Employment Law Update – February 2021

The IR35 Rules are changing on 6 April 2021

Do you engage contractors through personal service companies or other intermediaries?

If so, you should consider reviewing your IR35 position ahead of the changes on 6 April 2021.

What will change on 6 April 2021?

• Unless you are a small company, the off-payroll working rules will apply and you may be responsible for deducting tax and NICs from (and paying employer NICs on) payments made to contractors.
• The responsibility for determining the application of off-payroll working rules (IR35) will move to the organisation receiving an individual’s services.

Comment

Make sure you understand the impact of the changes on your organisation and the actions that you may need to take in advance of their implementation. If you are unsure whether these rules will apply to your organisation, or what you need to do next, please contact a member of the Employment Team.

Parental leave policy potentially discriminatory towards women

Are your policies indirectly discriminatory?

In Cumming v British Airways, the Employment Appeal Tribunal found that British Airways’ parental leave policy had the potential to be indirectly discriminatory against women, as women are more likely to have childcare responsibilities.

Facts

In this case, the Claimant argued that one of British Airways’ policies was indirectly discriminatory towards women. The policy stated that if a member of the crew staff was to take 3 days unpaid parental leave in a month, then they would automatically lose one day of paid leave too. Statistically, a higher proportion of women take parental leave than men, therefore, this policy put women at a disadvantage. The Employment Tribunal rejected the claim on the grounds that the policy applied to all of the crew members equally, regardless of whether they were male or female, and thus there was no particular disadvantage to women.

Decision

The Employment Appeal Tribunal overturned this decision because the Tribunal had failed to take into account the key question: “Were women put at a disadvantage compared to men in the same circumstance?” The relevant pool for the proper comparison should have been male and female crew members who have children of a relevant age and thus have childcare responsibilities, rather than the crew members on the whole. The case has now been sent back to the Tribunal to consider the claim based on the correct pool of comparison.

Comment

When introducing a rule or policy, it is important to consider whether this disadvantages a group of employees with a particular protected characteristic more than those who don’t have that protected characteristic.  Even if the rule or policy applies to the whole workforce it can still be indirectly discriminatory.  Employers may however be able to justify such a rule or policy to avoid a successful indirect discrimination claim.

Constructive dismissal claim not undermined by grievance

In Gordon v J & D Pierce (Contracts) Limited, the Employment Appeal Tribunal held that an employee had not undermined his right to bring a claim for constructive dismissal even though he had raised a grievance after the events which led to his resignation.

Facts

The Claimant brought a claim against his employer for constructive dismissal due to the relationship between himself and his manager deteriorating. The Tribunal rejected the Claimant’s claim as it was held that there were ‘faults on both sides’. Furthermore, it held that by engaging in the grievance procedure after the material events, the Claimant had affirmed his contract of employment (and therefore lost the right to claim constructive dismissal). The Claimant appealed against this decision.

Decision

The Employment Appeal Tribunal rejected the appeal on other grounds but held, unsurprisingly, that the fact the Claimant engaged in a grievance procedure with his employer didn’t actually mean that his contract had been affirmed. It was concluded by the EAT, in line with the previous case of Kaur v Leeds Teaching Hospitals NHS Trust, that a contract does not come to an end for all purposes and clauses just because an employee believes that the contract has generally come to an end. Some clauses survive termination, in this case the right to raise a grievance. Therefore, an employee can still seek to resolve differences or disputes without it meaning that they have lost their right to resign and claim constructive dismissal.

Comment

This is not a surprising outcome.  Whilst employees are required to resign promptly in response to an employer’s breach of contract to succeed in an unfair dismissal claim, clearly they should have the option to follow the grievance procedure to resolve the issue first.  A satisfactory outcome could avoid the need for them to resign.  If there is a delay in the grievance being dealt with, or the issue is not resolved satisfactorily, the employee still may be able to resign and claim constructive dismissal.  You should bear this in mind when dealing with employee grievances.

‘Stale’ training not enough to defend employer from discrimination claim

Is your training fit for purpose?

If not, then you maybe unable to rely on the ‘reasonable steps’ defence if an employee claims discrimination.

In Allay (UK) Ltd v Gehlen, the employer could not establish the ‘reasonable steps’ defence where one employee had discriminated against another as the equality and diversity training it had provided was outdated.

Facts

The Claimant, Gehlen, described himself as being ‘of Indian origin’. He complained to Allay (UK) Ltd that he had been subjected to harassment in relation to his race by another employee. Two managers had also witnessed the harassment but failed to report it to HR. It was found during an investigation that the racist comments had been made to Gehlen, and the offending employee was subsequently required to undertake additional equality and diversity training. Gehlen then brought a claim of harassment against Allay (UK) Ltd in the Employment Tribunal, in which Allay relied on the defence of ‘reasonable steps’ having been taken in order to prevent employees from committing discriminatory acts. The basis of this defence was that Allay had required all of its employees to previously take equality and diversity training.

Decision

The Employment Tribunal rejected Allay (UK) Ltd’s defence of ‘reasonable steps’. This was because the equality and diversity training it relied upon had taken place over two years prior to the harassment, and the Tribunal found that the training had now become ‘stale’. Allay had failed to provide ‘refresher’ training, and the Tribunal therefore found that Allay had not taken all reasonable steps in order to avoid the discrimination.

The Employment Appeal Tribunal dismissed Allay’s appeal. The EAT held that when considering how reasonable the steps an employer has taken are, consideration should be given to how effective training has been rather than just whether or not it has been carried out. The EAT concluded that it was clear the training had become ‘stale’ due to the perpetrator believing the remarks he made were only ‘banter’, that other employees who overheard the racist remarks had failed to report them, and that managers did not know what to do when they witnessed the harassment, thus showing the training had evidently faded from their memories. Furthermore, the fact that the employer had required the offending employee to undergo additional equality and diversity training showed that it itself considered additional training would be beneficial and effective. Therefore Allay (UK) Ltd could not rely on the defence of reasonable steps having been taken.

Comment

This case demonstrates the importance of ensuring that all employee training is kept up to date and refreshed periodically. This is particularly the case in areas such as equality and diversity, where societal standards are often changing. You should also bear in mind the effectiveness of any training provided to your employees as this will be crucial; providing training is not simply a ‘tick-box’ exercise.

If you require any further information on the above developments please do not hesitate to one of our employment law experts below.