DSC Employment Law Update
MAY 2014
Content
• A summary of the Coalition’s reforms
• Employment Status
• Zero hours contracts
• Flexible working & parental leave
• Whistleblowing
• Early conciliation
A brief look back…
Context (1)
On 20 May 2010, the Coalition Government issued its
programme for government which contained the stated aim to:
“review employment and workplace law… to ensure they
maximise flexibility for both parties… and [provide] the
competitive environment for enterprise to thrive...”
The Enterprise and Regulatory Reform Act (ERRA) was
introduced in 2012 and received Royal Assent on 25 April 2013.
is a reduction on the 5,900 in 2010-11 and continues a recent downward trend.
Context
Figure 1: Single and Multiple Accepted Claims, 2001-2 to 2011-12
Thousands
250
Singles
200
Accepted Claims
Multiples
Totals
150
100
50
0
2000/1
2001/2
2002/3
2003/4
2004/5
2005/6
2006/7
2007/8
2008/9
2009/10 2010/11 2011/12
Year
Note: Figures for 2007-08 are estimated
Source: ET Reports
Means of reform
The primary means by which the Coalition have sought to
reduce red tape / litigation is by:
• Restricting the number of people who can bring claims
(by increasing the continuous service requirements for
u/d claims to two years)
• Discouraging opportunistic claims
introduction of fees and penalties)
(through
the
• Recasting public interest legislation, which had been the
subject of (perceived) exploitation.
• Allowing employers (in some cases) to hold frank, private
conversations
• Limiting the value of u/d claims
Status
A hierarchy (of sorts)
Employees
Workers
Self-employed
Employees
Contract of
Employment
Personal
Service
Integration
Employees
Control
Mutuality of
Obligation
Workers
A contract
Not a client
relationship
Workers
Mutuality of
obligation
Personal
service
The difference between employees and workers
• Worker status has a lower “pass mark”
• Fewer rights (e.g. unfair dismissal, redundancy payments etc.)
• Typically more transient/ less integrated
• Mutuality still exists – but with (limited) scope for substitution
• Still subordinate
Self-employed
Assumes
financial risk
& reward
VAT
registered
(?)
Possesses
specialist
skill
Selfemployed
Do not rely
on a single
source of
income
Is liable for
negligence,
late
completion
etc.
Zero hours contracts
Zero hours contracts
• Not legally defined so open to broad interpretation
• Subject of 2013 government consultation
• Contract for casual working with no guarantee of work
• The employee is only paid for work done
Zero hours contracts
Advantages
•Flexible
•Employees maintain protection from unfair dismissal,
redundancy entitlement etc.
•In practice (sometimes) employees have a say in their hours
Disadvantages
•Seen as exploitative – some employees are unable to work for
other employers in between shifts
•Alternative: a bank of casual workers?
Flexible Working
The Right to Request itself is very limited in nature. It consists of:
•A right to request to work flexibly
•A statutory request procedure
•An obligation on the employer to consider the request properly
•A limited number of grounds on which the employer can refuse
the request
•BUT – INDIRECT DISCRIMINATION IS THE REAL ISSUE
Flexible Working
Who can make a request?
The eligibility criteria are scattered in different parts of the Right
to Request Legislation, but drawn together below. Some of these
are common to both those caring for children and those caring for
adults. These are to:
• Be employed.
• Have 26 weeks' continuous employment at the date the
request is made.
• Not be an agency worker or a member of the armed forces.
• Not have made another request to work flexibly under the
Right to Request Legislation in the preceding twelve months.
Flexible Working
Refusal of request following initial meeting
There are eight specific grounds for rejecting a request, which
are set out in s. 80(g) of ERA 1996:
• The burden of additional costs
• Detrimental effect on ability to meet customer demand
• Inability to re-organise work among existing staff
• Inability to recruit additional staff
• Detrimental impact on quality
• Detrimental impact on performance.
• Insufficiency of work during the periods the employee
proposes to work
• Planned structural changes
Parental Leave
• Parental leave is a form of statutory unpaid leave available to
some working parents in addition to statutory maternity,
paternity and adoption leave.
• On 8 March 2013, the total amount of unpaid leave that can
be taken per child increased from 13 to 18 weeks.
• It can be flexible in terms of the time at which it is taken and
the way in which the total leave entitlement may be split up
into a number of shorter periods (unlike current arrangements
for maternity, paternity or adoption leave).
Parental Leave
In summary, all eligible employees may:
• Take a total of up to 18 weeks' unpaid parental leave for each
child for the purpose of caring for that child.
• Take the parental leave at any time:
– before the child's fifth birthday;
– before the fifth anniversary of the date of placement in the case
of an adopted child; or
– before the child's 18th birthday in the case of a child entitled to a
disability living allowance.
