Since July 2017 when the Supreme Court abolished the requirement to pay a fee to issue a claim in the Employment Tribunal, there has been a steady increase in the number of claims issued in the Employment Tribunal, although the numbers are yet to reach the levels we saw before the fees regime was introduced.

The most recent figures published by the Ministry of Justice (“MOJ”) for the period for October to December 2018 show that there were 9,811 single claims issued in the Employment Tribunal, which has increased by 23% when compared to the same period in 2017.  Typically the most common employment tribunal claims are for unfair dismissal, unauthorised deduction of wages and equal pay.  The MOJ statistics confirm that unauthorised deduction from wages remains one of the most common claims, although the most common complaint disposed of in Q4 2018 was  unfair dismissal.   Discrimination and whistleblowing claims also increased, although those claims were never as dramatically impacted by the fee regime.  The most common discrimination claim remains age discrimination, followed by sex discrimination and then disability discrimination. 

The rise in claims continues despite the introduction of pre-claim ACAS conciliation in May 2014.  ACAS has released its latest statistics which show that only 24% of Early Conciliation cases that were closed in April to December 2018 proceeded to a Tribunal claim and, of those, 29% were settled by ACAS later or withdrawn. So although the number of claims is not back to the pre-fees level, the current numbers would no doubt be higher were it not for the introduction of ACAS early conciliation.

In response to the rise in numbers, the Government is currently recruiting more fee-paid judges and is due to introduce modernisation reforms to the Employment Tribunal over the next two years.  This is welcome news as it is clear that an increase in resources is much needed.  The MOJ figures reveal that the outstanding caseload for single claims has increased by 53%, and it is something we notice regularly when dealing with the Tribunals. We have been experiencing lengthy delays in the Employment Tribunal in processing both ET1s and ET3s, and recently had a main hearing cancelled on the day before, due to the unavailability of judges.  

Five years ago the pensions world was rocked by George Osborne’s Budget announcement:  DC members would no longer be forced to buy annuities.

Under his “freedom and choice” initiative, tax rules were changed so that DC pots could be used to provide lump sums or drawdown.  At the same time, Pension Wise was introduced – free guidance for DC members about their benefit options.  Later changes to tax law mean that, subject to certain conditions, members can use their DC savings to pay for financial advice.

Continue Reading Freedom and choice – not just for DC?

On Friday (24 May) the Court of Appeal delivered its decision in the cases of Capita v Ali and Hextall v Chief Constable of Leicestershire.  In both cases, male employees claimed sex discrimination on the basis that their employer’s shared parental leave (SPL) policies provided the statutory rate of SPL pay to employees taking SPL, while their maternity leave policies provided for enhanced maternity pay.  The Court of Appeal has ruled that this is neither direct nor indirect discrimination.

For direct discrimination, the correct comparison is between a man and a woman taking SPL – not between a man taking SPL and a woman taking maternity leave.  As such, there is no discrimination because they would both receive the same rate of SPL pay.  This is generally viewed as a correct analysis and is not surprising. What is more interesting perhaps is the ruling on indirect discrimination.  There, the claimants’ argument was that paying the statutory rate of pay for all employees who take SPL causes a particular disadvantage to men when compared to women.  The Court of Appeal rejected this argument too.  They said that the pool for comparison purposes is a pool of employees whose circumstances are the same as each other (or not materially different).  So women taking maternity leave had to be excluded because they are in a materially different position from men and women taking SPL.  That left a pool comprised of men and women taking SPL (as opposed to maternity leave).   Based on that pool, where the men and women would be paid the same flat rate of SPL pay, there was no particular disadvantage to the men.  In any event, the Court also found that, if there were any disadvantage to men, the employers would have been able to justify it as a proportionate means of achieving a legitimate aim, namely the special treatment of mothers in connection with pregnancy or childbirth.

Both Claimants have asked for permission to appeal to the Supreme Court but, for now at least, the legal position is clear.  Employers will not be liable to a sex discrimination claim if they operate an enhanced maternity pay policy and a statutory rate SPL pay policy.

What’s New?

