In this month’s update we have highlighted recent changes to employment-related statutory payments and rates, as well significant recent cases on constructive dismissal in connection with sickness absence, the extent of the public interest requirement on whistleblowing claims, unfair dismissal for exaggerated illness or injury, the meaning of day to day activities for disability discrimination purposes, and the scope of vicarious liability for employers.


As always, this time of year has brought with it changes that employers need to know about. Here are the key ones:

National Living Wage
The most significant change is the introduction of the National Living Wage (NLW) from 1 April 2016.  It entitles workers aged 25 and over to a minimum wage of £7.20 per hour. That’s 50p more than the existing National Minimum Wage (NMW), which will continue to apply to under-25s.  

Take note of these rates. Strict penalties apply where employers haven’t paid the amounts they should have. Expect a fine of 200% of the underpayment of the NLW or NMW (reduced if you pay up quickly), up to a maximum of £20,000 per worker. There’s also the possibility of director disqualification.

No Class 1 NICS for apprentices...
... under the age of 25, on a statutory apprenticeship and who are earning less than £827 per week (£43,000 a year). From 6 April, employer’s National Insurance contributions will not be payable in respect of these apprentices. It’s part of the Government’s push to create more opportunities for people to access high quality apprenticeships, and to support youth employment. 

Rates rise
From 6 April: 

-    the cap on a week’s pay, used to calculate unfair dismissal basic awards and statutory redundancy payments, rises from £475 to £479
-    the unfair dismissal maximum award also goes up to £78,962 (previously £78,335).

But there’s no change to maternity, paternity, adoption, shared parental leave, and sick pay limits. 

Penalties for non-payment
If you don’t pay up following a tribunal award against you, you could find yourself having to pay the government another 50% of the unpaid amount, up to a maximum of £5,000. The same applies to non-payment of settlement sums agreed via Acas. 

Dealing with employees who are on sick leave presents a host of potential pitfalls for employers. In this case, getting things wrong resulted in constructive dismissal. 

Ms Hodkinson was disabled; she had thyroid dysfunction and cardiac arrhythmia. She went on sick leave with what she said was depression and anxiety caused by bullying and intimidation by managers in the business. While she was off work, the employer wrote to her proposing a meeting. The letter also set out some areas of concern that the employer wanted to discuss with her, which were not serious or pressing issues.

Ms Hodkinson resigned, claiming that the employer had breached the implied term of trust and confidence and that she considered herself to have been unfairly constructively dismissed. She also claimed, alongside some other disability-related claims, that the correspondence amounted to harassment.

The Employment Appeal Tribunal (EAT) upheld the tribunal’s constructive dismissal finding. The employee was ill, and the letter did not need to be sent. But this didn’t amount to harassment. It hadn’t been established that the employer’s action in sending the letter related to her disability, or that it created an intimidating, hostile, degrading, humiliating or offensive environment for her. 

This shouldn’t stop you from communicating with employees who are on sick leave – in fact, it’s important to stay in touch. But make sure that you judge each communication carefully. If something can wait, hold off until the employee is better. 

Employees are protected from dismissal and from other detrimental treatment for having blown the whistle on certain types of malpractice. But for this to apply, there must have been a ‘protected disclosure’. And a key aspect of that is the whistleblower’s reasonable belief that disclosure was in the public interest.

What does and doesn’t count as being in the public interest is a hot topic at the moment. The Court of Appeal is looking at this in a few months in a case involving the estate agents, Chestertons. But in the meantime, the Employment Appeal Tribunal (EAT) in Morgan v Royal Mencap Society has considered whether or not an employee’s complaint about her cramped working conditions had enough of a public interest element to qualify as a protected disclosure. 

It’s possible, said the EAT, even if the complainant is the principal person affected. It reversed the earlier tribunal’s decision that had struck out Ms Morgan’s claim at a preliminary stage (based on legal arguments alone). It’s an arguable point, said the EAT, which should be decided after hearing evidence. 

What sort of evidence? Ms Morgan had argued that others could be affected by the same or similar cramped working conditions, so evidence about how other workstations were organised, how other employees might or might not be affected by cramped conditions, and what Ms Morgan’s belief was about such issues would be relevant to the public interest aspect of the case.

The Employment Appeal Tribunal (EAT) has made it clear that a worker who dishonestly claims to be unfit for work breaches the trust and confidence that an employee and employer must share. 

