Employment Eye, 14 November 2018

Welcome to the latest edition of our employment law report: our regular round-up of key employment law developments and what they mean for you.

Featured case

Aftermath of the after party

When things go wrong at a work-related social event, the test for whether an employer may be liable for an employee's wrongdoing has now broadened, reports Ashley Norman.

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Pensions briefing


Equal pensions benefits

Philip Woolham reports on Lloyds Banking Group Pensions Trustees v Lloyds Bank: an important pensions case on equalising pension benefits for men and women.

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A mentally healthy workplace

Yasmin Allan on the legal and practical issues linked to the employee wellbeing agenda.

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News round-up

Employment news round-up, November 2018

Anne Palmer rounds up the latest employment law news in brief.

Read more

Events and training

Employment law & HR - the hottest topics of 2018 and future developments

Our next series of free employment law training sessions will be running at the end of November and early December 2018, in Bristol, London, Leeds and Birmingham.

Read more


Aftermath of the after party

When things go wrong at a work-related social event, the test for whether an employer may be liable for an employee's wrongdoing has now broadened, reports Ashley Norman.

The background

It is a well-established principle that employers are vicariously liable for damage caused by employees in the course of their employment. A more controversial question is how far this extends to conduct which takes place outside of the workplace, but which has a connection to work; the classic example being a social event which is paid for by an employer and attended by their employees.

Given the forthcoming festive season, the Court of Appeal's recent decision in a case called Bellman v Northampton Recruitment Limited is timely, as it deals with the extent of an employer's liability for harm caused by an employee at a work Christmas party.

The facts

The defendant company, Northampton Recruitment Limited ('Northampton'), organised and paid for a Christmas party, which was attended by all employees. After the party had concluded, about half of the guests continued drinking at a hotel where some of the guests were staying. Taxis to the hotel were paid for by Northampton, and it was expected that the company would pay for at least half of the drinks at the hotel.

Initially, the conversation focussed on non-work related topics, but then turned to work matters and became more heated. Northampton's managing director, Mr Major, became angry and began to hold forth to the company's employees about his senior position and his high level of responsibility. When the claimant, Mr Bellman, challenged this, Mr Major punched Mr Bellman, knocking him to the floor. Mr Bellman hit his head, and sustained a fracture to his skull which caused serious brain damage.

Mr Bellman claimed that Northampton should compensate him for his injuries, on the basis that it was vicariously liable for Mr Major's actions.

The High Court rejected Mr Bellman's claim because it felt that there was an insufficiently close connection between Mr Major's actions and his employment by the company.

Mr Bellman appealed.

The decision

The Court of Appeal (CA) allowed the appeal, holding that Northampton was vicariously liable for Mr Major's actions, notwithstanding that they took place at unplanned drinks following the 'official' company Christmas party.

This restores the broader approach to vicarious liability, which applied before the High Court's original decision. The CA said that, when deciding whether an employer should be responsible for the actions of an employee, there are two questions to consider.

(i) What are the general functions or field of activities entrusted to the employee?

(ii) Is there a sufficiently close connection between the position in which the employee was employed and the wrongful conduct? 

By its very nature, this must be a broad analysis because an employer would not normally engage an employee to undertake wrongful activity; but there must be some linkage between the employee's actions and their employment.

Applying those principles to Mr Bellman's case, the CA found that Mr Major had a wide remit as the 'directing mind' of a fairly small company, with responsibility for all management decisions. So, in answer to question one above, Mr Major had a wide role.

Looking at question 2 above, there was a sufficiently close connection between those duties and the assault because

  • the after party drinks took place in the context of a work event, paid for by Northampton
  • the drinks took place on the same evening as the 'main' work party
  • Mr Major used the drinks as a forum for his views about the company
  • the attendees at the hotel drinks were there in their roles as employees and management; it was not the case that a number of colleagues had coincidentally met on a night out
  • Mr Major was in a senior and supervisory role and was using the discussion at the hotel to assert his authority.

Taking those factors into account, coupled with the broad remit of Mr Major's position, the Court of Appeal decided that the company should be liable for Mr Major's assault on Mr Bellman.