New system of shared parental leave: 2015
•On 5 April 2015, the Children and Families Act 2014 will
introduce a new system of "shared parental leave”.
•However, despite the similar terminology, the two concepts are
unrelated, and "shared parental leave" will not have any impact
on the existing unpaid parental leave provisions.
•The new statutory shared parental leave scheme will effectively
allow parents to share the statutory maternity leave and pay that
is currently available only to mothers (and adoptive parents to
share the adoption leave and pay currently only available to the
primary adopter).
Whistleblwoing
Background
Background
• In 1988 35 people died in the Clapham rail disaster as result of faulty
wiring.
• In the Maxwell publishing empire, £400 million was misappropriated
from the pension fund affecting 30,000 people.
• In 1987 the MS Herald of Free Enterprise capsized minutes after
setting sale with her bow doors still open, killing 193 people. In the run
up to the disaster the ship had set sale on 5 occasions with it bow or
stern doors open.
Background
• Political consensus
• PIDA attracted the support of the business community and the trade
union movement
• A public interest measure – not perceived to be individual employment
right
• During the passage of the Bill in the House of Lords, Lord Nolan
commended those behind it “for so skilfully achieving the essential but
delicate balance in this measure between the public interest and the
interests of employers”. Fifteen years on, the verdict is less effusive.
Trends & Statistics (1)
Trends & Statistics (1)
• In the period since 1999, the number of claims has increased
by 1170 %.
• 75% of whistleblowing claims are settled
• Of the remainder, 78% were lost and 22% were won
• Highest tribunal award £5 million
• Average award £113,667
Trends & Statistics (2)
YEAR
NUMBER OF CLAIMS
1999/ 2000
157
2000/ 2001
416
2001/ 2002
528
2002/ 2003
661
2003/ 2004
756
2004/ 2005
869
2005/ 2006
1,034
2006/ 2007
1,356
2007/ 2008
1,497
2008/ 2009
1,761
2009/ 2010
2,000
2010/ 2011
2,200
2011/ 2012
2,500
Context (3)
• 68% of cases were from the private sector, 26% from the public sector
and the remainder from the voluntary sector
• 83% of workers blow the whistle (at least) twice internally
• 60% of whistleblowers received no (negative or positive) response
from management
• Newer employees are most likely to blow the whistle (39% have less
than 2 years’ service)
The law relating to disclosures before 25 June 2013
The law relating to disclosures before 25 June 2013
• Who qualifies for protection?
• What type of conduct is protected?
– What must the disclosure relate to (does it need to be in the
public interest)?
– What form must a disclosure take and to whom should it be
made?
– Has the discloser acted in good faith?
• How does the statutory protection work?
Who is protected?
 Employees
 Contractors (but not the genuinely self-employed)
 Agency staff
 NHS practitioners
 Trainees (and work experience candidates)
 Police officers
Who is NOT protected?
✕ The self-employed
✕ Volunteers
✕ Workers in the intelligence services
✕ Workers in the army
What is protected?
“… a 'qualifying disclosure' means any disclosure of information which, in the
reasonable belief of the worker making the disclosure, tends to show one or
more of the following:
a.that a criminal offence has been committed, is being committed or is likely to
be committed,
b.that a person has failed, is failing or is likely to fail to comply with any legal
obligation to which he is subject,
c.that a miscarriage of justice has occurred, is occurring or is likely to occur,
d.that the health or safety of any individual has been, is being or is likely to be
endangered,
e.that the environment has been, is being or is likely to be damaged, or
f.that information tending to show [concealment of any of the above]…”
[Section 43B(1) of the Employment Rights Act 1996]
(prior to the ERRA 2013 amendments)
What is protected?
The
disclosure of
information
Which in the
reasonable
belief of the
worker
Tends to
show a
“relevant
failure”
• What amounts to the
disclosure of information?
• How does one assess
reasonable belief?
• What (in practice)
constitutes a relevant
failure? Does it need to
relate to the public interest.
The disclosure of information
•The disclosure can be made in writing, verbally or in the form of
recorded information.
•It must however “convey facts”, not mere allegations (Cavendish
Munro -v- Geduld).
•Gathering information is insufficient (Aspinal v MSI Forge
Limited and Bolton School v Evans).
Subject Matter of the Disclosure
The wrongdoing can be:
• Past, present, or prospective.
• Merely alleged.
• Relate to the conduct of the employer, an employee
or a third party.
