Employment Law Review – August 2021

Welcome to our employment law update bringing you up to speed with the key developments this summer.

We highlight the changes to the rules on close contact self-isolation and further developments on the mandatory COVID-19 vaccine front. We also bring you up to speed on what’s happening in the world of employment law away from COVID-19.

• COVID-19 developments

• Should furlough be considered as an alternative to redundancy?

• PHI: Employer cannot not rely on changes to an insurance policy to limit payments to employee

• Indirect sex discrimination: £185,000 in damages for refusing a flexible working request

• Gender Pay Gap: Reporting deadline approaching

• Adjusted right to work checks extended

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COVID-19 developments

• Mandatory COVID-19 vaccines - As care homes work towards implementing a mandatory COVID-19 vaccine requirement for those entering care homes, a judicial review challenge is shortly to be launched to challenge the lawfulness of the Regulations that implement the mandatory COVID-19 vaccine requirement. The Freeths Care team recently hosted a webinar to explore some of the key challenges in the care sector, together with some practical steps around encouraging COVID-19 vaccination and key actions care homes should be implementing. You can watch the on demand webinar here.

• Close contact self-isolation exemption - The rules on close contact self-isolation changed on 16 August 2021. Those who are under the age of 18 years 6 months, fully vaccinated (and beyond 14 days from their second vaccine dose), part of an approved COVID-19 vaccine trial or unable to take the vaccine for medical reasons will be exempt from the legal requirement to self-isolate if they are a close contact of a positive COVID-19 case. This applies both to close contacts within the same household and to individuals notified by NHS Test and Trace. You can see our Q&A for guidance on whether employers should check vaccination or exemption status and the considerations around COVID-19 testing.

You can keep up to date with all the latest Coronavirus developments on our Coronavirus Exchange, including our comprehensive FAQs for Employers and our series of bite sized videos providing guidance for organisations as more staff return to the workplace. 

Should furlough be considered as an alternative to redundancy?

Following the introduction of the Coronavirus Job Retention Scheme (CJRS) in March 2020 a key question for employers has been whether they need to consider furlough as an alternative to redundancy. We explore two contrasting Employment Tribunal (ET) decisions concerning redundancies during the operation of the CJRS. Mhindurwa v Lovingangels - Ms Mhindurwa was employed by Lovingangels as a live-in care assistant. When the client she cared for was admitted to hospital she was placed at risk of redundancy and her request to be furloughed was refused. Ms Mhindurwa was made redundant in July 2020. The ET concluded that Ms Mhindurwa was unfairly dismissed as Lovingangels failed to consider using the CJRS as an alternative to redundancy. The ET considered that a reasonable employer (in July 2020) would have considered furlough as an alternative to avoid redundancy. The employer could not explain why it had not considered furlough.Handley v Tatenhill Aviation - Mr Handley worked as a flying instructor for a small private airfield that provided private flying lessons and flight experiences. In April 2020 Mr Handley was furloughed under an agreement which stated that furlough would last ‘for a period of up to 3 weeks initially or until you can return to work as normal’. He was made redundant in August 2020 and brought a claim for unfair dismissal, also arguing that the furlough agreement prevented him from being made redundant. The ET decided that Tatenhill Aviation’s decision to dismiss Mr Handley, despite the existence of the CJRS, did not make the dismissal unfair. The ET accepted that Tatenhill Aviation needed to cut costs and that it wanted to use the CJRS grants to pay some of the redundancy costs relating to the notice period. The ET also recognised that although another employer may have chosen to leave Mr Handley on furlough for longer, Tatenhill Aviation did not act unfairly in declining to do so.Whilst these are first instance decisions and are not binding on other Tribunals, they provide some guidance to employers about how the issue of furlough will be viewed when it comes to considering alternatives to redundancy. They suggest that ETs will expect an employer to at least consider furlough as an alternative to redundancy, but that it would not necessarily be unfair to make an employee redundant while the CJRS is available, particularly as the CJRS hasn’t been cost neutral for employers. 

