Level 7 Employment Law
The below is a module submission for the CIPD Level 7 certification, kindly shared by one of our clients to help you on your own HR journey. This submission is about level 7 employment law.
1.0 Potential Legal Risks in Pursuing Redundancies
There are a number of potential legal risks in pursuing redundancies associated with the four individual employees who have raised concerns about their likely dismissals. Taking each one in turn, I have outlined these in detail below.
Lydia Skinner
Lydia has cited length of service for her belief that she has been unfairly selected for redundancy. As Lydia has over two years of continuous service (five years) she could make a claim of unfair dismissal under section 94 of the Employment Rights Act (1996). If Lydia goes to Tribunal, ABC Ltd will have to show that they acted reasonably when dismissing for redundancy. As set out in Polkey v A E Dayton Services Ltd (1988), employers must ensure their procedure for dismissing employees is fair (this became known as the Polkey Principe). The ACAS Code of Practice on Disciplinary and Grievance Procedures is taken into account by tribunals when determining whether an employer has acted reasonably when dismissing on grounds of conduct and capability. The employer must also show that the decision to dismiss fell within the range of reasonable responses open to an employer.
If a Tribunal finds in favour of Lydia it could order that she gets her job back with no losses, or request that she is employed in another job with ABC Ltd – although these are rarely ordered by tribunals. It could also order that Lydia receives compensation. However, even if ABC Ltd convinces a Tribunal that they dismissed Lydia on the grounds of redundancy, they must also show that the decision to dismiss fell within the range of reasonable responses open to them as an employer.
Lydia may have an additional claim of unfair dismissal under the Equality Act (2010) due to the fact she was unable to attend meetings abroad due as she has a young five-year old son. This could be grounds for her to make a claim of indirect sex discrimination, which occurs where an employer applies a provision, criterion, or practice (PCP), which puts women at a disadvantage compared to men. A classic example of indirect sex discrimination is a requirement for a female employee to work specific hours, which that employee cannot accommodate due to childcare responsibilities. This is known as ‘childcare disparity following London Underground v Edwards (No 2) (1999) which led to the courts recognising that childcare commitments can limit working mothers in terms of work patterns, compared to men.
Whilst a mother with childcare commitments is not a protected characteristic, in the case of Dobson V North Cumbria Integrated Care NHS Foundation Trust (2021), the Employment Appeal Tribunal recognised that working mothers must not be indirectly discriminated against by an employer who fails to consider their childcare obligations.
Whilst men may be taking on more childcare responsibilities than they have in the past, the position is still far from equal. However, following the Coronavirus pandemic, the UK Government announced in June 2021 that it will consult on whether flexible working should become the default position for all roles, unless there is a good reason not to. If flexible working does become the norm, it may allow for childcare to be split equally amongst parents, male and female. This could weaken the legitimacy of the childcare disparity argument.
Sarah Briggs
Sarah is also challenging whether her selection for redundancy is fair and as she is currently on maternity leave ABC Ltd must take extra precautions to prove this. Under section 99 of the Employment Rights Act (1996) a woman who is dismissed by reason of her pregnancy, childbirth or maternity leave or other pregnancy related reason is treated as having been unfairly dismissed.
Whilst ABC Ltd has a legitimate reason to consider Sarah for redundancy due to the diminishing need for a senior role to manage the smaller Creative team, as a woman on maternity leave, she has special rights in a redundancy situation and is entitled to be offered all suitable alternative vacancies in preference to other staff at risk of redundancy.
ACAS advise employers to:
- Check the redundancy is genuine and necessary.
- Ensure they consult and keep in touch with the employee.
- Use redundancy selection criteria that do not discriminate.
- Consider alternative work.
Failure in any of these areas could be maternity discrimination, which would leave Sarah open to a claim of sex discrimination under the UK Equality Act (2010). To prove discrimination, Sarah does not have to compare how a male colleague might have been treated, but only needs to prove that the discrimination has been due to her pregnancy.
In particular, it is important that Sarah is consulted and kept in touch with the restructure. Sarah needs to be communicated with and clearly be explained:
- Reasons for redundancy and the posts affected .
