which he claimed amounted to disability discrimination.  IBM took the position that Mr Clifford’s claims were covered by the terms of the settlement agreement, given the wording referred to above.  They referred in particular to the Bathgate case.  Mr Clifford argued that Bathgate was wrong (and so the EAT should not follow it) and that, even if it was correct, the facts here were different because Mr Clifford’s employment had continued whereas Mr Bathgate had been made redundant.

The EAT decided to follow the Bathgate decision and held that Mr Clifford’s claims in relation to lack of pay rises were covered by the settlement agreement he entered into in 2013.  The fact that his employment was continuing made no difference, they said.  All that is required is for the settlement agreement to contain clear wording that future claims are within its scope and for the claims in question to be identified clearly enough – which can be done by way of a generic description of the claim in question (as had been done in Mr Clifford’s agreement – see above) or by referring to the section number in the relevant statute.  Most commentators had considered it likely that the English courts would follow the Bathgate decision, notwithstanding that it was a decision of the Scottish courts, and that has indeed proved to be the case.  It is unclear whether it made a difference that Mr Clifford’s claims in 2022 were very similar to his 2012 grievance – i.e. a lack of pay rises.  The employment tribunal took that into account in its first instance decision but it does not appear to have been part of the EAT’s reasoning.  Either way, the current trend across the recent cases in this area is that future claims can be settled, provided the wording in the settlement agreement is clear enough.  Employers should review the wording of their template agreements, to the extent they have them, to make sure that they are drafted appropriately on this particular point.

If you have any questions on this, or any other topic, please contact your usual Mayer Brown contact or Christopher Fisher

The UK Government has responded to the recent ‘Sexism in the City’ report by the House of Commons Treasury Select Committee (the “Report”).  Among various recommendations in the Report was an outright ban on the use of non-disclosure agreements (“NDAs“) in sexual harassment cases, but the Government has decided it will not go that far.

The Government’s response

Published in March 2024, the Report looked at a wide range of issues facing women who work in UK financial services, including the use of NDAs in sexual harassment cases. It concluded that the misuse of NDAs was “widespread” and “shocking” and recommended an outright ban be introduced preventing the use of NDAs in such cases.

In its response, the Government says that, while it “shares concerns that NDAs are being used to intimidate victims of discrimination and harassment into silence”, it will not bring in a ban and instead points to the steps already being taken to combat NDA misuse:

  • a ban on NDAs in the higher education sector (in cases of sexual abuse, harassment or misconduct, and other forms of bullying or harassment) through the Higher Education (Freedom of Speech) Act 2023, which is expected to take effect in August 2024; and
  • a proposed ban on the use of NDAs that prevent disclosure of information relating to criminal conduct (discussed further below).

The Government also points to existing employment legislation which would invalidate NDAs in relation to whistleblowing but concludes that individual circumstances vary in relation to cases of sexual harassment and discrimination.  Referring back to a consultation carried out in 2019 into the use of NDAs, it says that the responses indicated that “many employees who sign a settlement agreement at the end of their employment with an organisation value the inclusion of confidentiality clauses, as they allow them to move on and make a clear break“.

The regulatory response

Another of the Report’s recommendations was that the Financial Conduct Authority (“FCA”) should collect data on the use of NDAs by regulated firms in cases of non-financial misconduct (i.e. bullying and harassment).

In its response to the Report, the FCA referred to the survey it issued to insurance and banking firms in February, requiring them to disclose how many incidents of non-financial misconduct they had encountered in the past three years, and how often they ended with an NDA being entered into.

What the FCA will do with the survey results remains to be seen but it seems possible that they may introduce a requirement on firms to report on their NDA usage going forward on a more regular basis. 

The new legislation

Despite its decision not to introduce an outright NDA ban in sexual harassment cases, the Government recently announced (on 28 March 2024) that it will legislate to ban the use of NDAs that prevent the disclosure of ‘information relating to criminal conduct’.  Although described as “an end to the murky world of non-disclosure agreements“, the scope of the new law is, in fact, fairly narrow. 

First, it will only prevent NDAs that apply to reports of a crime or ‘information relating to criminal conduct’.  We will have to see how that is framed in the legislation but, while it seems wide enough to catch sexual and other harassment in circumstances involving assault, ‘lesser’ forms of harassment and non-discriminatory bullying are likely to be outside of its scope. 

