UK & Europe
This is our selection of the recent developments which we think will have the most significant impact on HR practice. This month the key development has been the future plans for the Coronavirus COVID-19 Job Retention Scheme. Our update also features cases which raise a number of practical points concerning constructive dismissal, breach of confidentiality clauses in settlement agreements, change of terms by reason of a TUPE transfer, and employment status.
1. COVID-19: the future of the Coronavirus Job Retention Scheme
The UK government's Coronavirus Job Retention Scheme is designed to support employers to pay the salaries of those employees who take a temporary leave of absence because of the difficulties their employer is facing due to Covid-19. The Scheme is due to come to an end on 31 October 2020, and will continue in a more flexible form from 1 July, with employers being asked to contribute towards its cost from 1 August.
On 29 May 2020, the Chancellor announced that the Scheme will continue in its present form only until 30 June 2020 (one month earlier than anticipated). After that date, the Scheme will continue in a more flexible form until 31 October 2020, with employers gradually being asked to contribute to its cost from 1 August. The new flexible scheme from 1 July can only be used to furlough employees who have been previously furloughed for a full three weeks under the current Scheme which ends on 30 June.
Read our Clyde Guide to the Coronavirus Job Retention Scheme for a more detailed overview of the Scheme, an explanation of what we know so far about the revised Scheme that will be in place from 1 July and answers to some of your key questions.
There is guidance for employers on the current Scheme (Check if you can claim for your employees' wages through the Coronavirus Job Retention Scheme) and guidance for employees (Check if your employer can use the Coronavirus Job Retention Scheme).
HMRC has issued a step-by-step guide for employers to assist them when they make a claim under the current scheme. This sets out the information that employers are required to provide and what employers need to do to make a claim.
An additional guide, Work out 80% of your employees' wages to claim through the Coronavirus Job Retention Scheme, assists employers in calculating how much they can claim and includes various examples on how to calculate claims.
Further guidance on the revised Scheme is expected to be published on 12 June 2020. We will update our Guide following this.
2. Constructive dismissal: if the "last straw" is innocuous, can the employee still succeed in a constructive unfair dismissal claim?
Yes says the Employment Appeal Tribunal (EAT) - even if the "last straw" is innocuous, the employee may be able to rely on an earlier fundamental breach by the employer to succeed in a constructive dismissal claim.
A schoolteacher, Mr Williams, resigned after a series of events during which he had been suspended for an alleged child protection matter. He also had disciplinary proceedings brought against him for alleged breach of the school's data protection policy. Mr Williams had a number of complaints about the process and resigned after several months, saying that the last straw was learning that a colleague, who was under investigation for a connected data protection breach, had been prohibited from contacting him.
Mr Williams failed in his claim of constructive unfair dismissal at the employment tribunal. The employment tribunal found that the school's instruction to the colleague not to contact Mr Williams was reasonable in the circumstances and entirely innocuous. They decided that meant that despite previous conduct by the employer that amounted to a fundamental breach of contract which had not been affirmed, the Claimant had not resigned in response to a fundamental breach of contract.
The EAT decided that was the wrong approach. The judge said that as long as there has been conduct which amounts to a fundamental breach of contract, and the employee does resign at least partly in response to it, constructive dismissal is made out. That is the case even if other, more recent, conduct has also contributed to the decision to resign.
Employers should be aware that even reasonable and seemingly innocuous acts on their part have the potential to revive an earlier fundamental breach of contract. If the earlier fundamental breach contributes to the employee's decision to resign, a constructive dismissal claim may succeed even though the last straw identified by the employee does not in itself contribute to a breach of the implied term of trust and confidence.
3. Settlement agreements: breach of confidentiality clause
The High Court has ruled that breaching a generic confidentiality clause in a COT3 did not bring an end to the agreement.