- Considering alternatives, such as voluntary redundancies, or reduced working hours.
- The selection criteria for those employees at risk of redundancy.
- How the employee’s redundancy selection assessment was carried out any suitable alternative work.
The protection against discrimination on the grounds of pregnancy or maternity lasts for a pre-set period that begins once someone becomes pregnant. This period is called the protected period and lasts until they resume work after maternity leave.
The fact Sarah has proactively suggested she could reduce her working hours, should not simply be dismissed. This is a reasonable request and needs to be explored further. Failure to do so is likely to be discrimination, as well as making the process unfair. Regulation 10 of the Maternity and Parental Leave Regulations (1999) says that if there is a suitable alternative vacancy it should be offered to the individual on maternity leave as opposed to making them redundant.
Sefton Borough Council v Wainwright (2014) supports that. A failure to do renders the subsequent dismissal automatically unfair. Therefore, if there are any potential vacancies in the business, Sarah must be considered for them in the first instance. As we know in any restructuring, there are likely to be other employees who proactively seek alternative employment and therefore vacancies may arise during the period of her maternity leave.
There is no limit to the amount of compensation that a tribunal can offer someone for pregnancy discrimination. Unlike unfair dismissal, the compensation usually includes a compensation for injury to feelings, as well as a compensation for any monetary losses suffered. It is not uncommon for an employee to receive thousands of pounds as compensation.
Bob Myers
Bob provides another potential redundancy challenge for a couple of specific reasons. First of all, his age (62), as the UK no longer has a default state retirement age and is another protected characteristic under the Equality Act (2010). The law was changed in 2011 to stop employers forcing people to retire at 65, which means someone can continue working for as long as they want to. Bob has already expressed an interest in continuing to work and the senior team need to err on the side of caution using language such as ‘energy and drive’ as this could be perceived as ageist. According to ACAS, in discrimination, how the recipient perceives words and actions matters more than the intention of the person delivering them, as in the case of James v Gina Shoes Ltd and others (2012).
Another potential issue is regarding whether Bob feels he has been unfairly treated under the Equality Act (2010) with regards to potential discrimination around the sexual orientation of his son, which is another protected characteristic. The Act outlines that sexual orientation discrimination is where you are treated unequally because of your sexual orientation, your perceived orientation, or the orientation of someone with whom you associate – which would apply in this case to his son, as it is widely known in the business. The fact Bob raised a grievance after witnessing a senior executive (Peter Hertzberg) using homophobic language, which didn’t result in any action, is of concern. He could argue that in being made redundant he has a case of Victimisation under the Act, because of him having previously raised a grievance around the senior executive’s conduct, which could give claim to discrimination on the grounds of sexual orientation under the Act. As outlined above, there is no ceiling on the amount of compensation a tribunal can award for discrimination.
Dan Mayo
Fair reasons for selecting employees for redundancy include:
- Skills, qualifications, and aptitude.
- Standard of work and/or performance.
- Attendance.
- Disciplinary record.
Dan’s absence record has been the most significant factor in his potential redundancy; however, we know he is a diabetic and therefore this also gives him grounds for protection under the Equality Act (2010). Time off work is covered by the Act, stating that an employer should make reasonable adjustments to stop someone being disadvantaged in comparison with non-diabetic workers. The law does not dictate that the time off should necessarily be paid, however, some businesses may be happy to do so.
We do not know if Dan’s diabetes is Type 1 or Type 2, however we do know that he regularly needs insulin and has been under the supervision of his doctor recently. Case law has previously treated diabetes as falling within the definition of disability, such as in the cases of MetrolineTravel Ltd v Stoute (2015) and Taylor v Ladbrokes Betting and Gaming Ltd (2017). Although hasn’t always been clear cut, as in the first case, the Employment Appeal Tribunal overturned the original employment tribunal’s decision that an employee’s type 2 diabetes amounted to a disability under the Equality Act (2010). However, according to Diabetes.co.uk, the global diabetes community, as of March 2022, diabetes is classed as an ‘unseen disability’ under the Equality Act.