Secondly, the new law will only apply to reports made to:

  • the police or other bodies which investigate or prosecute crime;
  • qualified and regulated lawyers; and
  • others providing support services who operate under confidentiality, such as counsellors, advocacy services or medical professionals. 

So, even in criminal cases, NDAs will be permitted to prevent disclosures to friends, family and prospective employers. 

It is also worth noting that the Solicitors Regulation Authority made clear some years ago that it expects solicitors to ensure that, where they are involved in drafting or reviewing NDAs in settlement agreements, they must not prevent disclosures to the police, regulators, or legal and medical professionals.  The proposed new law does not seem to take things much further, although it will extend to NDAs not prepared or reviewed by solicitors. 

What does this mean for employers?

There has been much negative publicity surrounding the use of NDAs in recent years, with some high-profile cases showing how NDAs can be misused.  It remains recognised, however, that, when used responsibly, NDAs can have a legitimate role to play in the protection of sensitive, confidential information that neither the employer nor the employee wishes to become public. As such, employers will no doubt welcome the Government’s decision not to implement an outright ban, particularly where confidentiality is also valued by the affected employee.   As for the proposed new legislation, when the Government announced it in March, it said it would be introduced ‘as soon as parliamentary time allows’.  Now with a little over a month to the election, it remains to be seen whether it will find its way to the statute books.

If you have any questions on this, or any other topic, please contact your usual Mayer Brown contact or Christopher Fisher or Cheryl Stevart

Last week the Government announced a consultation on proposed changes to the Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPE”) to ensure that firms can be confident of their obligations during the process and take advantage of the new regulatory freedom since our departure from the European Union.  The consultation is open until 11 July 2024 and seeks views on the following proposals:

  1. re-affirming that TUPE only applies to employees and not workers;
  1. removing the obligation to split employees’ contracts between multiple employers where a business is transferred to more than one new business. The proposal is that the employers taking over the business would be required to agree who should be responsible for each employee’s contract.

The proposed changes are in addition to the reforms that are already due to come into effect from 1 July 2024 in relation to TUPE, under which small businesses are permitted to consult with employees directly if there are no existing employee representatives in place. The proposals, if implemented, appear helpful to employers in removing some of the current uncertainty in relation to the application of TUPE. In addition, consultation is being sought on proposals to abolish the legal framework for European Works Councils (“EWCs”) which would include a repeal of the current requirement to maintain existing EWC.  Following the departure from the European Union, the Government already legislated to prevent the establishment on new EWCs in the UK so these proposals build on the changes already implemented.

If you have any questions on this, or any other topic, please contact your usual Mayer Brown contact or Francesca Ingham

The latest legal update from our US team considers the FTC’s ‘Final Rule’ on non-compete clauses in the US.

The Final Rule introduces significant changes to non-compete clauses as it provides that, with respect to most workers, it is an “unfair method of competition” for an employer to:

  • enter into or attempt to enter into a non-compete clause;
  • enforce or attempt to enforce a non-compete clause; or
  • represent that a worker is subject to a non-compete clause.

Find out what this means for employers by reading our legal update here.

This month, the latest instalment of annual increases relating to the minimum wage, the maximum claim amounts awarded in the Employment Tribunal and other statutory rates takes effect. We set out below the main rates and limits that employers should be aware of.

1. Increase in minimum wage

The national minimum wage increased from £10.42 to £11.44 on 1 April. The UK Government accepted in full the recommendations of the Low Pay Commission (“LPC”) in respect of rates for the National Minimum Wage (“NMW”) which were published in the LPC’s Summary of Evidence 2023.

These new rates will need to be applied to new and existing employment contracts for all employees who are subject to remuneration at any of the NMW bands.

The rates which apply from 1 April 2024 are:

National Minimum Wage rateIncrease in pencePercentage increase
National Living Wage (21 and over)£11.44£1.029.8%
18-20 Year Old Rate£8.60£1.1114.8%
16-17 Year Old Rate£6.40£1.1221.2%
Apprentice Rate£6.40£1.1221.2%
Accommodation Offset£9.99£0.899.8%

2. Increases in Employment Tribunal awards

On 6 April 2024, the Employment Tribunal increased its compensation limits for certain tribunal awards and other statutory payments, including statutory redundancy pay. The changes come into force under the Employment Rights (Increase of Limits) Order 2024 and aim to bring awards in line with the Retail Prices Index (“RPI”).

