Newsflash: ACAS publishes draft GPG guidance

What do we already know?

We have been keeping you up to date on the Government’s proposals to introduce new gender pay reporting requirements and how our Gender Pay Gap Audit service can help you with this. For an overview of the reporting requirements see our February 2016 Newsletter Government reforms (2): Gender pay – mend the gap!

We now know that private and voluntary sector employers will be required to publish their first GPG data based on their April 2017 payroll (for those employed on 5 April 2017), while public sector employers will be required to publish their GPG data based on their March 2017 payroll (for those employed on 31 March 2017).

What’s new?

The long awaited ACAS guidance on GPG reporting has been published in draft form.  The guidance:

  • Helpfully explains the basic differences between the Gender Pay Gap and equal pay as concepts, and also lists the main causes of the GPG.
  • Confirms that ‘workers’, as well as employees, need to be covered by the GPG data and specifically reminds employers that this may include self-employed contractors.
  • Provides a useful explanation about overseas employees.
  • Suggests that if an employee “does not self-identify as either gender” then they can be omitted from the GPG report.  Our view is that this suggestion is not in line with the legislation and is therefore incorrect and unsafe advice to give, as things stand.  The legislation appears to be clear that the GPG data must cover all employees and it does not provide such an opt-out. Indeed, the rest of ACAS’s own guidance makes it repeatedly clear that the GPG data must cover all employees (without exception).   
  • Provides some limited explanations of the calculations required, but not in a particularly clear, step-by-step way.
  • Provides a list of which senior official is required to approve and sign the statement of accuracy.
  • Provides some guidance on what the employer’s narrative might contain.
  • Provides some (non-mandatory) suggestions of positive action that employers can take to improve pay equality in their organisation, including management training, flexible working and more family-friendly policies.

We will continue to monitor all developments in this ACAS guidance and all other aspects of the GPG reporting duty and will keep you up-to-date.

If you have any questions, please do get in touch with us.  We’d be very happy to help.

Our Gender Pay Gap & Equal Pay Audit services

If you have 250+ employees, we’d love to tell you about our bespoke Gender Pay Gap Audit & Advice service. Just get in touch and we will be happy to explain how we can support you.

Case update (3): Disability discrimination – Type 2 diabetes

Summary:  Can type 2 diabetes be a disability?

Yes, says the EAT in Taylor v Ladbrokes Betting & Gaming Ltd available here.

Background:  Under the Equality Act 2010, a person has a disability if they have a physical or mental impairment and the impairment has a substantial and long-term adverse effect on their ability to carry out normal day-to-day activities. If measures are taken by the person to correct or improve the impairment, they will still be considered to have a disability if the impairment is considered to have a substantial adverse effect even without the measures.

Facts:   The employee, Mr Taylor, who suffers from type 2 diabetes, was dismissed by his employer, Ladbrokes Betting and Gaming Ltd, and brought claims of unfair dismissal and disability discrimination.  The employee claimed that he had been disabled for almost a year before his dismissal, due to type 2 diabetes.  At a preliminary hearing an employment judge found on the basis of two medical reports that his type 2 diabetes did not amount to a physical impairment and therefore the employee was not disabled.

The employee appealed to the EAT. The EAT held that the Tribunal had misconstrued the proper test.  The question the Tribunal should have asked was whether the condition was likely to result in an impairment. Type 2 diabetes, as a progressive condition, would amount to a disability even if it did not have a substantial adverse effect at that time, as long as it was likely that it would result in such a condition.

As the medical evidence was not clear as to whether the employee’s diabetes was  progressive, the EAT remitted the case back to the Tribunal to reconsider the medical evidence in light of the condition’s progressive nature and the extent of the possibility of the condition significantly worsening in the future.

Implications:  This case suggests type 2 diabetes can be a disability depending on the medical prognosis of the likely impact of the condition in individual circumstances.  Given the current extent of type 2 diabetes in the UK and that this is only set to worsen; this is a warning to employers to be mindful of disability discrimination law when dealing with any employee who suffers from type 2 diabetes and to get medical evidence before making decisions.

Case update (2): Redundancy – reliance on mobility clauses

longer commuteSummary: Can a contractual mobility clause enable an employer to avoid dismissing employees for redundancy?

Yes, but only if the terms of the mobility clause and the manner in which the employer operates the clause are reasonable. The EAT’s decision in Kellogg Brown & Root (UK) Ltd v Fitton, available here, is a useful illustration of this.

Background:  In circumstances where an employer faces a redundancy situation because it is closing a particular workplace, it may be able to avoid making employees redundant if it can rely on a contractual mobility clause and instruct the employee to relocate to another of the employer’s operations.  If an employer proposes to limit redundancies in this way it needs to ensure that it takes this approach from the start.  If the employer instead announces a redundancy exercise and offers the new location as suitable alternative employment, if that offer is refused the employer must then either find alternative employment or dismiss the employee for reasons of redundancy  i.e. employers cannot back-track at this point and seek to invoke a mobility clause.