The latest episode of Mayer Brown’s UK Employment Law podcast is now available for streaming and download. To celebrate the success of our long running podcast, we have released the 150th episode with a few changes and availability on a wider variety of platforms such as:

Subscribe now and tune in regularly to hear Nick discuss the latest developments in UK Employment law to help keep you apprised of changes in the law and what they mean for your business.

Episode 150: May 2019
In our 150th episode, Nick reviews a case which considers whether Board directors were employees, to decide where those individuals could be sued. Secondly, we have a case on the test for harassment, and whether the test is an objective one, or a wider test. Finally, we have a key case on the personal liability of directors for breaches of contract by their company.

The High Court has held that directors of the sponsoring employer of two pension schemes did not, as trustees of those schemes, owe any fiduciary duties to the employer.

H and W were directors of a company and were trustees of the company’s main and executive pension schemes (the schemes). After H and W left the company, it issued proceedings against them, arguing that H and W had breached the directors’ duties that they owed the company by, among other things, adopting unduly conservative investment and funding strategies for the schemes. In addition, the company argued that as trustees of the schemes, H and W owed the company a fiduciary duty to act in its interests.

The High Court held that as trustees of the schemes, H and W did not owe any fiduciary duties to the company as sponsoring employer. As trustees, H and W were entitled to take account of the company’s interests, but only where those interests did not conflict with their primary duty to the schemes’ beneficiaries. H and W were not in breach of their directors’ duties to the company by adopting conservative investment and funding strategies for the schemes. While the adoption of these strategies was to the advantage of scheme members, this did not necessarily mean that it was to the disadvantage of the company or that it was contrary to the interests of the company and/or improper.

In the wake of #MeToo and the associated shift in the way allegations of sexual harassment are treated by employers, making the decision to suspend an employee can have far-reaching repercussions for employers and employees alike.

Importantly, in 2007, the Court of Appeal, in Mezey v South West London and St George’s Mental Health NHS Trust, held that suspension, regardless of how it is framed by an employer, is not a “neutral act” as it “inevitably casts a shadow over the employees’ competence” and, in some instances, his or her character. In light of this, employers should be careful not to rush this process and ensure that any action taken is reasonable in all the circumstances.

Here are a few points employers should keep in mind before making the decision to suspend an employee in a potential disciplinary context:

  • Suspension should not be a “knee-jerk” reaction and should only be imposed in circumstances where it is reasonably warranted.
  • Consider whether an alternative is available, such as relocating the employee to a different site or desk, allowing them to work from home or changing their hours.
  • Provide the employee with written confirmation of the suspension and the reason(s) for it prior to any period of suspension. Employers should also make clear that it has not formed any view as to whether wrongdoing had been committed by the employee.
  • Exercise caution in communicating the employee’s absence to others so as to avoid any suggestion that it has pre-judged the outcome of the investigation or disciplinary proceedings.
  • Ensure that the employee is aware of his or her obligations while on suspension, such as remaining contactable and available during work hours as required.
  • Although there is no statutory limit, any period of suspension should be as brief as possible and any investigation should be carried out without delay.
  • Any period of suspension should be paid. Where an employment contract permits an employer to suspend an employee without pay, this should only be done in exceptional circumstances.
  • The employer should consider whether IT/systems access needs to be suspended during suspension, but ensure provision is put in place to enable an employee to access material to respond to the allegations (possibly through supervised access) and to contact the employee if work-related queries arise.

Various pieces of legislation came into force in early April 2019.  The common, and unsurprising, theme among all these legislative changes is that they increase the statutory minimum amounts employers must pay to their staff and increase awards available to the Employment Tribunal.  We have set out below a summary of these key increases all of which are now fully effective.

Statutory sick and family leave pay

Under the Social Security Benefits Up-rating Order 2019, employers must increase minimum weekly payments to eligible employees as follows:

  • as of 6 April 2019, statutory sick pay must now be a weekly payment of £94.25; and
  • as of 7 April 2019, family leave-related pay must now be a weekly payment of £148.68.