The most significant increases to note are:

  1. the maximum compensatory award for unfair dismissal – from £105,707 to £115,115;
  2. the minimum basic award for some forms of unfair dismissal – from £7,836 to £8,533;
  3. the limit on a week’s pay when calculating statutory redundancy pay and unfair dismissal basic awards – from £643 to £700. This means that the maximum cap will now be £21,000 (increased from £19,290); and
  4. the ‘statutory guarantee pay’ increases from £35 to £38 per day.

It is important for employers to note that these increases will only apply to situations where the event giving rise to the entitlement to compensation or other payment occurred on or after 6 April 2024, so that, where the event occurs prior to 6 April 2024, the old limits will continue to apply.

3. New Vento bands

From 6 April 2024, the “Vento bands” (i.e. bands of compensation awarded in the Employment Tribunal for injury to feelings and psychiatric injury) increased.

For claims presented on or after 6 April 2024, the Vento bands will be as follows:

BandCase typeAward range
Lower BandLess serious cases£1,200 – £11,700
Middle bandCases that do not merit an award in the upper band£11,700 – £35,200
Upper bandThe most serious cases£35,200 – £58,700 (with the most exceptional cases exceeding £58,700)

It is important the employers are mindful of these increases, particularly those in the upper band as they can rise to figures in excess of £58,700 in some exceptional circumstances.

From 6 April 2024, the statutory right to request flexible working changed and a new ACAS Code of Practice came into effect.

A summary of the main changes are as follows:

  • employees can now make a flexible working request from day one of their employment. This is a change from the previous requirement for an employee to have 26 weeks service;
  • employees can now make two flexible working requests in any twelve-month period, rather than one;
  • employees will no longer have to explain what effect the requested change would have on their employer when making the application;
  • employers must consult with an employee before refusing a request – this would usually be done at a meeting; and
  • employers must deal with requests within two months of receipt. Employers currently have three months to handle requests.

These changes are likely to lead to additional workload for employers, given flexible working now becomes a “day one” right, who should ensure that their policies and processes when dealing with requests have been updated to reflect the changes. Managers may require additional training if the predicted increased volume of requests means a larger manager population will need to consider such requests. The risk for discrimination claims (e.g. failure to make reasonable adjustments or indirect sex discrimination) remains where an employee’s request is refused, so employers need to consider and clearly articulate their reasons for rejecting a request.

In case you missed it, the latest edition of Insights, our employment, benefits and mobility publication, is now out.

Highlighting some of the challenges and opportunities facing businesses this year, Insights includes perspectives from a range of jurisdictions on topical issues:

If you have any questions or would like to receive future editions of Insights, please contact Louise Fernandes-Owen.

Firms in the insurance sector have submitted their responses to the FCA’s recent survey into non-financial misconduct and, before too long, other regulated firms may receive similar survey requests.

In this update, we look at the questions the FCA is asking and what we might expect next.  

Our latest legal update considers a recent decision from the Scottish Court of Session which makes it clear that employers can settle future claims which are unknown at the time of entering into a settlement agreement, even if the basis for the claims has not yet arisen (Bathgate v Technip Singapore Pte Limited).

Find out what this means for employers by reading our legal update here.

This week, the Ministry of Justice announced that it is commencing a consultation on the introduction of a fee of £55 which will be payable on presenting a claim to the Employment Tribunal or when lodging an appeal with the EAT (please click here for further information). It is proposed that the same fee will be payable regardless of the type of claim.

In order to address concerns in relation to those who cannot afford the fees, it is proposed that individuals will be supported by a fee remission scheme which will provide financial support to individuals on low incomes and with small savings.

The Ministry of Justice estimates that the fees could generate between £1.3 m – £1.7 m a year from 2025/2026 onwards. It is hoped that the fees may incentivise parties to settle their disputes at an early stage via Acas, however, given the low fee rate it may not have the desired impact.

As some may recall, the previous fee regime was introduced in 2013 and ended in 2017 following a Supreme Court ruling that the fees impacted access to justice. The previous regime had a significant impact on the number of cases, with a sharp decline seen following their introduction. However, fees under the previous regime were much higher as they ranged from £390 to £1,200 depending on the type of case.

The consultation is due to close on 25 March 2024 and it is suggested that, if implemented, the fees will become payable from November 2024. It will be interesting to see if the same concerns regarding access to justice are a feature of the consultation response, notwithstanding the proposed fees are set at a much lower level than before.