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Employment Law Newsletter - January 2017


In this issue ...

  Best of both worlds?   You're kidding!  
  Three on disability   Action on industrial action  
  On the road for another gig   Taxing termination pay  
  Ancient history still works   Gender Pay Gap Reporting  
  The apprenticeship levy – a reminder  

Best of both worlds?

Welcome to 2017. Having derived great reassurance from watching President Trump's inauguration and Teresa May's Lancaster House Brexit address, here's a little distraction while we await the Supreme Court's imminent ruling on the Article 50 process.

Beyond immigration, the other big motivator for Leave voters was some ill-defined notion of 'sovereignty' – 'getting back' independence for our legislators and our judges. But it seems that national judicial independence and membership of the EU need not be mutually exclusive anyway. The European Court of Justice (ECJ) recently ruled that a Danish law was incompatible with the age discrimination aspects of the EU's Equal Treatment Directive. When the case came back to the Danish Supreme Court (DSC), how did it respond? Having concluded that it could not interpret the words of the national legislation to conform to the Directive's requirements, it declined to take the next logical step of complying with the ECJ's view by declaring the legislation invalid. Not sure what the Danish for 'get stuffed' is, but this seems to be their judicial equivalent.

Now, there are constitutional and accession differences between Denmark and the UK which help to explain this stance. But, in a post-truth world, perhaps we could ignore those and publicise this case in a late bid for a second referendum? Anyway - Happy New Year!


Three on disability

Late 2016 saw a flurry of appellate decisions on disability discrimination.

InHerry v Dudley MBC, the Employment Appeal Tribunal (EAT) confirmed that, without more, 'stress at work' (here characterised as unhappiness with a decision or colleague, a tendency to nurse grievances or a refusal to compromise) is not a 'mental impairment' within the disability discrimination provisions of the Equality Act (EqA). It must have assumed the quality of a clinically-recognised mental illness.

Conversely, Type 2 Diabetes is capable of coming within the EqA, at least as a progressive condition which would be likely substantially to impair the sufferer's future day-to-day activities. This was the view of the EAT in Taylor v Ladbrokes, in which it also suggested that, in reaching a decision on such likelihood, a tribunal was probably not entitled to factor in assumptions about the individual's future approach to recommended diet and lifestyle.

City of York Council v Grossett is authority from the EAT for the proposition that an employer's perhaps quite reasonable but ultimately wrong conclusion about the link between disability and a situation/behaviour (in this case, gross misconduct) which attracts a certain response (in this case, dismissal) could not prevent a finding of discrimination arising from disability. So, if in any doubt about the relevance of an employee's disability to the matter under consideration, get a medical opinion before you act.


On the road for another gig

The gig economy (see our November/December 2016 issue) continues to attract attention. In Dewhurst v City Sprint, an employment tribunal has found a cycle courier was not 'in business on her own account' but a 'worker' – providing services personally – and so able to claim for paid holidays under the Working Time Regulations.

Terms in a 'tender' document purported to demonstrate or confirm that she was self-employed. But the reality of the relationship – she was expected to work when she said she would, had to log in and out of the Company's tracker system, was directed en route by a controller, was told to wear a uniform and smile and, despite the nominal requirement to submit invoices, was in fact paid in arrears following deductions by the Company according to its own records and calculations – indicated otherwise. The tribunal applied the Supreme Court's reasoning from Autoclenz v Belcher (see the October 2011 issue if your personal archives extend to that far) to find she was integrated into the business as one of its 'workers'.


Ancient history still works

The November/December 2016 issue covered a case about reliance on a final warning later treated as having been excessive.

Given the potential difficulty in that situation, what about lapsed warnings? Can they ever be taken into account in determining a disciplinary case? According to the EAT in Stratford v Auto Trail VR, yes - when an employer, having already found an employee guilty of something amounting to gross misconduct, is deciding whether to apply the typical sanction of dismissal or to exercise leniency. At that point, overall history and the consequent likelihood of the employee's mending his/her ways if retained becomes (or should become) relevant to the employer.


You're kidding!

A recently launched consultation on the employment tribunal system has mooted some changes that, if implemented, should put it firmly into the twentieth century. They include:

Digitising the claims process (with special provision for those without access to the necessary technology);
Delegating from judges to caseworkers routine tasks and procedural issues which do not determine the outcome of a claim; and
Tailoring the lay composition of tribunal panels to the needs of cases.