Tribunal awards

On 6 April 2019, both the Employment Rights (Increase of Limited) Order 2019 and the Employment Rights (Miscellaneous Amendments) Regulations 2019 came into force, resulting in the below increases to awards and penalties now available to Employment Tribunals:

  • the maximum limit on a week’s pay, including for the purposes of calculating statutory redundancy, has increased to £525;
  • the maximum compensatory award for unfair dismissal claims is now £86,444;
  • the minimum basic award for certain unfair dismissal (including dismissal for reasons of union membership and acting as a staff representative) has risen to £6,408; and
  • the maximum penalty for an aggravated breach of employment law is now £20,000, up from the previous maximum of £5,000.

In addition to the above, an addendum to the Presidential Guidance on bands of damages for injury to feelings (Vento bands) has been issued, which increases the potential damages that the Tribunal can award for claims presented on or after 6 April 2019. The Vento bands are now as follows: a lower band of £900 to £8,800 for cases such as a one-off act; a middle band of £8,800 to £26,300 for more serious one-off acts of harassment or loss of job due to discrimination; and an upper band for the most serious cases of discrimination of £26,300 to £44,000, with the most exceptional cases, such as a sustained course of harassment, capable of exceeding £44,000.

National living and minimum wage

Further to our blog post in early March, under the National Minimum Wage (Amendment) Regulations 2019, the increases to hourly rates took effect from 1 April 2019.

What do employers need to do?

The above increases have already come into force so employers must ensure they have implemented these changes, and from the correct dates. Employers should think about the mechanics of backdating payments to the relevant effective date to ensure employees or workers do not have claims for unpaid wages.  Employers facing a potential claim in the Tribunal should keep in mind the above increases to awards as, no doubt, claimant solicitors will be sure to mention these increases in any pre-claim settlement discussions.

The government has given the green  light to a new form of defined contribution pension scheme.  At least, it is new to the UK.  “Collective defined contribution” (“CDC”) schemes are common in the Netherlands and Denmark but the idea of introducing this type of scheme into the UK has only relatively recently gained traction.  The fact that the Royal Mail wants to put such a scheme in place for its 140,000-strong workforce has provided the impetus for the government to consult on how CDC schemes would operate and be regulated.

Continue Reading Collective defined contribution schemes: a fresh alternative?

The case of Hargreaves v Department for Work and Pensions provides a useful reminder of what employers should keep in mind when managing an employee with a disability, including the following:

  • Discuss suitable reasonable adjustments at the very first opportunity and seek input from the employee’s treating health professional and occupational health as well as the employee.
  • Consider whether the application of a ‘provision, criterion or practice’ within the organisation, such as rigid working hours, could have the effect of placing a disabled employee at a disadvantage.
  • Be attentive to the changing circumstances of an employee with a disability and open to reassessing the reasonableness of the adjustments.
  • Be open to suspending, extending or restarting a reasonable adjustments ‘trial period’ if an employee’s symptoms or condition is likely to change due to, for example, a change in medication.
  • Be mindful that a disability may affect an employee’s ability to follow a standard process, such as calling a line manager to advise if he or she will be late, and consider whether an alternative process could be possible.
  • Be careful not to reject any recommendations made by a disabled employee’s treating health professional or occupational health without first discussing the reasonableness of their suggestions with them and the employee, and clarifying any points of uncertainty.

In this case, the Tribunal held that the employer had failed to make reasonable adjustments when it refused a flexible working pattern requested by a disabled individual. The subsequent dismissal was also held to be discriminatory. If the employer has taken into account the above, this outcome could have been avoided.

Defined benefit (DB) pension schemes promise their members a pension for life. However, while one member may live to age 75, another might live to age 95. When working out how much money a DB scheme needs to fund the benefits it has promised members, trustees (or rather their actuarial advisers) therefore have to make an assumption about how long, on average, members will live – a longevity assumption.

If that longevity assumption proves to be incorrect and the scheme has to pay benefits for longer than expected, the trustees will need to find additional money to fund those benefits. And usually they will look to the scheme’s sponsoring employer for that money.

Finding ways of managing a scheme’s longevity risk is therefore beneficial for both the trustees and the employer. One way of doing this is a transaction called a longevity swap. Between 2009 and 2018, nearly 50 pension schemes entered into longevity swaps, including schemes sponsored by Astra Zeneca, AkzoNobel, BA, BAE Systems, BMW, BT, Heineken, ITV and Rolls-Royce.

Continue Reading Managing pension scheme longevity risk – a good thing for schemes and employers