Employment Eye February 2021

Welcome to our latest round up of employment law developments and what they mean for employers. In this edition, we look at the following:

Covid-19: Vaccination Programme for Employers

We look at some of the key employment law issues arising from the national vaccination programme, including the extent to which employers can require employees to be vaccinated, and how any reluctance to be vaccinated should be approached.
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Covid-19: Carry Over of Holiday Leave

With the start of a new calendar year, questions over whether workers can carry forward accrued but untaken leave come to the fore.  We consider the impact of Covid-19 on this topical issue, and the temporary amendment to the Working Time Regulations 1998.
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Update: The Pension Schemes Act

The Pension Schemes Act has received royal assent and will introduce significant changes to the UK’s existing legislative framework for defined benefit pension schemes.  We explore the key updates.
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Covid-19: Vaccination Programme for Employers

With the recent news of another Covid-19 vaccine showing efficacy in clinical trials, and the successful roll out of mass vaccination centres around the UK, employers would be forgiven for starting to think ahead to a post-vaccination era and a full return to the workplace.

In the meantime, in light of press coverage that Pimlico Plumbers are to introduce a “no jab, no job” policy into all of their employment contracts we examine some key issues for employers to consider around the national vaccination programme.

Can an employer insist on employees being vaccinated?

Whilst many organisations will be keen to encourage employees to be vaccinated if and when it is offered to them, and there are obvious advantages to employers to having a fully vaccinated workforce, the Government has made it clear that it is not a legal requirement to be vaccinated against Covid-19. 

Alongside this, there are many reasons why an employee may not wish to be vaccinated – from religious and philosophical beliefs through to a desire to have more information on the potential side effects of the different vaccines available or even a phobia of needles.

When considering an employer’s position on vaccination therefore, there are both legal and ethical factors to take into account. 

• From a legal perspective, the obligation to be vaccinated has not been enshrined in law and, based on the Government’s position to date, it seems that it is unlikely to be in the future. Coupled with that, given this is still a novel concept, it is unlikely that existing employment contracts contain a clause that requires employees to undergo such vaccination in order to work.
  
  The key question for employers to consider therefore is: is it a reasonable management instruction for the employer to require its workforce to be vaccinated?
  
  The answer will depend upon a range of factors. Overall, employers have a responsibility to protect the health and wellbeing of their staff. There may be cogent health and safety arguments for requesting employees to be vaccinated against Covid-19. These are likely to be prevalent in health care, social care or other high risk sectors where an employer has an obligation to ensure staff do not pose a risk to patients, clients or suppliers. For example, a frontline healthcare worker is more likely to be exposed to Covid-19 at work than a worker in a general office, so having the vaccine will protect them, their families and those they care for.
  
  In order to assess the risks, employers should carry out individual risk assessments to determine whether it is reasonable to impose a requirement on its staff, having in mind the role(s) in question - including the working environment, the risks posed by the employee to others, and vice versa - and the health and needs of the individual themselves. It is likely that the same arguments and rationale for imposing the requirement will not apply to all staff in all cases.

• What about the ethical considerations? The success of the vaccine in stopping the spread of the virus is dependent on the widest possible take-up, so there also appears to be an ethical duty on employers to educate and encourage maximum participation amongst its workforce. Mandating vaccinations may not however sit comfortably with the core values of the business.

If, having considered all the different factors, an employer considers making vaccination a mandatory requirement for all staff, there are a number of practical steps that it should take. In part these will depend on whether the employer intends for the requirement to be captured in a policy or as an amendment to the employment contract (both of which are dealt with in this article). The main, and critical, step is to consult with the workforce to set out the rationale for the employer’s decision and any expectations on the individual.

A word of caution however.

