Employment Law Update - December 2022

Welcome to our latest employment law update bringing you up to speed with this month's key cases and developments.

In this month's bulletin, we discuss two notable Employment Appeal Tribunal decisions: a claimant who had been unfairly dismissed for whistleblowing was found to have acted unreasonably in failing to mitigate her loss, and it was held that an employee must expressly state that they wish to withdraw their appeal to avoid automatic reinstatement following a dismissal.We also discuss developments in relation to the proposed Retained EU Law (Revocation and Reform) Bill as well as new Regulations which render exclusivity terms in lower income worker contracts unenforceable.

• Brexit Freedoms Bill faces new opposition
• Exclusivity clauses in low-income worker contracts are now unenforceable
• Whistle-blower failed to reasonably mitigate loss
• EAT considers what constitutes withdrawal of an appeal

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Brexit Freedoms Bill faces new opposition

The proposed Retained EU Law (Revocation and Reform) Bill, which seeks to grant extended powers to ministers to amend, repeal or retain around 2,400 pieces of Retained EU Law (REUL) has faced fresh opposition, most recently with the Trades Union Congress (TUC) calling it “reckless” and accusing the government of setting off “a ticking time bomb under hard won workers' rights”. Much of the criticism for the Bill centres around its `sunset` clause, which will have the effect of automatically revoking any REUL after December 2023, unless the government chooses to keep or change them, with powers to extend the deadline until June 2026. At the Parliamentary committee stage on 8 November 2022, UNISON's head of legal services Shantha David argued that if key provisions are `sunsetted`, it would remove basic employment rights such as annual leave and maternity protections.In addition, an impact assessment conducted by the government has been labelled as “not fit for purpose” by the Regulatory Policy Committee (RPC), which found in its report that the government “has not sufficiently considered or sought to quantify the full impacts of the bill”. Both the Scottish Parliament and the Welsh Assembly have withheld their consent to the Bill in its current form and argue that they should be made exceptions to its provisions. The SNP has itself proposed 50 amendments to the Bill, with one of these being to extend the cut-off point from December 2023 to 2026. Labour has also called for amendments, focusing on the retention of key workers' rights such as parental and annual leave and maternity rights. Labour has also proposed a `sunrise` clause which would mean that EU law would by default remain unless specifically amended or revoked.The future of the Bill (and therefore of Retained EU Law) remains unclear.

Exclusivity clauses in low-income worker contracts are now unenforceable

The Exclusivity Terms for Zero Hours Workers (Unenforceability and Redress) Regulations which came into force on 5 December 2022, now prevent employers from enforcing exclusivity terms in contracts where the worker or employee's earnings do not exceed the lower earnings limit, (currently set at £123 a week). The Regulations were proposed following a government consultation launched in December 2020 and they seek to replicate the provisions of 2015 legislation which had made exclusivity terms in zero-hour contracts unenforceable.The cost-of-living crisis has also been a driving force behind the passing of these Regulations, as it is expected that many lower income workers will want to take up additional work in the form of second jobs to supplement their income. Under the previous law, those who had exclusivity terms in their contracts would have been prevented from doing so, unless they had their employer's consent.  It is anticipated that the new Regulations will impact around 1.5 million lower income workers.From 5 December 2022, a dismissal of an employee who earns less than the lower earnings limit, where the sole or principal reason is for breaching an exclusivity clause, will be automatically unfair and the employee will be entitled to bring a claim for unfair dismissal. Employers should also be aware that lower income workers or employees will now have protection from any detrimental treatment they receive if they breach exclusivity terms in their contract.Employers are advised to review any contracts that they have in place with qualifying low-income workers, to check if they will now need updating. The correct method to use when calculating an employee or worker's net average weekly wage is set out in the Regulations.