Subject matter of the disclosure
Criminal
Offence
Breach of a
Legal
Obligation
Concealing
Information
Subject
Damage to
the
Environment
Miscarriage of
Justice
Health and
Safety
Subject matter of the disclosure
Criminal
Offence
Breach of a
Legal
Obligation
Concealing
Information
Subject
Damage to
the
Environment
Miscarriage of
Justice
Health and
Safety
Subject matter of the disclosure
• In Parkins v Sodexho, the EAT held that the disclosure of information
tending to show a failure to comply with a contractual obligation under
the employee’s own contract of employment was covered.
• Many whistleblowing claims have, at their core, such disclosures.
Reasonable belief
Reasonable belief
The worker must have a reasonable belief that the information
tends to show one of the relevant failures. A worker does not
have to prove that the facts or allegations disclosed are true, or
that they are capable in law of amounting to one of the categories
of wrongdoing listed in the legislation.
As long as the worker subjectively belives that the relevant failure
has occurred or is likely to occur and their belief is, in the
tribunal's view, objectively reasonable, it does not matter that the
belief subsequently turns out to be wrong, or that the facts
alleged would not amount in law to the relevant failure (Babula v
Walthan Forest College [2007] IRLR 346 CA).
Reasonable belief
Reasonable belief therefore turns on two questions:
•At the time the disclosure was made, did the Claimant actually believe
that the disclosure tended to show a relevant failure (i.e. one of the 6
items listed at s.43B(1).
•Looked at objectively, was the worker’s actual belief reasonable?
To whom can information be disclosed?
To whom can information be disclosed?
Internal Disclosure
•PIDA encourages disclosure to the worker's employer as the
primary method of whistleblowing.
•If the employer has a whistleblowing procedure, or any similar
procedure, which authorises disclosure to a third party (for
example, an external hotline or a regulator), disclosure under that
procedure to the third party is treated the same as disclosure by
the worker to the employer.
•Such a disclosure is protected provided that it was made in good
faith (see below).
To whom can information be disclosed?
External Disclosure – Disclosure to third parties may be protected
if more stringent conditions are met:
•Responsible third party – Disclosure to a responsible third
party will be a protected disclosure only where the worker
reasonably believes the malpractice relates solely or mainly to
the conduct of that person or a matter which is the legal
responsibility of that person and not the employer.
•Prescribed person – For a qualifying disclosure to be protected
in these circumstances, the worker must reasonably believe that
the default falls within the remit of the prescribed person in
question and the information disclosed and any allegation
contained in it are substantially true. (Prior disclosure to the
employer is not required)
To whom can information be disclosed?
•Ministers of the Crown – This will be protected if the worker is
employed by an individual or body appointed under any
enactment, including a statute or statutory instrument (eg an NHS
body). Prior disclosure to the employer is not required.
•Wider disclosures – There is no list of the identity of those to
whom wider disclosure can be made. However, identity will be
key to the question of whether disclosure was reasonable. The
worker must reasonably believe that the information disclosed,
and any allegation contained in it, are substantially true and must
not make the disclosure for the purposes of personal gain.
Good Faith / Bad Faith
Qualifying Disclosure
Has
the
disclosure
been
made
in
good
faith?
• Good faith is not the same as truth. A disclosure that turns
out to be false will still be protected if the worker acted in
good faith. Good faith is acting with honest motives.
• A tribunals will look at the predominant purpose of the
disclosure in determining whether a disclosure was made
in good faith. Where the "predominant motivation... was
not directed to remedying the wrongs identified in s43B but
was an ulterior motive unrelated to the statutory
objectives", the disclosure was unlikely to be in good faith
– Street v Derbyshire.
• Where motives are mixed, it is ultimately a question of fact
for the Tribunal.
How does the statutory protection work?
The public interest
Unfair dismissal (s103A ERA)
• The dismissal (including constructive dismissal) of an
employee will be automatically unfair if the reason, or
principal reason, is that they have made a protected
disclosure. The same applies to selection for redundancy.
Unlawful detriment (s47B(1)(ERA)
• It is unlawful for an employer to subject one of its workers to a
detriment (including threats, disciplinary action, loss of work or
pay, or damage to career prospects) on the ground that they
have made a protected disclosure.
The law relating to disclosures after 25 June 2013
The public interest - post 25 June 2013
Five key changes were introduced by the Enterprise and
Regulatory Reform Act 2013 (“ERRA”):
•The addition of an overarching public interest test.
•The removal of the requirement that a disclosure be made in
good faith.
•The ability to reduce compensation in instances of bad faith.
•The extension of the of the meaning of worker.
•The introduction of primary liability.