The definition of disability is met if someone suffers with a physical or mental impairment that has a ‘substantial’ and ‘long-term’ effect on their ability to do normal daily activities. If someone takes medication, the decision is based on how their impairment would affect them if they didn’t take the medication. So, in the case of Dan Mayo, ABC Ltd must consider the effect of diabetes if it wasn’t being treated and as we know he has an increasing dependence on insulin, we need to assume that he would be protected by the Act.
In addition, under the Health and Safety at Work Act (1974), ABC Ltd should seek to carry out an individual risk assessment with Dan to ensure his diabetes is not putting him or anyone else at risk. Under Section 20 of the Act, there is a duty for ABC Ltd to make reasonable adjustments to any provision, criterion or practice applied by them, or physical feature of their premises, that places a disabled person at a substantial disadvantage. For example, it could be enabled for Dan have his lunch break at the same time every day. ABC Ltd should discuss what he needs and be guided by Dan.
Summary of Advice
In all the above cases, I recommend that legal counsel is sought with immediate effect and before any further consultation with individuals. As I have explained, there are potential grounds in every instance for unfair dismissal cases to be brought against ABC Ltd if redundancies were to be carried out without further consideration.
2.0 Legal Risks Following Confirmation of Redundancy
Lydia Skinner
In addition to the considerations outlined above, once Lydia’s redundancy is confirmed, there is a risk that she could claim she was subject to discrimination under the equal pay provisions within the Equality Act (2010) as her pay was different to the other directors, all of whom are male.
Under the Act women have the right to be paid the same as a male comparator where they do like work, work rated as equivalent, or work of equal value. It is unlawful for an employer to discriminate between genders in relation to the terms of their contracts of employment, as in the high profile case Samira Ahmed v BBC (2018) where the journalist was shown to be paid six times less than a male counterpart for what was deemed similar work.
Ted Maslow outlined that the reasons for a difference in her pay is because the other directors serviced clients abroad (outlined earlier as a risk due to her childcare responsibilities), that she didn’t have the same qualifications and that length of her service was considerably different. Length of service and qualifications do qualify as ‘material factors’ under the Act and not due to a difference in sex. Examples of other material factor defences include performance and levels of responsibility. However, the Act gives a right to equal pay between genders for equal work, implying a sex equality clause automatically into all contracts of employment to ensure that a woman’s contractual terms are no less favourable than a man’s. ABC Ltd would have to work hard to justify the difference in a tribunal.
There is a great deal of media and public support around bridging the gender pay gap. Were Lydia to make a case against ABC Ltd and win, it would be significantly reputation damaging to the business in the fact that the only senior Director to be made redundant was a woman, which could further impact the business if more clients chose to leave the agency, as well as being damaging to their employer brand and attracting more senior talented women in the future.
Pam Truman
All employees have a statutory right to a written statement of particulars of employment setting out key employment terms. Pam raising concerns about her workload and a change to her role needs to be explored further. Any changes to her duties and responsibilities should have been documented as a variation to her existing contractual terms, which normally requires agreement by the employee under the Employment Rights Act (1996). Contractual terms can be express (documented and agreed between the parties in writing) or implied, where changes will arise by implication in the context of the employment relationship. As the changes to Pam’s workload have arisen following a restructure of the business, ABC Ltd should have documented and agreed these changes with Pam. If this hasn’t been the case, she could make a claim for a breach of contract and if she is forced to resign due to her feelings of overwork, she could claim constructive dismissal.
In addition, in the UK, employers have the same legal obligations and a duty of care to recognise work-related stress as any other hazard, which means ABC Ltd has duties under the Health and Safety at Work Act (1974) to take Pam’s concerns seriously, as a typical cause of work-related stress is an overload of work. If work-related stress results in Pam being diagnosed with a recognisable psychiatric injury, such as depression or post-traumatic stress disorder, she may have a claim for personal injury, as in the case of Hatton v’s Sutherland (2002) in relation to employer liability for psychiatric illness caused by workplace stress. The Hatton Judgement and 16 Hatton propositions are still a working starting point when assessing claim, even 20 years on.