Requiring employees with specific health issues, or religious or philosophical beliefs, to be vaccinated could open the employer to claims of discrimination under the Equality Act 2010 in cases where such health issues or beliefs amount to a protected characteristic. Further, a blanket requirement for all staff to be vaccinated may constitute a provision, criteria or practice (“PCP”) for the purposes of a claim for indirect discrimination. Such a PCP may be justified if it were a proportionate means of achieving a legitimate aim. The safety of staff, patients, clients or suppliers, and the duty of employers to comply with their health and safety obligations, may well constitute a legitimate aim. However, it may be difficult to demonstrate that there were no less discriminatory means of achieving this same aim.

In addition, any requirement by an employer that only vaccinated employees continue to attend the workplace might fall foul of the implied term of mutual trust and confidence, by reason that it would in effect be compelling employees to have a vaccination for which there is no express legal right. This is new territory and a question which has divided employment lawyers. Employers are therefore advised to tread carefully when considering their policies and take legal advice before taking any decisive action.

Can an employer make vaccination a condition of the employment contract?

For new starters, an employer can insert a clause into its employment contract that requires those employees to be vaccinated as and when they are offered it. It is then the decision of the new starter as to whether they choose to accept the terms of the contract, or not. If compulsory vaccination has been incorporated into an employee’s terms and conditions of employment and the employee subsequently refuses to be vaccinated, then this will amount to a breach of contract which could warrant disciplinary action.

The position is not the same for existing employees. A contract cannot be unilaterally amended by an employer without the employee’s consent to the change. If an employer seeks to introduce a clause to make vaccination compulsory, they must ensure that they obtain the agreement from the employee first. If an employee refuses to agree to the introduction of this clause, the employer may choose to accept their position on an individual basis (thereby continuing the employment) or may dismiss them and offer re-engagement of employment on the new terms, which an employee may choose to accept or reject. However, this latter option could lead to claims of unfair dismissal so is not recommended without first seeking individual legal advice.

Of course, until the vaccine is widely available to those of working age, either on the NHS or privately, any contractual provision that requires an employee to be vaccinated cannot be met.

Can an employer include a mandatory requirement for vaccination in their policies?

If an employer decides that it is appropriate to require staff to be vaccinated, taking into account an appropriate risk assessment, relevant factors and any special circumstances, the employer may decide that it is reasonable and necessary to record this in a written policy.

Any policy will need to be carefully drafted to take into account a range of considerations such as applicable equalities issues and data protection obligations.

The key issue for employers will be whether the requirement for mandatory vaccination is reasonable. Consultation and engaging with trade union or employee representatives prior to introducing any such policy is recommended as a matter of good practice and fairness.

A policy that requires mandatory vaccination cannot be contractual without the agreement of staff (as changes to employment contracts cannot be made unilaterally). A fundamental change to a policy may breach the implied term of mutual trust and confidence, which could entitle employees to resign and claim constructive unfair dismissal.

Can an employee refuse to be vaccinated?

It is not a legal requirement for individual to have the vaccination so, yes, employees can refuse and they may have legitimate and genuine reasons for doing so. The implications of an employee refusing to have the vaccine where an employer has made it a requirement can cause some challenges so it is incumbent on the employer to find out the reasons why the employee has refused before taking any action.

If it is not a requirement for the employee to have the vaccine, then the employer should take steps to understand if there is any impact of the employee’s decision on the health and safety of their colleagues.

If it is a requirement for the employee to have the vaccine in order to work, then the employer should investigate the reasons for the refusal with the employee and seek to understand their concerns. If, based on documented risk assessments, the employer believes that they risk the health and safety of the employee by retaining them in their position without vaccination, yet the employee still refuses the vaccine then the employer would need to take active steps to minimise or remove the risk. This may be through a change in duties, redeployment or, ultimately, sending the employee home. Whether this is a reasonable action will depend on the particular facts.

If the requirement to have a vaccine is a contractual term of employment, or enshrined in the employer’s policies, a refusal to have a vaccine may amount to disciplinary action and / or dismissal. This should be a last resort measure and avoided where possible.