Facts: The employer was closing down the workplace in which the employees, Mr Fitton and Mr Ewer, worked. They were both very long serving employees with mobility clauses in their contracts that stated: “…the company may require you to work at a different location including any new office location of the company either in the UK or overseas either on a temporary or permanent basis…”  In addition, the employer’s Disciplinary Procedure gave failure to carry out reasonable instructions as an example of misconduct.

The employer, in reliance on this clause, instructed both employees that they were to relocate to its second site. This would give rise to an additional 20 to 30 hours of commuting time each week for the employees.  Mr Fitton lived close to the closing workplace and did not have a car (although he was able to drive).  Mr Ewer also lived close to the workplace, had done so for his whole life and was only a year away from retirement and did not want to spend the last year at work subject to the stress of a considerably extended commute.

The employees were given two months’ notice of the relocation and the employer proposed various measures to assist the employees with the relocation.  These included a contribution towards additional travel costs for a six month period and a reduction in core working hours to allow employees with longer journeys to finish earlier, to assist with the M25 traffic.

Mr Fitton and Mr Ewer both refused to relocate.  They both argued that the mobility clause was unenforceable and that they were redundant. They were both summarily dismissed for misconduct for refusing to comply with a reasonable management instruction to relocate.

The employees brought Tribunal claims for unfair dismissal.  The Tribunal held that the dismissals were unfair and were by reason of redundancy. The employer appealed to the EAT which upheld the Tribunal’s decision that the dismissals were unfair.  However, the EAT held that in fact the employees had been unfairly dismissed by reason of misconduct.  This was because the employer had chosen to rely on the mobility clause and not pursued redundancy.  For such a misconduct dismissal to be fair: (i) the instruction to relocate had to be lawful (i.e. was the employer entitled to rely on the mobility clause?); (ii) the employer had to have acted reasonably in giving that instruction; and (iii) the employee had to have acted unreasonably in refusing to comply with the relocation instruction.

The EAT found that (i) the instruction to relocate was not lawful as the mobility clause was drafted too widely in that it suggested that the employee was agreeing to work anywhere in the UK or overseas (ii) the instruction to relocate was unreasonable in light of the considerably extended commute, the fact Mr Fitton did not have a car and that Mr Ewer had worked close to his home town for 25 years and was due to retire a year later and (iii) it was reasonable for both employees to refuse to comply with the relocation instruction.

Implications: This decision does not alter the law but usefully illustrates the confusion that can arise when an employer seeks to exercise a contractual mobility clause against the backdrop of a redundancy situation. Using a mobility clause may enable an employer to avoid dismissing employees for redundancy. However, the terms of the mobility clause and the manner in which the employer operates the clause may themselves be subject to scrutiny.  In particular the following points should be noted:

  • when embarking upon a redundancy exercise, consideration should be given to whether a mobility clause can be relied upon to avoid making employees redundant;
  • mobility clauses must not be too widely drafted as they risk being void for lack of certainty;
  • just because there is a mobility clause within the contract will not mean that it is automatically fair to dismiss an employee who refuses to comply with an instruction to relocate; and
  • if the mobility clause can be relied upon then an employer has to act reasonably when invoking that clause. For example, providing sufficiently long notice of the relocation and possibly providing some sort of transitional financial assistance.

Case update (1): Unfair dismissal – re-engagement

case updates - small person sitting on large briefcaseSummary:  In cases of re-engagement, whose belief in the breakdown of trust and confidence between employer and employee is the most critical; the Tribunal’s or the employer’s?

The employer’s, says the EAT in United Lincolnshire Hospitals NHS Foundation Trust v Farren available here.  The Tribunal should not substitute its view on a breakdown in trust and confidence for the employer’s view.

Facts:  A nurse, the employee, who worked in A&E was dismissed for failing to follow the correct procedure for administering drugs.

The nurse brought an unfair dismissal claim and requested re-instatement.  The Tribunal upheld her claim.  Although the Tribunal refused to order re-instatement, it did order her re-engagement in a role outside of A&E. However, the Tribunal reached this decision despite 1) the employer arguing that re-engagement was not practicable due to a breakdown in trust and confidence and 2) despite a finding that the nurse had contributed to her own dismissal by one third.

The employer appealed to the EAT on the point of re-engagement.  The EAT remitted the case and confirmed that the Tribunal must consider whether the employer genuinely believed that trust and confidence had broken down and was not irrational in doing so. As such, the Tribunal should test the view of the parties, not substitute its own view.

Implications: Orders for reinstatement and re-engagement remain rare.  However, this case is useful for employers in that it emphasises the importance for employers when faced with a request for re-engagement to focus on the appropriate test: i.e. whether the employer not only genuinely believed that trust and confidence had broken down, but also that this belief was not irrational. Employers also need to be ready for the Tribunal to test this view.