Whistle-blower failed to reasonably mitigate loss

The Employment Appeal Tribunal (EAT) has held that the tribunal had erred in law when it found that a claimant who had been unfairly dismissed on whistleblowing grounds did not act unreasonably in failing to mitigate her loss.Mrs Harrington (the Claimant) had been dismissed in October 2017 by Hilco Capital Ltd (the Employer) purportedly on grounds of redundancy. However, the Claimant was later successful in an Employment Tribunal claim for unfair dismissal when it was found that she had in fact been dismissed for making protected disclosures. At the remedy hearing, the Employment Tribunal had to consider whether she had properly mitigated her losses. It found that she had not acted unreasonably by not applying for any other jobs during the three-year period from when she was dismissed up until the date of the remedy hearing. This was based on the Claimant's assertion that she would have been rejected if she had she applied for other positions once prospective employers discovered that she was a whistle-blower.The Employer appealed this decision, arguing that the compensation awarded to the Claimant should be recalculated because the Employment Tribunal was wrong to find that she had properly mitigated her loss. It submitted that there was no substantive evidence to support her claims that she would have been rejected from all positions owing to the stigma that she would face as a whistle-blower. It contended that it would be wrong to hold that an employee would suffer stigmatisation from all prospective employers simply based on an unsubstantiated assertion or suspicion.On appeal, the EAT began by reaffirming the established principle that the burden is on the respondent to prove that a claimant has unreasonably failed to mitigate. However, it then stated that where the claimant has made no job applications at all, “the Employer is entitled to assert that by failing to do so, she has acted unreasonably...”. The EAT stressed that the fact that she had made no job applications was not “necessarily fatal” to her case, however, if she was relying on stigma as the reason for not applying, it was reasonable to expect that she “put forward some evidential basis in support of that case”.The Claimant attempted to argue that there were some matters which did not need specific evidence, and on which the Tribunal can “draw on its industrial experience and common sense”. The judge agreed that one of these was that “whistle blowers are sometimes stigmatised and struggle to find fresh employment”. However, it stressed this was nevertheless a generalised proposition and the tribunal could not make a finding of fact based on merely an assertion without evidence to support it. The EAT therefore found that the Employment Tribunal had been wrong to find that the claimant had not acted unreasonably in failing to mitigate her loss and accordingly remitted the case to the tribunal for a reassessment of compensation.This decision is a useful reminder for employers of their ability to challenge an employee's failure to mitigate losses and of the need for evidence to be presented in relation to mitigation arguments (from either side).

EAT considers what constitutes withdrawal of an appeal

The Employment Appeal Tribunal (EAT) has considered what constitutes effective withdrawal of an appeal to be reinstated following a dismissal.Ms Marangakis (Claimant) had worked for Iceland Foods (Employer) as a part time sales assistant. In January 2019, she was dismissed for gross misconduct, which she subsequently appealed via email in February 2019. In her email she stated, “it is my wish that I be reinstated back into the position that I held before this alleged incident took place”. An appeal hearing was scheduled, however, but in March of that year the Claimant sent a further email to the Employer stating that she no longer wished to return to work and that she was seeking compensation. At the appeal hearing in April, her appeal against dismissal was granted and she was informed that she was to be reinstated to her former position. However, the Claimant never returned to work, and she was dismissed once more in July 2019.The Claimant then brought a claim against the Employer in the Employment Tribunal, arguing that her original dismissal in January 2019 had been unfair. In its defence, the Employer submitted that because her appeal to be reinstated had been allowed, this meant that her original dismissal in January had effectively disappeared, and it was as if it had never happened. The issue in this case was that while the Claimant had been opposed to her reinstatement, she had never withdrawn her appeal and instead allowed the process to continue. The ET considered whether, in these circumstances, her original dismissal could still be seen to disappear on her reinstatement. It held that the original dismissal did indeed vanish, stating that “even where the claimant had made it clear that she did not wish to be reinstated, but did not formally withdraw her appeal, she took the risk that a successful appeal would mean in law that the dismissal in January 2019 was of no legal effect...”. On appeal to the EAT, the Claimant argued that her statement that she did not wish to return to work should be objectively construed to mean that she was withdrawing her appeal. The Employer, however, submitted that the Claimant needed to have expressly stated that she wanted to withdraw her appeal. The EAT agreed with the Employer's position, finding that “...when a contractual right of appeal is exercised, the agreement between the parties is that should the appeal succeed, the employee will be treated as never having been dismissed”. The Tribunal judge emphasised that this was “irrespective” of what the Claimant's subjective wishes may have been. In its concluding remarks, the EAT found that the Employment Tribunal had been correct to find that “on an objective analysis”, the Claimant's words did not indicate that she wished to withdraw her appeal, and thus the original dismissal could not be relied upon to bring a claim.This case is a useful reminder that when deciding if an employee has withdrawn from an appeal to be reinstated, it is necessary to look at their words on an objective construction. If an employee does wish to withdraw their appeal, they must make this explicit.