If the individual has a protected characteristic under the Equality Act 2010, extra care should be taken to ensure that any risk of a discrimination claim arising is minimised.

This is a highly sensitive and contentious issue which should be considered on a case-by-case basis. In the absence of any Government guidance on this point, employers are strongly advised to take legal advice on individual cases.

Can an employer exclude an employee from the workplace if they have not had the vaccine?

If there are clear health and safety concerns, an employer may be able to exclude an employee from the workplace. This is most likely to be in health care, social care or other high risk sectors. If the employer considers that the risk to the employee, to their colleagues or to patients, clients or suppliers is high enough and there was no other way to remove or minimise the risk to these individuals then there may be sufficient grounds to exclude an employee from site.

However, there are risks with treating workers differently on the grounds that they have not been vaccinated. As this is a health issue, treating staff differently on health grounds could amount to disability discrimination and lead to a risk of a claim against the employer. A blanket policy to exclude workers who have not been vaccinated could also lead to an indirect discrimination claim on the basis that the blanket policy places those in certain age groups (i.e. those of a working age), or with other protected characteristics, at a particular disadvantage.

It is not yet clear if being unvaccinated would be classified as a disability, and it has not yet been tested as to whether an anti-vaccination belief is akin to a religion or belief and therefore a protected characteristic under the Equality Act 2010. However, it is likely that excluding unvaccinated workers from the workplace without robust and documented reasons could be challenged by workers.

As above, this is a contentious issue and therefore employers are encouraged to seek legal advice before taking any positive action to exclude a worker or workers from the workplace.

Additional Resources

In addition to our own Covid-19 Vaccinations FAQs for Health and Social Care Employers, and Supplementary FAQs, there are a number of resources available to employers within the health and social care sectors to support their approach to the vaccination programme:

• NHS Covid-19 vaccine programme communications resources (updated 12 Jan 2021) which is available on the Public Health England (“PHE”) coronavirus resource centre
• NHS England Operational Guidance: Vaccination of Frontline Health and Social Care Workers (updated 26 January 2021)
• PHE Covid-19 vaccine guidance for healthcare workers (updated 25 January 2021)
• PHE Covid-19 vaccine guidance for social care staff (updated 25 January 2021)
• NHS England Standard Operating Procedure: Covid-19 local vaccination services deployment in community settings (updated 14 January 2021)

More generally, PHE has produced the following guidance documents which may be useful for employers to disseminate to their staff to educate them on the vaccination programme:

• Information on COVID-19 vaccination: easy-read guide (8 January 2021)
• What to expect after your Covid-19 vaccination (updated 25 January 2021)
• Why you have to wait for your Covid-19 vaccination (updated 25 January 2021)

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Covid-19: Carry Over of Holiday Leave

With the start of the new calendar year, and for some the new holiday year, the question of whether workers can carry over holiday leave from the previous year when they’ve not been able to take the time off due to Covid-19 has come to the fore.

A temporary amendment to the Working Time Regulations 1998 introduced last year entitles staff to carry forward up to 4 weeks holiday leave into the next 2 years where it was not reasonably practicable for them to take some or all of their holiday entitlement as a result of the effects of coronavirus on themselves, their employer or the wider economy or society. We examine the detail here.

Holiday Leave – a reminder

The purpose of holiday leave is to ensure that workers have a reasonable time off to rest, relax and re-energise during the working year. It has been shown that workers who take regular holidays can be more motivated about their work, and less prone to accidents or stress-related health issues. Employers are therefore obliged to ensure that their workers have an adequate opportunity to take holiday each year.

There are 3 types of holiday leave:

1. The European Working Time Directive (“WTD”) leave of 20 days per annum;
2. The UK’s Working Time Regulations (“WTR”) leave, which implements the WTD and then allows UK workers an additional 8 days to make 28 days’ statutory leave in total;
3. Any extra contractual entitlement agreed with the employer.