Well, well...


Action on industrial action

The Trade Union Act 2016 (see the brief note in our May 2016 issue and the 'Change alert' entries at pages 162-164 of the current edition of 'Employment law for line managers') is not yet in force. However, probably prompted by the recent flurry of strikes, the Government has published sets of Regulations (with accompanying guidance) defining 'essential services', where action will only be lawful if, in addition to satisfying the new universal requirement for 50% of eligible voters to have voted, at least 40% of the eligible voters have approved it. Those Regulations (the transport set of which would cover the recent Southern Rail action) are intended to take effect from 1st March. So the whole Act is likely to become operative from then.

Meanwhile, new Codes of Practice incorporating guidance on the Act's provisions about balloting/notice and picketing have been published. No commencement dates are specified, but, if we are right about the Act's starting date, 1st March seems a good bet here as well.


Taxing termination pay

As predicted in the November/December 2016 issue, the recently published Finance Bill has provided a more complete picture of changes that will be operative in just over a year (from April 2018). Even payments in lieu of notice that are not made pursuant to a contractual 'PILON' clause will be treated as earnings (and, so, subject to tax and NICs). Any part of a termination payment exceeding the current £30,000 tax-free threshold will become liable to employer's NICs. And the Treasury will be given delegated power to vary the threshold's amount. Meanwhile, payments made in respect of 'injury to feelings' (notably in cases of alleged discrimination) will not be able to benefit from the tax exemption for personal injury awards unless the hurt feelings have caused psychiatric illness.

When they take effect, these amendments will entail adjustments in parties' bargaining positions and budgeting on the negotiation of settlement agreements.


Gender Pay Gap Reporting

The final version of the Regulations, under which first reports will be due in April 2018, has been published. The principal changes from its draft predecessor (which we summarised both in the February 2016 issue and at page 35 of the current edition of 'Employment law for line managers') are to:

change the 'snapshot date' on pay levels from 30th April to 5th April (2017 and annually thereafter);
tighten definition of bonuses et cetera; and
ensure that the reduced earnings of those on sick, maternity or other family leave do not lower calculated average pay

The apprenticeship levy – a reminder

The Apprenticeship Levy comes into effect on 6th April 2017 and applies to all UK employers.

Employers will be required to pay an amount that equates to 0.5% of the payroll that is subject to Class 1 National Insurance contributions. The levy will only be payable if that pay bill exceeds £3m per annum. It replaces all current public funding for apprenticeships.

The levy has to be declared monthly via the payroll. Therefore, the first time employers in scope of the levy will have to declare their liability to HMRC will be in May 2017 (for the levy due in April).

All participating employers will receive an allowance of £15,000. 'Connected companies' only receive one allowance but they can share it between the different companies within the group.

A new Digital Apprenticeship Service (DAS) will be introduced, but it is still being developed by the Skills Funding Agency. Companies can gain access to the levy through their DAS account shortly after their declaration to HMRC. The funds in the account can be spent on apprenticeship training from the start of May 2017. They can only be used for apprenticeship training and assessment, not for wages, wider training requirements or recruitment etc.

The government will top-up the levy payments by 10%. For example if a company pays a levy of £10,000 per month then it would receive £11,000 in the DAS account.

Although the levy is UK-wide the funds in the employer's DAS account will only be available to spend on apprenticeship training in England. Other UK countries have their own arrangements for supporting employers with apprenticeships. HMRC will use the portion of the payroll that is received by employees whose home address is in England to calculate the amount that is made available in the DAS.

All funds in the DAS will expire after 24 months. Whenever a payment is taken from the DAS, the service automatically uses the funds that entered your account first.


Just a quick reminder that Collinson Grant does a lot more than advise clients in all sorts of organisations about the complexities, constraints and opportunities presented by employment law. Our consultants also provide support regularly on: employee relations, reward, restructuring, recruitment, leadership and HR strategy. And we have well-honed skills in operations: managing and reducing costs, organisational design, process improvement, procurement and managerial controls. Do ask if you would like to know more.


If you would like to discuss this or any other issue facing your organisation please speak to your usual contact at Collinson Grant or Peter Howarth on 0161 703 5600

Although care has been taken in the preparation of this Newsletter, Collinson Grant cannot accept responsibility for errors, omissions or advice given. Readers should note that only Acts of Parliament and Statutory Instruments have the force of law and only the courts can authoritatively interpret the law.