This ‘Halloween edition’ of our employment news bulletin is all treat and no tricks, as Mike Smith explains October’s key developments: an equal pay & equalities round up, including the recent Birmingham City Council decision on equal pay; new social media guidelines; some practical points on harassment from the Employment Tribunal; and the new ‘shares for rights’ proposals.

Equal pay audits and equalities

The Supreme Court last week handed down its decision in Birmingham City Council v Abdulla that equal pay claims may be brought in the civil courts, even if the time limit for bringing an equal pay claim in the Employment Tribunal has expired.  This means that employees have six years in which to bring their claims, rather than the six months during which a claim must be brought in the Employment Tribunal.  Furthermore, the payment of employees’ legal costs in bringing equal pay proceedings will be an issue, as employers may have the winning party’s legal costs awarded against them; whereas costs are relatively rarely awarded in the Employment Tribunal, regardless of the outcome.  

Following on from this decision, employers may find that equal pay claims start to come out of the woodwork, even if the employee has long since left their employment or any pay disparity has been resolved.  Bevan Brittan’s employment team has extensive experience of advising on equal pay issues (including complex and high volume litigation), so please do contact the author of this article, Mike Smith, or Sarah Lamont if you require any assistance in this regard.

In other equalities developments, draft amendments to the Enterprise and Regulatory Reform Bill have been announced. In relation to equal pay, ministers will have a power to make regulations requiring employment tribunals to order that an equal pay audit is undertaken by any employer found to have breached equal pay law or discriminated because of sex in non-contractual pay, such as discretionary bonuses (as we reported in September’s Employment Eye).

However, audits will not be ordered in all circumstances. An audit will not be ordered when

  • a tribunal considers that an audit completed by the respondent in the past three years meets prescribed requirements
  • it is clear without an audit whether any action is required to avoid equal pay breaches occurring or continuing
  • the breach found by the tribunal gives no reason to think that there may be other breaches, or
  • the disadvantages of an equal pay audit would outweigh its benefits.

In relation to equalities

  • draft amendments remove the questionnaire provisions in section 138 of the Equality Act 2010 which allow a person who thinks that he or she may have been unlawfully discriminated against, harassed or victimised to obtain information from his or her employer; and.
  • liability for ‘third party harassment’ will be repealed (whereby employers may be liable for harassment by third parties, such as customers or clients, where the employer has failed to take reasonable steps to avoid any harassment of which it was aware).  

Social media guidelines

As we reported last month, Keir Starmer QC, the director of public prosecutions (DPP), announced that a wide public consultation was to be undertaken with a view to issuing new guidelines on abuse arising from the use of social media. It has now been reported that the DPP expects the new measures to be announced before Christmas and that these will enable relevant authorities to use remedies other than criminal prosecution to address instances of offensive activity. Please see our October 2011 and April 2012 articles for more information on social media and employment law.

Pope in the newsroom

An Employment Tribunal has found that a newspaper sub-editor, Mr Heafield, was not harassed on the grounds of religion when an offensive comment about the Pope was shouted across the newsroom.  Mr Heafield was a practising Catholic, and claimed that the comment amounted to harassment because he felt intimidated and frightened by it. 

However, the Employment Tribunal found that Mr Heafield had failed to show that it was reasonable for him to have reacted to the comment in this way, when the comment was seen in context. The comment was made in the context of an editor, Mr Wilson, shouting across the newsroom ‘can anybody tell me what’s happening to the f-ing Pope’ and, when no-one responded, he repeated the question, raising his voice.  The Employment Tribunal accepted the newspaper’s argument that the comment was not made about the Pope himself but regarded the whereabouts of the article – ‘the Pope’ was the working title of the article.  Furthermore, whilst Mr Wilson’s comments were offensive and disrespectful, applying the objective limb of the definition of harassment, the Employment Tribunal found that it was not reasonable for Mr Heafield to have felt that the comment created a hostile, intimidating, degrading, humiliating or offensive environment.  The comment was not made in the context of a discussion on the Church or a debate on the Pope's forthcoming visit to the UK or any other related issue. Neither was there any evidence that Mr Wilson was using the situation as a pretext to create a hostile environment for Mr Heafield.

Although this is only a first instance decision (so another tribunal could come to a different conclusion), it is a useful reminder of the following practical points on harassment claims

  • simply unsavoury or unpleasant comments will not necessarily amount to harassment; context will be all important
  • the feelings of the employee in question are important, but an employee must be reasonable in their level of upset
  • the tribunal noted the case of Nazir v Asim which emphasised that the prohibition on harassment in the workplace does not seek to prevent all forms of bullying or anti-social behaviour; rather, it is concerned with equality.

Fire at will? New ‘owner-employee’ scheme

It has been widely reported in the press this month that the government has announced plans for a new type of employment contract called an ‘owner-employee’ contract.

In brief, ‘owner-employees’ can be given £2,000-£50,000 of shares in the business for which they work, which will be exempt from capital gains tax.  In return, owner-employees would surrender their right to

  • protection from unfair dismissal
  • a redundancy payment
  • request flexible working and time off for training; and
  • employees would be required to provide 18 weeks’ notice of a firm date of return from maternity leave (instead of the usual 8 weeks).

There is nothing to prevent employers and employees from agreeing additional rights within an owner-employer contract – for example, longer notice periods in order to ameliorate the effect of losing the right to claim for unfair dismissal.

What are the timescales?

  • The government has opened a consultation which closes on 8 November 2012.  The consultation documents can be accessed here .
  • Legislation is expected before the end of this year.
  • The new contract may be used from April 2013.

Until further information is published, there is little that employers need to do in respect of this development. 

In terms of the potential impact of this proposal, there may be limited uptake as

  • individuals already have a capital gains tax allowance of £10,600 for the tax year 2011-2012;
  • employers may not feel that the cost saving of avoiding the claims outlined above is worth the exchange of shares, given that the average award for unfair dismissal last year was just over £9,000; and
  • there are already tax efficient employee share scheme/employee ownership arrangements in place.

It therefore seems unlikely that this latest proposal for reform will change the employment landscape considerably.


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