Almost all workers are legally entitled to the 28 days, or 5.6 weeks, paid statutory leave per year (pro rata’d for part-time workers).

The general position on carry-over is that the 20 days, or 4 weeks, derived from the WTD cannot be carried between leave years. The additional 8 days, or 1.6 weeks, granted by the WTR can be carried forward into the next leave year (but no further) with the agreement of the employer. There are some exceptions to this, for example where a worker is unable to take holiday leave due to maternity or sick leave, but, in the main workers should be taking a minimum of 4 weeks paid holiday leave each year.

What has changed?

The Working Time (Coronavirus) (Amendment) Regulations 2020 amends the WTR by allowing workers to carry over up to 4 weeks statutory leave where it was not “reasonably practicable” to take this in the given holiday year as a result of the effects of coronavirus (including on the worker, the employer or the wider economy or society). The untaken holiday leave can now be carried forward into the following 2 leave years.

The regulations also limit an employer’s right to refuse an employee’s request to take this carried over leave on particular days. Now an employer may only prevent an employee from taking leave on their requested dates if they have a “good reason” to do so.

In addition, the provision on payment in lieu of accrued but untaken holiday makes it clear that where an employee’s employment terminates in one of the years in which holiday was carried forward, any payment in lieu must include holiday carried forward under these new regulations.

What does “reasonably practicable” mean?

The Government’s guidance document on holiday entitlement and pay during coronavirus emphasises that “employers should do everything reasonably practicable to ensure that [a] worker is able to take as much of their leave as possible in the year to which it relates…”.

Within this context, when is it not “reasonably practicable” for an employee to take holiday leave?  The guidance document sets out various considerations that a worker should have when making this assessment, such as:

• “whether the business has faced a significant increase in demand due to coronavirus that would reasonably require the worker to continue to be at work and cannot be met through alternative practical measures
• the extent to which the business’ workforce is disrupted by the coronavirus and the practical options available to the business to provide temporary cover of essential activities
• the health of the worker and how soon they need to take a period of rest and relaxation
• the length of time remaining in the worker’s leave year, to enable the worker to take holiday at a later date within the leave year
• the extent to which the worker taking leave would impact on wider society’s response to, and recovery from, the coronavirus situation
• the ability of the remainder of the available workforce to provide cover for the worker going on leave.”

It is clear that the focus is on business and work pressures as well as workers’ health, rather than practical difficulties which may impact a worker’s ability to take holiday leave such as the cancellation of holiday bookings.

What about furloughed workers?

The guidance document indicates that furloughed workers are unlikely to need to carry forward annual holiday leave. However, when taking holiday leave workers must be paid the correct holiday pay which is likely to be higher than the pay rate covered by the Government’s Coronavirus Job Retention Scheme. If an employer is unable to make up the difference, then this may be a reason for it not being “reasonably practicable” for the worker to take holiday leave in the given year.

What should employers be thinking about?

Other than the temporary suspension to the “no carry-over” rules, the normal rules on taking annual holiday leave under the WTR still apply. The overarching message from Government is that where it is reasonably practicable for a worker to take annual leave in the given leave year, employers should facilitate this.

Where workers have not been, or may not be, able to take leave employers should:

• Alert workers to the possibility of carrying over holiday and the process for doing so.
• Consider the reasons why they have not been able to take leave. If workers could have taken leave but chose not to, then, unfortunately, they are at risk of losing that holiday entitlement.
• Talk to line managers and, where applicable, agree that it was not reasonably practicable for the worker to take leave.
• Talk to the individual and be mindful of their individual considerations.
• If agreed, confirm how much leave will be carried forward.

Whilst there should be no additional administrative burden on employers as a result of these amended regulations, it is even more important for employers to accurately track holiday leave and the reason for, or against, allowing a worker to carry over statutory leave. The guidance states that “where leave is carried forward, it is best practice to give workers the opportunity to take holiday at the earliest practicable opportunity.” It does not expressly state however the order in which different classes of holiday leave should be taken.