The public interest
The public interest - post 25 June 2013
“… a ‘qualifying disclosure’ means any disclosure of information which, in the
reasonable belief of the worker making the disclosure, is made in the public interest
and tends to show one or more of the following:
a.that a criminal offence has been committed, is being committed or is likely to be
committed,
b.that a person has failed, is failing or is likely to fail to comply with any legal obligation
to which he is subject,
c.that a miscarriage of justice has occurred, is occurring or is likely to occur,
d.that the health or safety of any individual has been, is being or is likely to be
endangered,
e.that the environment has been, is being or is likely to be damaged, or
f.that information tending to show [concealment of any of the above]…”
[Section 17 of the Enterprise and Regulatory Reform Act 2013 (“ERRA”)] ]
The public interest
A number of points immediately stand out:
• There is no definition of “public interest”
• The disclosure does not have to be in the public interest, rather
the disclosure must “in the reasonable belief of the worker” be in
the public interest
• There has been no other amendment to s43B(1). A complaint
about a breach of one’s own contract of employment is still
covered, subject to the public interest test;
• As such, this is not a reversal of Parkins v Sodexho per se.
The public interest
• The public interest is is a difficult concept. It can mean:
• of demonstrable benefit to the public generally; or
• of interest to some members of the public.
• See for example: AAA v Associated Newspapers Ltd [2013]
Good Faith / Bad Faith (revisited)
Good Faith / Bad Faith (revisited)
• Good faith was (prior to 25 June 2013) a pre-condition for a claim.
• Now, someone acting in bad faith (even someone acting maliciously)
can bring an successful claim.
• Good faith does not fall completely out of the picture. It remains
relevant to the question of remedy. As such there are new provisions
contained at s49(6A) and s123(6A) which enable a tribunal to reduce
an award by up to 25%.
Good Faith / Bad Faith (revisited)
• Dame Janet Smith’s 2004 “Fifth Report on the Shipman Inquiry”
recommended the removal of the words “in good faith”. She did not
regard them as necessary given the other “Exacting requirements” of
the statutory scheme.
• “The public interest would be served, even in cases where the
motives of the messenger might not have been entirely altruistic”.
Practical tips
• Adopt a policy
• Ensure that the policy is drawn to workers’ attention
• Nominate a designated key contact
• Remember that employees may want to raise concerns about their
own manager (ensure that there is a mechanism that allows this).
• Permit a broad range of workers to invoke the policy
ACAS Early Conciliation
ACAS Early Conciliation
• With effect from 6 May 2014 early conciliation is mandatory
• A prospective Claimant will need EC certificate in order to pursue a
claim.
• It applies to all “relevant proceedings”
• There are very few exceptions, e.g:
– Joining a claim to existing claims;
– Cases concerning the Security Service, the Secret Intelligence Service
and GCHQ
The Procedure
• Step 1: BEFORE a prospective Claimant submits a claim, he / she
MUST do one of the following:
– Complete and submit a EC from to ACAS (online or by post); or
– Telephone ACAS.
•
Prospective claimants do not have to explain the nature of their claim.
• Step 2: ACAS must then make “reasonable attempts” to contact the
Claimant to discuss the process. If ACAS are unable to contact the
Claimant or the Claimant is unwilling to conciliate an EC certificate
will be issued.
The Procedure
• Step 3: if the prospective claimant is willing to conciliate, ACAS will
pass the case to a conciliation Officer (“CO”). The following steps are
then likely:
– The CO will confirm with the Claimant that he / she is willing to conciliate;
– The CO will then make reasonable attempts to contact the prospective
Respondent;
– Where both parties agree to try and conciliate the CO will have one
calendar month in order to promote settlement (with the possibility of a 14
day extension);
– Any resulting agreement will be completed by way of COT3.
Time Limits
• The vast majority of employment claims must be submitted with 3
months (less one day) or the act or omission that forms the substance
of the complaint. The new procedure introduces a number of changes.
• The basic idea is that the time limit clock stops ticking during the early
conciliation period. However, if the time limit for issuing proceedings
would otherwise have run out during this period, the claimant benefits
from a month’s extension of the time limit, counting from the end of
that period.
• The early conciliation period starts when the claimant supplies the
required contact details to ACAS, and ends on the date the EC
certificate is received by the claimant.
Consequences for employers
• Employers are likely to notice two immediate differences when the
scheme comes into effect. First, they are likely to be have more
frequent contact from ACAS, and at an earlier stage in the dispute.
• Secondly there is likely to be a longer time lag between the incident
giving rise to a potential claim and the issue of proceedings. The
extension of the time limits mean that in many cases claimants will
have at least a month longer to institute proceedings, even when
there has been no active conciliation via ACAS.
• Only time will tell whether the introduction of the scheme will lead to a
significant increase in the number of pre-issue settlements.
Questions
Contacts
Paul Jennings – Senior Associate
E-mail: p.jennings@bwbllp.com
: 020 7551 7694
Bates Wells Braithwaite
2-6 Cannon Street
London EC4M 6YH