Mr Steels brought a claim against Duchy that was subsequently settled. Under the COT3, Duchy agreed to pay him £15,500 in 47 weekly instalments of £330 in full and final settlement of his tribunal claims. There was a confidentiality clause that required Mr Steels not to disclose the fact and terms of the agreement, as well as a warranty that he had not already done so. Within a couple of months, after discovering he had disclosed the fact and amount of the settlement payment to a former colleague, Duchy stopped making the weekly payments. Mr Steels brought a claim to recover the unpaid sums.
The County Court ruled that the confidentiality clause was not a condition of the contract - a provision that is central to the agreement that would give the other party the right to end the contract if breached. So Duchy was obliged to continue making the payments. On appeal, the High Court agreed the clause was not a condition - it was a generic clause that was included in employment settlement agreements "almost as a matter of course". But the Court said that there were circumstances in which a confidentiality clause may amount to a condition.
This decision serves as a warning that the breach of a confidentiality clause may not justify the non-payment of settlement payments if the clause is not a condition, i.e. central to the agreement.
Employers should consider adopting the following solutions, suggested by the Court, to seek to make a confidentiality clause enforceable – expressly state in the agreement:
4. Employment status: European Court clarifies who is a "worker" under EU law in gig economy ruling
The European Court of Justice has said that it is up to national courts to decide employment status but suggested that a Yodel courier driver appeared to them to be genuinely self-employed.
There have been a number of cases in the UK brought by those working in the gig economy claiming that they have been incorrectly labelled as self-employed and are really workers entitled to greater employment rights. This case concerns a Yodel courier driver who claims that although his contract says he is self-employed, he is really a "worker" under the Working Time Regulations. This would entitle him to paid holiday, amongst other protections.
The courier used his own vehicle and mobile phone, but had to use Yodel's handheld delivery device. He was allowed to use a substitute, although Yodel could veto the choice of substitute if they did not have sufficient skill or qualifications. The courier was personally liable for any acts or omissions of the substitute. Yodel was under no obligation to provide work and the courier could choose to reject jobs. He could decide the exact time, order and route for deliveries (within parameters set by Yodel). He could also work for other delivery companies, including potentially Yodel's competitors.
The case was referred to the European Court by an employment tribunal with questions on the EU Working Time Directive from which the UK Working Time Regulations derive. The European Court said it is for the national courts to decide employment status, but the essential feature of an employment relationship is that a person performs services for and under the direction of another in return for remuneration. In contrast, where the individual may choose the type of work to be done, when and how to perform that work, and has the freedom to recruit their own staff, those features are typically associated with a self-employed person.
The court noted that the courier appeared to have a "great deal of latitude", his independence did not appear to be fictitious, and that there did not appear to be a relationship of subordination between the courier and Yodel. This suggested that he would not be a worker under EU law. Although it would be for the employment tribunal to make the final decision about this.
This decision will be welcomed by employers in the gig economy. We expect to continue to see that where a worker has a clear and genuine right to use a substitute to do the work for them and has a substantial degree of latitude in the relationship, then they are unlikely to succeed in showing that they are a "worker". The Supreme Court (the UK's highest court) is due to hear the Uber case later this year and is likely to provide further guidance on this issue.
5. TUPE: Contractual variation by reason of a transfer
The Employment Appeal Tribunal (EAT) has ruled that if the sole or principal reason for a change to an employment contract is a TUPE transfer then that change is void - even where it is beneficial to employees.
Before the transfer of an estate management contract from Lancer to Astrea (the new service provider), the claimants (directors of Lancer) varied their contracts to give themselves generous guaranteed bonuses and termination payments. Astrea discovered this shortly before the transfer and dismissed some of the them for gross misconduct and refused to allow the others to transfer. The claimants brought claims for unfair dismissal and contractual termination payments on the basis of their new contracts.
The EAT found that the effect of the changes was to significantly improve the claimants' rights when the transfer took place, rather than to safeguard their rights as employees. It said that all contract variations agreed by reason of the TUPE transfer were void.
Changes that are made to employment terms by reason of a TUPE transfer are likely to be void, whether they are detrimental or beneficial to employees.
Transferee employers should consider including a provision in the agreement that makes it clear that the transferor is not permitted to make any changes to the transferring employees' terms and conditions before the transfer.