Top 5 recent workplace developments – September 2022

This is our selection of recent developments which we think will impact on HR practice.

1. Changing employment terms: “Fire and rehire”

The Court of Appeal has overturned an injunction that was granted by the High Court to prevent Tesco from “firing and rehiring” employees in order to remove a “permanent” contractual entitlement to enhanced pay.

“Firing and rehiring” is the practice of facilitating a change of employment terms by dismissing employees and then immediately re-engaging them on new terms.

The Union of Shop, Distributive and Allied Workers (USDAW) brought a claim on behalf of employees working at Tesco warehouses who were told to give up their entitlement to retained pay. The retained pay had been awarded as part of a restructuring exercise in 2007, as an incentive for employees to relocate to another warehouse. USDAW argued the employees had a permanent entitlement to retained pay.

The High Court ruled that the parties intended that the entitlement to retained pay should be permanent and granted an injunction to prevent Tesco “firing and rehiring”. However, the Court of Appeal found that nothing in the wording of the retained pay provisions prevented Tesco from giving notice to terminate the contract in the usual way. The Court also noted that the granting of an injunction was not justified in this case, even if the High Court’s interpretation of the contract had been correct.

Practical point

A significant but manageable risk for employers adopting “fire and rehire” tactics is unfair dismissal claims. The government recently announced a new Statutory Code which will enable tribunals to increase the compensation payable to employees where employers unreasonably fail to comply with their statutory obligations to dismiss fairly and to consult and inform employee representatives. The draft Code is expected to be published this summer for consultation.  For further information, see our update: Government announces new statutory code to protect employees from “fire and rehire” tactics to change

Employers should consider how to retain flexibility when offering entitlements that may be construed as permanent. The High Court in this case noted that Tesco could have set a longstop date for the entitlement to retained pay by use of a sunset clause.

USDAW v Tesco Stores Ltd

 

2. Long-term sickness: PHI benefits

The Court of Appeal has ruled that an employer was liable to pay the level of income protection payments set out in an offer letter and attached summary of benefits which were incorporated in the employee’s contract.

Mr Langton was employed by Cramer Systems from 2003. In addition to an employment contract, he received an offer letter and summary of benefits which set out the terms of a long-term sickness absence scheme and the level of income protection payments (IPP) payable under it, which included an "escalator" of 5% per year to account for inflation. After Amdocs acquired Cramer in 2006, it changed insurance provider and bought in a policy which had no escalator. The employees were not told about this change and Amdocs did not issue any contractual documentation to reflect this. From 2009, Mr Langton began a period of long-term sickness and, after discovering that the escalator had not been applied to his payments under the IPP, he brought a claim for unlawful deduction of wages.

Both the tribunal and EAT held that Mr Langton was contractually entitled to have the escalator applied in the calculation of the IPP. The Court of Appeal agreed, finding that the offer letter and summary of benefits sent to Mr Langton with his employment contract when he commenced employment had contractual effect and entitled him to a 5% escalator on payments made under an IPP.

Practical point

This case is a reminder for employers to ensure that contractual documents, including offer letters and employment contracts, do not inadvertently give employees a greater contractual entitlement to PHI payments (or indeed any other insurance related benefits) than would be covered by the underlying insurance policy. In order to limit employees' benefits to the amounts covered by insurance, the limitation should be stated explicitly, and the terms of the policy should be made known to employees.

Amdocs Systems Group Ltd v Langton

 

3. Homeworking: Location-based pay

An employment tribunal has ruled that a homeworking employee who relocated to the north-east of England was not entitled to receive London weighting pay.

The Crown Prosecution Service (CPS) operates two pay ranges: a London rate (defined to include certain counties in the south-east region) and a national rate. An annex to the CPS pay rules states that the applicable pay range is determined by "the location of the permanent workplace, as set out in the employee contract".

Ms McKenzie-Bayliss was working as a solicitor for the CPS when in 2012 she was seconded from the London team to CPS Direct. It was an express term of the secondment agreement that this was a home-based role, which she carried out from her home in Bedford. In 2017, after requesting to move to the CPS in north-east England for family reasons, it was agreed she would move her home to the north-east but continue to work for the south-east region which was understaffed. The CPS continued to pay her the London rate in error until September 2021, when it reduced her salary to the national rate.

Ms McKenzie-Bayliss sought a declaration that she was entitled to continue to be paid the London rate because she was carrying out work for the CPS south-east region (which includes counties covered by the London Rate).

The tribunal noted the express wording in Mrs McKenzie-Bayliss' secondment agreement: "your home address will become your permanent work location resulting in a potential change to your pay location". It found that her permanent workplace was her home address, and that when she moved to the north-east, her entitlement to pay should have changed to the national rate.

     Practical point

This is a tribunal decision, so it will not be binding on other tribunals.

In this case, it was evident from the contractual documentation that the purpose of the two rates was not relevant to the type of work done, but to the place where the work is carried out - and that the London rate was intended to reflect living costs for employees based in the south-east.

McKenzie-Bayliss v The Crown Prosecution Service

 

4. Employment status: New guidance

The government has published a response to its 2018 consultation on employment status, issued as part of the response to the 2017 Taylor Review of Modern Working Practices.

The response confirms that the government will not proceed with any legislative reform around employment status at this stage. It has however published new guidance which the government believes, together with existing case law, will help provide clarity on how to approach employment status issues.

The new guidance consists of:

• Employment status and employment rights: guidance for HR professionals, legal professionals and other groups – this detailed guidance sets out the differences between employees, workers and self-employed individuals as well as the key factors in determining employment status
• Employment status and rights: support for individuals – this is a summary of the above guidance and also sets out how individuals can challenge their employment status
• Employment status and rights: checklist for employers – this guidance is along similar lines, but aimed at employers and others that engage individuals

On a separate but connected topic, the Future of Work review 2022 is expected to produce a written report to guide long term, strategic policy making on the labour market. It would appear that the review will explore key policy questions such as the role of automation and how the “good” flexibility in the labour market and the gig economy can encourage productivity and growth.

    Practical point

It seems that the impact of the pandemic and the growing economic crisis mean that legislative change to employment status tests is not a priority for the government.  In addition, although it recognises that there may be benefits in aligning the frameworks for assessing tax and employment rights, it has decided that now is not the right time to do this.

The government has also updated its calculating the minimum wage guidance, to include a new section on the gig economy and platform-based workers.

 

5. Women’s health: Menopause in the workplace

The House of Commons Women and Equalities Committee (WEC) has published a report, Menopause and the workplace.

The report notes that the current law does not specifically protect menopausal women and considers it unsatisfactory that, to make an effective claim, women must present themselves as suffering from a disability. It calls on the government to consult within six months on making menopause a protected characteristic, including a duty to provide reasonable adjustments for menopausal employees.

The report also calls on the government to appoint a Menopause Ambassador to champion good practice and to produce model menopause policies which include:

• how to request reasonable adjustments
• advice on flexible working
• sick leave for menopause symptoms
• provisions for education, training and building a supportive culture

     Practical point

The government’s response to the independent report Menopause and Employment: How to enable fulfilling working lives was published recently. It seems unlikely that the WEC’s call for legislative reform will be taken forward as the government confirmed in this response that it doesn’t intend to make any changes to the Equality Act.  

The response does however state that a Women's Health Ambassador for England has been appointed and will sit on the newly established UK Menopause Taskforce. The government has also said that it will work with employers and employer organisations to raise awareness on the menopause and assist them in supporting workers.