Additionally, when she raised her concerns, she was told that she needed to ‘put in the hours’ to achieve a promotion to a senior role. This could be deemed as discrimination under the Equality Act (2010) if Pam could prove that this was not advice given to that of her male counterparts. In addition, she could make a claim under the Working Time Regulations (1998), which gives employees the right to paid leave and specified rest breaks. The fact that Pam has not taken any leave for months is concerning bearing in mind her increased workload.
Finally, the comments from Management regarding her joining the trade union are a breach of the Employment Relations Act (1999), which establishes a number of rights at work, including the right to join a trade union. It is unlawful of ABC Ltd management to hint that Pam should be clear ‘where her loyalties lie’.
Diane Golding
Several high-profile legal cases have appeared around the so-called ‘Gig economy’, with regards to the employment status of contract worker, including the landmark case, Uber BV and others v Aslam and others (2021). By ABC Ltd asking Diane to know when she is on leave and unable to commit to them, this implies that she is a ‘dependent contractor’. Following The Taylor Review of Modern Working Practices (2016), the UK Government upheld 51 of the 53 recommendations around improving quality of work, which led to The Good Work Plan, in 2018. This is government legislation to bring UK employment law in line with modern ways of working, which has seen changes in effect as of April 2020.
Diane and ABC Ltd could be breaking the rules of Off-Payroll Working, known as IR35, which is a set of tax rules/legislation designed to protect contractors from operating as ‘disguised employees’. IR35 was reformed in 2017 and prevents a worker that would otherwise have been considered an employee from operating through a limited company and receiving the tax benefits of this.
Contractors receiving bonus payments can find themselves pitched straight into IR35, as HMRC is likely to see such bonuses as evidence of them being a disguised employee and could seek reimbursement for unpaid tax and National Insurance contributions.
A contract for the purpose of the off-payroll working rules is a written, verbal or implied agreement between parties. Therefore, even though ABC Ltd haven’t given Diane a contract of employment, the way she is being treated around her leave and availability points towards her being a “worker” under employment law. This would give her paid holiday and other rights, including being part of the bonus scheme.
3.0 Advice
In conclusion, Ted Maslow as HR advisor to the senior team clearly is aware of the responsibilities ABC Ltd has as an employer but has not had the influence or been involved with the senior team in this restructuring. In preparation for any further restructuring but also by way of ensuring best practice and reputation management, I’d advise all the senior team and every manager with people responsibilities to be trained in the basics around employment law and the various acts this paper has identified, in particular the Equality Act (2010). They need to be aware of all the protected characteristics (sex, trans-gender status, pregnancy, race, religion or belief, sexual orientation, married or civil partnership status, age and disability), and also understand the difference between direct and indirect discrimination.
In addition, I would advise them to retain an online employment law, HR and health and safety advisory service. This would be an additional support for Ted and enable ABC Ltd to get access to advice which could protect them from being taken to a tribunal in the future.
Furthermore, the whole business may benefit from some understanding diversity. Unconscious bias is difficult to identify and resolve, as most people can’t recognise that they are acting based on bias. I would suggest the business hires a trainer to address small groups of staff and stimulate an open discussion about how to overcome any form of bias in ABC Ltd. This could lead to a more inclusive culture going forward.
References for Level 7 Employment Law
ACAS Code of Practice on Disciplinary and Grievance Procedures
www.diabetes.co.uk
Dobson V North Cumbria Integrated Care NHS Foundation Trust (2021)
Employment Rights Act (1996)
Employment Relations Act (1999)
Equality Act 2010
Health and Safety at Work Act (1974)
Hatton v’s Sutherland (2002)
James v Gina Shoes Ltd and others (2012)
London Underground v Edwards (No 2) (1999)
Maternity and Parental Leave Regulations (1999)
MetrolineTravel Ltd v Stoute (2015)
Off-Payroll Working (IR35)
Polkey v A E Dayton Services Ltd (1988)
Samira Ahmed v BBC (2018)
Sefton Borough Council v Wainwright (2014)
Taylor v Ladbrokes Betting and Gaming Ltd (2017)
The Good Work Plan (2018)
The Taylor Review of Modern Working Practices (2016)
Uber BV and others v Aslam and others (2021)
Working Time Regulations (1998)