New guidance (3): Access to Work – Eligibility letter published

disability discrimination - person in wheelchairThe Government has published the Access to Work eligibility letter for employees and employers, available here. The letter is intended to assist employees who consider that they might be entitled to support under the scheme.

The Access to Work scheme provides support and reasonable adjustments for disabled workers in the workplace. Under the scheme disabled workers can be supported with a variety of measures, including special occupational and travel arrangements for work, support for mental health issues and the provision of a communicator to help at job interviews.  In addition, from 6 April 2016, some disabled workers may be entitled to receive payments for work-related costs of up to £41,000 a year.

New guidance (2): Revised Code of Practice on Industrial action

A draft revised Code of Practice on industrial action ballots and notice to employers has been published, available here. The revisions relate to new requirements that will be introduced by the Trade Union Act 2016. These concern ballot turnouts and support, information that must be included on ballot papers, information that must be given to employers, the notice that must be given regarding the start of industrial action and the time within that action must be taken. The new Code will come into force on a date to be advised once it has been approved by Parliament.

New guidance (1): ACAS Guidance on Social Exclusion

social exclusionACAS has published Guidance, available here, that seeks to raise awareness of the cost of social exclusion in the workplace.  According to the Guidance, social exclusion at work can have a negative impact on employees’ performance levels, confidence and wellbeing. The Guidance provides recommendations as to how employers can limit the negative consequences. For example, the Guidance suggests that employers have a structured conflict management strategy in place to tackle the issue.

The Guidance comes in light of CIPD research that suggests that almost two-thirds of employees consider bullying to have a social aspect, with over 91% believing that their employer is failing to sufficiently tackle the problem.

Government reforms (2): Apprenticeship levy

What do we already know?

We updated you in our October 2016 Newsflash Apprenticeship levy that HMRC had published the first set of draft regulations for the calculation, payment and recovery of the Apprenticeship Levy, for a period of technical consultation, available here.

What’s new?

HMRC has published, for further technical consultation, updated draft regulations for the apprenticeship levy.

The draft regulations, available here, have been updated to incorporate drafting comments received during the technical consultation (referred to above). They have also been extended to cover the assessment and recovery of underpaid levy by HMRC and record keeping by employers.

In particular, the regulations:

  • clarify that an employer need only report to HMRC where in the preceding tax year it had, or in the current tax year expects to have, a pay bill over £3 million. The reporting threshold has increased from £2.8 million in response to comments made during the original consultation. They also clarify how the reporting threshold works where the annual allowance has been allocated between group companies;
  • confirm that the annual levy allowance will operate on a monthly cumulative basis and provide that an employer with multiple PAYE schemes that does not use the full annual allowance will be able to offset the unused amount against another scheme after the end of the tax year; and
  • cover recovery of debts from managed service companies (so the provisions which currently apply to PAYE debt will also apply to levy debt).

The regulations also extend the scope of the levy to continental shelf workers certificate holders.

HMRC is seeking comments by 3 February 2017 on whether the draft regulations achieve the objectives set out in the consultation document and whether they have any unintended consequences.

Government reforms (1): Gender Pay Gap

The Government has launched a new website, available here, which allows the public to view the gender pay gap by profession.  The website suggests that the highest pay gaps are in the construction and finance industries.

There is also an online quiz which allows you to test your knowledge of the gender pay gap by profession – it’s available here if you’ve got time to spare…

Our Gender Pay Gap service

If you have 250+ employees, we’d love to tell you about our bespoke Gender Pay Gap Audit & Advice service.  Just get in touch and we will be happy to explain how we can support you.

January 2017 news

Happy New Year and welcome to our first Newsletter of 2017. We hope you are all surviving the cold and managing to still maintain just one or two of your New Year’s resolutions. If one of those resolutions is to keep more up to date with HR/employment law news then we can help with that and this month we have updates on the gender pay gap and the apprenticeship levy, plus guidance from ACAS on social exclusion, a revised code of practice on industrial action and a template eligibility letter from Access to Work.

In our first case update of the year we look at the rules for re-engagement in unfair dismissal cases, when mobility clauses can be relied on and whether type 2 diabetes can be a disability.

What Simon has been doing recently…

My month has been taken up largely with drafting and advising on settlement agreements, although not the same agreements obviously! The question we get asked a lot by clients is when is the best time to introduce a settlement agreement? My view is that the best approach is to progress sufficiently far down whatever process upon which you are engaged so that it is clear that dismissal could result. This is so that when the employee is considering what their options are with their solicitor you have put sufficient doubt in their minds about the risks to them of rejecting the offer and either demanding a lot more money or refusing to sign at all.

As an aside confidential/without prejudice discussions are dealt with in Anne-Marie’s splendid blog with Part 2 coming soon.

Simon Martin, Specialist Employment Lawyer at Menzies Law