This is our selection of the recent developments which we think will have the most significant impact on HR practice.
1. Holiday pay for part year workers
The Court of Appeal has ruled that holiday pay for a teacher who worked irregular hours on a permanent term-time, or so-called "part-year" contract, should be calculated using her average earnings over a 12-week period and not pro-rated according to the proportion of the year worked. The common practice of applying a cap of 12.07 percent of annualised hours, as suggested by ACAS, was incorrect.
Ms Brazel, a visiting music teacher to a school worked 10 to 15 hours a week during term time, on a permanent zero-hours contract. She was paid monthly according to the hours worked. She did not work during school holidays and was paid for her annual leave in April, August and December, calculated as 12.07 per cent of her earnings in the previous term (a method recommended by ACAS on the basis that the statutory annual leave entitlement of 5.6 weeks represents 12.07 per cent of a working year of 46.4 weeks ie 52 weeks minus 5.6 weeks).
Ms Brazel claimed this method of calculating holiday pay was incorrect. She claimed her holiday pay should be calculated by taking the average weekly remuneration for the 12 weeks prior to the date she takes the holiday and multiplying it by 5.6, as prescribed by the Working Time Regulations (WTR). Her claim was rejected by the employment tribunal which said that a part-year worker should have their holiday entitlement pro-rated to reflect the weeks they actually work; otherwise this would be unfair to full time workers.
The Court of Appeal ruled in favour of Ms Brazel because the WTR makes no provision for pro-rating. Instead, they require the exercise of identifying a week's pay in accordance with the rules set out in the Employment Rights Act, and multiplying that figure by 5.6 weeks. It was therefore wrong for term-time only workers to have their holiday pay capped at 12.07 per cent of annualised hours.
The judgement technically only applies to part-year workers employed on permanent contracts. However, if you employ any zero hours workers, and cap holiday pay at 12.07% of earnings, you should consider the implications of this judgement carefully. Conduct an audit of your workers' holiday pay arrangements, decide if there is any potential liability for arrears and consider whether to act now or await the outcome of any appeal.
2. Discrimination arising from disability – employer's knowledge of disability
The EAT decided that where an employer fails to make reasonable enquiries about an employee’s health issues, if the likelihood is that the employee would have continued to conceal their disability, then the employer could not reasonably be expected to know about the employee's disability.
Z, who had mental health impairments that amounted to a disability, worked as a part-time finance co-ordinator at A Ltd. She did not disclose any health issues to A Ltd during the recruitment process. After nearly 14 months' employment Z was dismissed because, with her poor attendance and timekeeping, she could not be depended on.
Z subsequently brought a disability discrimination claim on the basis of unfavourable treatment because of something 'arising from' her disability. This form of discrimination occurs where X treats Y unfavourably because of something arising in consequence of Y's disability, and X cannot show that the treatment is a proportionate means of achieving a legitimate aim. However, this does not apply if X shows that it did not know, and could not reasonably have been expected to know, that Y had the disability.
The Tribunal upheld Z's claim and A Ltd appealed.
While the EAT agreed with the Tribunal that A Ltd should have made further enquiries into Z's mental health, it also said that the Tribunal should have taken its finding into account in its decision. Its finding was that even if A Ltd had made those further enquiries, Z would have continued to withhold information about her mental health and would not have agreed to an occupational health referral or other medical examination that might have revealed her psychiatric history. So the EAT concluded that A Ltd could not reasonably be expected to know that Z was disabled.
The circumstances of this case were unusual, with the employee determined to conceal information about her mental health - and therefore her disability.
If there are indications that an employee has mental or physical health issues, employers should take reasonable steps to establish whether these issues may amount to a disability. What amounts to 'reasonable steps' will depend on the circumstances, and involves a balance between the obligation to make enquiries, the likelihood that the employee will provide the information and the dignity and privacy of the employee.
3. Extension of redundancy protection after return to work from maternity leave
Before making a woman on maternity leave redundant, her employer must offer her a suitable alternative vacancy where one is available either with the employer or an associated employer. People taking adoption and shared parental leave are protected in a similar way. The government has been consulting on whether to expand this protection.
The government has now said that it will change the law "when Parliamentary time allows" so that redundancy protection applies from the point when a woman notifies her employer of her pregnancy, whether verbally or in writing, to six months after the end of the maternity leave (notwithstanding any additional leave she may add on to the end of the maternity leave). For those on adoption leave, the period will be extended to six months after the end of adoption leave.
The government will consult further over the coming months on how to provide a period of extended redundancy protection for those returning from shared parental leave (SPL). Given that some people may take SPL for only a few weeks, the government considers that it would be disproportionate for people in those circumstances to benefit from redundancy protection for six months after returning to work.
The government will also establish a taskforce of employer and family representative groups to make recommendations on what improvements can be made to the information available to employers and families on pregnancy and maternity discrimination. It will also develop an action plan on what steps can be taken to facilitate pregnant women and new mothers staying in work.
What should HR do next?
- Look out for new legislation and, in particular, any further announcements regarding how SPL will be impacted
- Review and change policies to comply with any new law
4. Sick pay reform - Health is everyone's business proposals to reduce ill health-related job loss
All non-disabled employees could soon have a new right to request workplace modifications to assist in their return from sick leave. This new government consultation seeks views on this new right and other measures to reduce ill health-related job loss, giving emphasis on greater employer responsibility and involvement. The three key reforms on which the consultation seeks views are:
- A new right to request workplace modifications on return from sick leave - It is proposed that the right will operate in a similar way to the current right to request flexible working, subject to the key difference that work (place) modifications may be more likely to be short-term, unanticipated or urgent. Employers would therefore be entitled to refuse a request on legitimate business grounds and there would be a timetable for the decision making process (all set out in a new Code of Practice). The right would be separate from the right to request flexible working, as well as separate from the duty to make reasonable adjustments under the Equality Act 2010 for disabled employees.
- A major reform to the Statutory Sick Pay (SSP) scheme - Concerns that the current SSP scheme is outdated and fails to provide adequate benefits to part time employees, the government is seeking views on the following reforms:
- Pro-rata SSP to facilitate a phased return to work
- SSP for workers earning less than the lower earnings limit (currently £118 per week)
- Simpler and fairer rules on qualifying days and waiting days, particularly for those working irregular shifts
- Tougher enforcement measures
- Greater notice from employers to warn employees that their SSP is due to end
- A system of rebates to help smaller employers
- Improvements in and greater access to Occupational Health Services (OHS) - including targeted subsidies or vouchers to support SMEs and the self-employed to access OHS
What should HR do next?
- Consider responding to the consultation which ends on 7 October 2019
- Look out for the government’s response to the consultation later in 2019
- Review sick leave and return to work policies depending on the government's response
5. Revised immigration plans for no-deal Brexit
The government has clarified revised immigration arrangements applicable in the event of a No Deal Brexit for EU national and eligible non EU national family members (“Eligible Applicants”). Assuming the UK leaves the EU without a deal on 31 October 2019:
- Eligible applicants lawfully in the UK as of 31st October 2019 will be required to apply under the EU Settlement Scheme by the deadline of 31 December 2020
- Eligible applicants entering the UK between 1 November 2019 and 31 December 2020 should apply for a 36-month non extendable temporary immigration status, known as European Temporary Leave to Remain (ETLR) by the deadline 31 December 2020. Time spent in the UK with ETLR status will not count towards settlement. Applications for ETLR will be simple and free and will be made after arrival in the UK
- Those who enter the UK post 1 January 2021 will be subject to new UK Immigration framework which is as yet undocumented