What does this mean for me?

In overturning the High Court's original decision in this case, the CA has restored the position that a broad approach should be taken to vicarious liability.

However, this does not mean that employers are at significantly greater risk than they were before this decision; the CA specifically confirmed that this case does not mean that victims are 'unofficially' insured by their assailant's employer. Cases such as these will turn very much on their own facts, and the facts of this case are quite rare.

That said, it would be prudent to be aware of the slightly wider remit of the law following the CA's decision and to err on the side of caution in the planning and execution of employer backed social occasions. Whilst instances of physical violence are unusual, the current high profile of the issue of workplace harassment means that you should remain more vigilant than ever: reports of sexual harassment claims have gathered pace over the last year, in the wake of the #MeToo movement, and a harassment claim by someone who was disgruntled after being referred to as a "fat ginger pikey" has caught the attention of the HR press in recent weeks (the claim was not successful, Evans v Xactley Corporation Limited, EAT, 2018).

Please click here for details of Bevan Brittan's workplace harassment prevention training.

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Equal pensions benefits

Philip Woolham reports on Lloyds Banking Group Pensions Trustees v Lloyds Bank: an important pensions case on equalising pension benefits for men and women.


The High Court has recently delivered its ruling in the important Lloyds Banking Group Pensions Trustees Limited v Lloyds Bank case (‘Lloyds’).

It was in fact based on both parties' need to understand how to deal with one part of equalising benefits for men and women. A court ruling was the best route. The DWP has previously provided in draft guidance a number of possible ways to do this, and they were considered as part of the case too.

The principle that men and women should receive equal pension benefits has been established for many years. But there have been a number of areas where this has been difficult to implement. Lloyds deals with an area where work-based pension schemes effectively replaced state benefits.

The decision affects both public and private pension schemes.

What is a guaranteed minimum pension (GMP)?

For many years, both public and private sector pension schemes could 'contract out' of part of the state pension system. Very many did so.

This was an additional element of payment, above and beyond the basic state pension. It was based on National Insurance contributions by employers and employees, so usually required people to be in work to qualify. It had a number of names and structures over the years, but it is still most commonly called 'SERPS', the State Earnings Related Pension Scheme.

If employers' pension schemes contracted out of SERPS then they committed to paying their scheme members an additional element of pension that would be at least as generous as the SERPS the employees were giving up. It was in addition to any normally promised pension benefits. It had to be paid and administered according to centralised rules.

In return, both employers and employees paid lower National Insurance contributions, as they were effectively 'privatising' part of the state pension, lightening the burden on the Exchequer.

Members could choose to remain in SERPS, but they very rarely did, because of the lower National Insurance contributions they paid if they contracted out.

Between April 1978 and April 1997, this alternative method of delivering SERPS was called the Guaranteed Minimum Pension (GMP). This period and payment structure is what the Lloyds case was about.

Contracting out has now been abolished. All employees paying National Insurance contributions build up the new state pension at the same rate.

Why were GMPs different for men and women?

Simply, throughout the GMP period the state pension was payable in full for women at the age of 60, and for men at the age of 65. Therefore, any pension scheme which contracted out needed to build up greater benefits each year for women than they did for men, because women had a shorter time to build up a full pension equivalent to the SERPS benefit they had given up.

This meant that for any given year of service, and pension build-up, benefits for men and women were inherently different, and therefore unequal, assuming they were paid the same.

What was the case about?

Following a number of complex UK and European judgements, all employment-related pension schemes must equalise benefits between men and women, including in relation to their normal retirement ages. This does not affect historic state pension benefits, although these have now been equalised at age 65 for the future.

Doing this in respect of GMP has always been considered very complex. Because it replicated state benefits, it was not clear that it was necessary to do so, (although we have assumed that eventually it would need to happen). Even while schemes equalised other benefits, therefore, many have held off from doing the same for GMP, because there was no clear legal requirement for them to do so.

Lloyds was brought by both the employer and trustees of a very large pension scheme to gain clarity. The case makes it clear that GMP benefits do need to be equalised.