Mr Ajaj, a bus driver, said he slipped and fell at work, injuring himself to the extent that he was unable to do his job. Surveillance evidence showed that he was more mobile than he said he was. A gross misconduct dismissal followed. 

Unfair dismissal, held the tribunal. Even though Mr Ajaj had exaggerated his inability to walk, there was no evidence that he had exaggerated his inability to do his job. But the Employment Appeal Tribunal (EAT) overturned that decision. Whether or not someone is fit to do their job goes to capability, not conduct. Mr Ajaj had exaggerated the effects of his injury. That was culpable and misleading.  Dismissal for gross misconduct was the obvious sanction, and certainly a reasonable one.  So Metroline's decision to dismiss Mr Ajaj was fair.

The Employment Appeal Tribunal (EAT) has held that it is not discriminatory for an employer to stop providing childcare vouchers to a woman who was on maternity leave. 

In Peninsula Business Services v Donaldson, the EAT said that the vouchers counted as salary because they had replaced pay under a salary sacrifice scheme. As women on maternity leave are entitled to the benefits of their terms and conditions of employment – but, crucially, that doesn’t extend to remuneration – the employer was entitled to withhold the vouchers.

A person is disabled, in employment law terms, where they have a physical or mental impairment that has a substantial, long-term, adverse effect on their ability to perform normal day-to-day activities. But what counts as normal day-to-day activities?

Mr Banaszczyk worked in a distribution centre, where he lifted and moved cases weighing up to 25kg. After injuring his back in a car accident, he couldn’t meet the employer’s ‘pick rate’ targets. He was dismissed for capability and went on to claim unfair dismissal and disability discrimination.   

A dispute over whether or not Mr Banaszczyk was disabled centred on whether the heavy, manual handling work that he had become unable to do could be considered to be normal day-to-day activities. The Employment Appeal Tribunal (EAT) held that it could. Many people are employed to do that sort of work. As Mr Banaszczyk was slower than his colleagues in carrying out that normal day-to-day activity, his condition was held to have the requisite effect. He was disabled.

Two important Supreme Court cases have been decided on the issue of vicarious liability. The effect is that employers may now be liable for the acts of employees (and others) in more situations than before. 

In the Mohamud case, a claim was brought against Morrisons by a customer who had been assaulted by one of its employees on the forecourt of a Morrisons petrol station. The employer was held to be liable for the actions. There was a close enough connection between the employee’s actions and their employment. It was the employee’s job to attend to customers, and Morrisons was liable for his abuse of his position. 

Cox v Ministry of Justice put a different slant on liability again. A prisoner, working in the prison kitchen, injured a catering manager by dropping a heavy bag of rice on her. The Ministry of Justice was liable, even though there was no contract of employment between it and the inmate. It was significant that the prisoner was an integral part of the Ministry of Justice’s business. Also that he was placed by the prison service in a position where there was a risk that he might commit a variety of negligent acts. 
 
The key thing for employers to take from the widened scope of vicarious liability is to make sure that you take all reasonable steps to stop incidents happening. Policies and training are a useful indicator of your commitment to this.

A PLC is reported to have become the first UK company to be convicted for failing to prevent bribery. The penalty? The business was ordered to pay £2.25m.
 
It goes to show that the Bribery Act is alive and kicking. If you haven’t already got in place good policies and procedures designed to prevent breaches, it is important to address this. And make sure that such policies and procedures extend to all parts of your business, including those that are based outside the UK.

Walbrook Law is a specialist employment law firm based in the City of London, acting for employers and senior executives.

We advise employers across a range of sectors on all employment issues affecting their businesses. We are highly experienced in advising on restructuring, redundancy, performance management and disciplinary/termination issues. We are also experts in conducting employment tribunal litigation and dealing with complex areas of employment law such as restrictive covenants and employee competition, whistleblowing, FCA and other regulatory employment issues, and the Transfer of Undertakings Regulations (TUPE).

We also have a thriving practice acting for senior executives, including board directors of both private and publicly listed companies, partners/LLP members of professional services firms and senior employees working in all industry sectors, including banking, financial services, insurance and media. We have an established reputation in the City as leading advisers on the negotiation of senior executive service agreements and exit terms, partner/LLP member appointment/retirement terms and other contractual matters such as employee bonuses, commission arrangements and restrictive covenants.

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