PHI: Employer cannot not rely on changes to an insurance policy to limit payments to employee

The Employment Appeal Tribunal has concluded that where contractual payments under a long term sickness policy are insurance linked, the employer remains contractually obligated to make those payments even if the insurance contract is changed and no longer covers the payments. Permanent Health Insurance (PHI) will entitle an employee to receive a fixed proportion of their wages in the event of long term sickness. When Mr Langton started work in 2003 he was offered a range of company benefits, which included PHI cover. Income protection payments were triggered after 13 weeks of sickness at 75% of his wages, and would be subject to an uplift of 5% each year after the first 52 weeks. This was backed by an insurance scheme. Mr Langton was diagnosed with a long term illness in 2009 and began receiving income protection payments. In 2015, when Mr Langton’s employment transferred to Amdocs Systems he realised that he had not been receiving the 5% increments. He brought an unlawful deductions from wages claim. The EAT held that Mr Langton was contractually entitled to the annual 5% uplift in income protection payments and as a result, there had been an ongoing deduction from wages. The EAT considered that any shortfall in the contractual income protection payments would need to be met by the employer. The argument that the obligation was limited to the payments which were covered by the insurance was unsuccessful. This decision is a reminder that if payments under a long term sickness policy are linked to an insurance policy, employers must clearly state this in the employment contract or benefit summary. Employers should also be clear that income protection payments are subject to any changes made to the insurance policy and will be limited to the amounts received from the insurer.  

Indirect sex discrimination: £185,000 in damages for refusing a flexible working request

An Employment Tribunal (ET) has awarded damages of almost £185,000 to a mother whose flexible working request was denied. The compensation included loss of earnings, pension contributions, injury to feelings and interest. Ms Thompson worked for an estate agent, Manors. She made a flexible working request on return from maternity leave; she requested a four day working week and also requested to leave the office at 5pm to collect her daughter from nursery (the usual office finish time being 6pm). Manors informed Ms Thompson that the business could not afford for her to work part time and so declined her request. Manors stated that there would be an inability to meet customer demand and an inability to reorganise work among existing staff as reasons. The ET found that the failure to consider Ms Thompson flexible working request properly was discriminatory on grounds of sex. Unlike unfair dismissal claims, discrimination awards are not subject to a cap. An ET has the power to award large amounts of compensation for discrimination, which can include compensation for loss of earnings, career losses, injury to feelings, personal injury and aggravated damages. This decision is an important reminder that organisations should consider requests for flexible working seriously. Failure to do so, especially following the shift in working patterns due to the pandemic, may risk good employees leaving the organisation, together with potential for discrimination claims and significant damages. 

Gender Pay Gap Reports: Deadline approaching

Qualifying employers are required to publish Gender Pay Gap (GPG) reports for the reporting year 2020/21. In February 2021, the Equality and Human Rights Commission (EHRC) confirmed that it would delay enforcement action until 5 October 2021. For qualifying employers who have not yet reported their GPG data, this is now a priority. The EHRC has also confirmed that furloughed employees who were receiving reduced pay on the snapshot date of 5 April 2020 should be omitted from GPG reporting. However, employers who ‘topped up’ pay to the normal rate, should still include the pay of their furloughed employees. This is likely to means that for many qualifying employers, a large proportion of their workforce will be excluded from 2020/21 GPG report. This could mean that GPG reports may be misleading, so organisations may wish to include a narrative along with their reports to address any exceptional circumstances. 

Right to work

The Home Office has announced that the temporary adjustments to Right to Work checks made to cater for Covid-19 remote working arrangements, will be extended again until 5 April 2022 (inclusive). The guidance confirms that it is not necessary to carry out retrospective checks on those who had a COVID-19 adjusted right to work check between 30 March 2020 and 5 April 2022 (inclusive). Further guidance from the Home Office is expected ahead of 5 April 2022. For more information on how these changes will impact your business, please contact our Business Immigration team.