Because the GMP payment still replaces a state benefit, and is calculated and paid on government rules, it is not possible to amend the benefits themselves. Therefore employees' 'regular' benefits under the scheme must be increased as appropriate to provide the equivalent of an equalised benefit for each year of GMP for men and women.

The judge also looked at the various possible routes available to the scheme to complete GMP equalisation. These approaches may well be similar to those available to other pension schemes. He concluded that it was appropriate to use the route that provided equalisation correctly at the lowest cost to the employer. In particular, he rejected some approaches suggested earlier by the DWP on grounds of cost and complexity.

What does it mean for employers and pension schemes?

While public sector schemes were also contracted out, their response and the costs associated with it are likely to be centrally directed.

Private sector schemes will however, if they contracted out during the relevant period, have to equalise GMPs. They will need to decide on the best route in the light of Lloyds for doing so, and consider the costs, choosing the route that meets both the need to equalise GMP benefits with least impact upon the employer.

There will be increased benefits for some members, and the employer will have to meet those costs. While the case clearly says that the cheapest route that will provide equalisation should be used, it may be necessary to decide which of the several approaches set out in the Lloyds case will be most appropriate.

There may be some backstop protection. It is likely that back-payments will not need to be calculated for periods of service prior to 17 May 1990, which is the date of the original European ruling on pension equalisation. While there is no limitation period in law to reduce this period further, there may be valid rules in the specific pension scheme that could limit some back-payment periods.

This is going to be a considerable administrative task for many schemes. For example, what happens if a member has previously transferred his or her benefits pot out of the scheme – does the old scheme have to pay, or the new one, or is any increase lost?

The DWP may well produce some updated guidance based on this case which may deal with some of these questions, but schemes are likely to need detailed advice on these issues. Please do contact me if you have any queries or require assistance on this, or any other pensions matters.

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A mentally healthy workplace

Yasmin Allan on the legal and practical issues linked to the employee wellbeing agenda.

Employee mental wellbeing is a rising issue that many organisations are striving to address to ensure that their employees remain happy and motivated at work. After all, a happy workforce is a productive workforce. In this article, we will take you through some of the key legal obligations, together with ways in which organisations can seek to promote mental health and wellbeing in the workplace. 

Why you’ve got to get it right

The Health and Safety Executive website reports that one in four people will suffer from some form of mental illness in their lives. Although business expense should not be the primary driver, the cost to employers of mental health problems in the UK workforce is also estimated at approximately £35 billion, which is a substantial increase from £26 billion a decade ago. 

We know by now that investing in health and wellbeing can improve productivity. NHS Trusts, for example, that score highly on the health and wellbeing index (measured annually through the NHS Staff Survey) have better performance across a range of measures, including financial, spend on agency staff, patient satisfaction and fewer infections.  So what, as employers, can we be doing to ensure a mentally healthy and productive workforce?

What can you do?

It almost goes without saying that employers should be proactive and preventative in this area, rather than reacting to problems when they arise. Some practical examples of steps employers can take to improve mental health in the workplace include:

(i) Create a mental health policy which sets out the organisation’s values and approach towards supporting employees. 

(ii) Implement a dedicated employee assistance or wellness programme and confidential counselling.

(iii) Ensure that senior managers champion awareness of mental health and have regular one to one meetings with employees to identify potential issues and offer support. ACAS have published useful guidance on mental health in the workplace, which includes practical information for managers on managing staff experiencing mental ill health.

(iv) Adopt initiatives designed to promote employee wellbeing such as incentivising staff to eat lunch away from their desk, take “walking” meetings, or offering onsite yoga classes and mindfulness sessions.

(v) Strive to be an open and approachable employer by fostering a culture of support so employees feel confident about seeking help without a stigma being attached.

(vi) Manage absent employees and those returning from long term sick leave carefully with input from occupational health.

The legal framework

There are a plethora of legal obligations in relation to the health and safety of the workforce and the practical steps listed above should go some way in assisting employers to meet these with regards to mental wellbeing.  

