Upcoming Employment Law Decisions with Repercussions for Employers

As we move through 2019, there are a number of employment law decisions in the pipeline which could significantly impact employers and their bottom line, with a cross over into the employment taxes and payroll arena.

We have summarised the key points below, and what HR, Payroll and Tax professionals need to be aware of when budgeting and planning for the coming year.

 

Is failure to enhance shared parental pay discriminatory towards men?

Ali v Capita Customer Management Ltd

The common consensus is that one of the main reasons why shared parental leave has not been more popular is that employers who enhance maternity pay are not legally obliged to enhance shared parental pay.

However, Ali explores whether or not it is sex discrimination for employers to enhance pay during maternity leave, but not during shared parental leave.

In this case, a male worker claimed that his employer discriminated against him because of his sex by denying him the opportunity to take shared parental leave on full pay. Mr Ali failed at the Employment Appeal Tribunal (EAT) stage.

Mr Ali has appealed to the Court of Appeal. A finding of sex discrimination could force employers to reconsider their policies if they provide shared parental pay at the statutory level, but offer increased contractual maternity pay.

The similar case Hextall v Chief Constable of Leicestershire Police is also being appealed to the Court of Appeal in 2019.

KEY DATE – The Court of Appeal is scheduled to hear Ali and Hextall on 1 May 2019.

 

National Minimum Wage (NMW) for sleep-in care workers

Royal Mencap Society v Tomlinson-Blake; Shannon v Rampersad and another t/a Clifton House Residential Home.

One of the most controversial employment law cases of 2018 saw the Court of Appeal hold that a “sleep-in” care worker in residential accommodation was not entitled to the national minimum wage while asleep.

The decision has a big impact in sectors where staff are allowed to sleep at work until called upon, such as the care sector. The Court of Appeal held that those who are allowed to sleep at their workplace – ready to be woken if needed – are not working while they are asleep. The sleeping time does not therefore count towards the calculation of their national minimum wage entitlement.

The Court of Appeal ruling also means that the Government has had to suspend its social care compliance scheme, which was set up to allow care-sector employers to volunteer back payments to sleep-in staff who were previously denied the national minimum wage.

Unison has lodged an appeal to the Supreme Court, where the union will argue that care workers who sleep on-site and can be called upon at any time should be paid at least the minimum wage.

Until that point, it is more uncertainty for both employees and employers whilst we await the decision of the Supreme Court.

 

Restrictive covenant prevents ex-employee from being “interested in” competitors

Tillman v Egon Zehnder Ltd

In 2019, we will find out from the Supreme Court whether or not a restrictive covenant that prevents an ex-employee from being “concerned or interested in” a competitor for six months is too wide to be enforceable.

A senior member of staff within executive recruitment and management consulting group Egon Zehnder wished to take up employment with a US firm. However, she appeared to be prevented from doing so as a result of a restrictive covenant that contained a six-month non-compete clause. The clause stipulated that she should not “directly or indirectly engage or be concerned or interested in any business carried out in competition”.

The Court of Appeal interpreted the phrase “concerned or interested in” as being too wide to be enforceable, since it could even prevent a person from holding shares in a company. The clause was set aside in its entirety, meaning that the ex-employee was free to work for the US firm.

If the Supreme Court agrees with the Court of Appeal, employers may be scrambling to review their restrictive covenants to ensure that they are not drafted too widely. With significant changes already hitting the termination payment arena with PENPs, this is something else employers need to add to their checklist when considering settlement agreements.

KEY DATE – The Supreme Court is scheduled to hear Tillman on 21 and 22 January 2019.

 

Employment status in gig economy

Aslam and others v Uber BV and others

In 2018, we couldn’t get away from high-profile cases revolving around the employment status of gig economy “workers”. This includes the flagship case against Uber, which the Court of Appeal decided in December 2018.

The cases are important because a finding that gig economy staff are “workers” means that they are entitled to basic employment rights, such as the national minimum wage and paid annual leave.

This trend for cases on employment status will continue into 2019, when we can expect to see:

• a possible appeal to the Supreme Court against the Court of Appeal’s decision that Uber drivers are “workers” and not self-employed;
• further developments in the Independent Workers’ Union of Great Britain’s (IWGB’s) challenge against the Central Arbitration Committee (CAC) decision that, for collective bargaining purposes, Deliveroo couriers are self-employed; and
• potential appeals from Addison Lee to the Court of Appeal against the EAT decisions classifying its couriers and drivers as workers, and not self-employed.

For employers, the probable cost implications of these cases being found in favour of the “workers” alongside the private sector IR35 changes due to hit in April 2020 will be substantial and need to be budgeted for now.

 

If you have any questions on how any of these cases could impact your business, or need any support in helping plan for the potential outcomes, please do not hesitate to contact Charlotte Edwards (charlotte.edwards@aab.uk) or your usual AAB contact.

To find out more about Charlotte and the Payroll and Employment taxes team click here.