Employers should therefore be able to identify the different classes of holiday that each worker has accrued or carried over, and track when those holiday days are taken. This will ensure that the employer facilitates and the worker takes the holiday leave to which they are entitled.

As an aside, employers cannot buy back statutory holiday leave. Payment for accrued statutory holiday leave is only permitted on termination of employment. Employers may be able to buy back contractual holiday leave over and above the 28 days’ statutory entitlement, subject to agreement with the workers.

Comment

When announcing these changes to the WTR, the Business Secretary, Alok Sharma, made it clear that the intention was to protect workers who are “working around the clock to help…with the coronavirus pandemic” to ensure that “these workers do not lose out on [their] annual leave… and employers are not penalised.”

This temporary amendment to the WTR therefore provides some relief to employers in sectors which are critical to the fight against coronavirus, such as healthcare, social care or the food industry. Instead of insisting that workers take their full holiday entitlement in a year, it gives employers the flexibility to manage their workforce without fear of repercussions whilst at the same time ensuring workers do not lose out on those important rest days. 

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The Pension Schemes Act 2021 – big changes over time

The Pension Schemes Act has received Royal Assent.  It will make major changes to how all pension schemes are run over time, although not everything will happen at once.  Some will more affect private sector pension schemes, some will affect all types of scheme. 

This article provides a brief overview of some of the key elements.

Expanded Pensions Regulator Powers

The Pensions Regulator has extensive new and widened powers to intervene to support the funding of pension schemes.

There are two new criminal offences:

• avoidance of employer debt or conduct risking scheme benefits already built up; and
• failure to comply with a Contribution Notice (a power the Regulator already has to require payment of funds to a pension scheme where it believes actions have led to the scheme being less well funded than it should have been).

Employers need to take into account the circumstances of their pension scheme (generally if they are of a defined benefit (final-salary-type)) before taking a number of corporate actions.

The Regulator can also issue a Contribution Notice in many more circumstances and for more reasons.

Further detail will follow in respect of the Regulator’s powers.

New Funding Code

The Regulator has for many years had a code of practice on funding defined benefit pension funds.  Under the Act it will produce a new one.  Including time for consultation, this may not happen until 2022, but trustees of pension schemes will have to produce a long-term funding and investment strategy, work with the employer, and monitor the strategy regularly, and as part of funding negotiations.  The Regulator can also impose changes to the strategy.

Pension Dashboard

This is intended to be an online ‘one-stop shop’ where anyone with UK pension saving can see a summary of all their state, employment-related and personal pensions.  That will allow them to better understand what they have saved, and what they may need to do to meet their retirement plans.

Of course, none of this data is in the same place – it is held by the Government, scheme trustees, insurance companies and other bodies.  There will be costs and data protection questions associated with collating and providing data, as well as managing and updating it over the long term.

The Act provides the regulatory framework for this to take place, although it will not happen immediately.

Climate Change

As part of the Government’s wider focus on climate change, the Act requires some pension schemes to manage and report on their climate change exposure, primarily through their investments.  This is likely to affect schemes with £1bn of assets or more, although that could change as the consultation progresses.

Collective Money Purchase Schemes

CMP Schemes (previously known as Collective Defined Contribution or CDC) are something of a half-way house between money purchase and traditional final salary-type pension schemes.  They aim to provide a certain level of benefits, but without an obligation on employers to fund a specific level.  The Act gives us a statutory framework under which these can operate.  There has been considerable interest in these schemes over the past few years, particularly from large employers with traditional pension arrangements.  We may therefore see some movement on this quite soon.

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If you would like advice or assistance in relation to any workforce issues relating to Covid-19, or indeed any of the topics mentioned in this newsletter, please get in touch with a member of our Employment Team.