From a personal injury perspective, the key focus is on whether or not the harm suffered was reasonably foreseeable and whether or not the employer took reasonable steps to avoid it. A counselling service and involving occupational health can help in that regard.  Employers also need to be mindful of claims under the Protection from Harassment Act 1997 in relation to employees suffering from stress or depression caused by a course of conduct pursued by a fellow worker. This could give rise to vicarious liability on the part of the employer. Actions can be brought for up to six years and there is no employer’s defence that it took reasonable steps.

The legal definition of disability under the Equality Act 2010 includes references to “mental impairments”. Someone with a mental impairment that is long-term and has a substantial adverse effect on normal day-to-day activities will be protected. Employers are under an obligation not to discriminate and to provide reasonable adjustments in relation to any employees who meet the definition. Failure to do so could expose employers to the risk of claims for disability discrimination (where awards of compensation are potentially uncapped), as well as generate negative publicity around how employees who suffer with mental illness are managed.  Training senior managers around awareness of mental health issues and regular one to one contact with staff should assist in identifying issues so appropriate support and adjustments can be addressed.

Employers also need to proceed with caution when managing employees going on sickness absence leave due to stress, particularly where there are disciplinary or absence management proceedings. Although employers must be able to apply their formal procedures, they should be mindful of an individual’s particular personal and medical situation in doing so through discussion and seeking input from occupational health.  Employees could also consider resigning and claiming constructive unfair dismissal if they are insufficiently supported and can show a breach of the implied term of mutual trust and confidence. 

Conclusions and next steps

It is clear that the employee wellbeing agenda is here to stay and there are sound reasons for giving thought to your employee wellbeing programme – both from the point of view of limiting your legal liability and also because of the general benefits connected with creating a supportive, positive working environment. If you require any further information or support in this regard, please do contact me or your usual Bevan Brittan contact.

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Employment news round-up, November 2018

Anne Palmer rounds up the latest employment law news in brief.

Supermarket liable for 'rogue employee' data breach

Similarly to another vicarious liability case considered by the Court of Appeal (CA) recently, (Bellman v Northampton Recruitment Limited – please click here  for our summary) the CA has looked whether an employer should be liable for a data breach by an employee, which was specifically intended to cause harm to the employer. In WM Morrison Supermarkets plc v various Claimants, the employee in question copied the personal data of around 100,000 Morrisons employees, including payroll data, and posted this information on the internet, in a deliberate attempt to cause harm to Morrisons. The CA found that the supermarket was liable for damages to the victims of the data breach, because the employee's actions were a seamless and continuous sequence of events linked to his employment. It was irrelevant that he had tried to hide his actions and that he was motivated by a desire to harm his employer rather than for his own gain.

This case was decided under the (now repealed) Data Protection Act 1998, but the principles would still apply to similar circumstances, under the General Data Protection Regulation / Data Protection Act 2018. However, the level of compensation under the new data protection regime may be higher for a similar breach, given the greater scope for damages. It is, therefore, vital that you ensure that your data protection compliance is robust and up to date, and that you have adequate insurance in place if a major data breach would to occur – although some insurers may be looking to introduce policy limits in response to this decision.

Autumn Budget 2018 and HR – key points

Private sector IR35 roll-out delayed

The headline point in the October 2018 Budget for those working in HR and employment law is the announcement that the extension of the public sector off-payroll IR35 reforms to the private sector will be delayed until 6 April 2020. Please click here for a summary of the public sector IR35 reforms. These changes were introduced in April 2017 and require public sector organisations to determine the employment status of workers providing services through Personal Service Companies (PSCs) and make appropriate tax and National Insurance Contributions where the worker would (but for the use of a PSC) be considered an employee or office holder.  The off-payroll rules for the private sector will only apply to large and medium sized employers (as defined in the Companies Act 2006) and small businesses will be exempt. We have been advising our large public sector client base on the practical operation of the existing off-payroll rules, so please do contact me, or your usual Bevan Brittan contact, if you require any assistance – whether in relation to the existing off-payroll rules for the public sector, or in relation to preparation for their roll-out to the private sector.

National minimum wage increases

From April 2019, the national minimum wage will increase to the following rates.

Type of worker

Hourly rate



16-17 year olds


18-20 year olds


21-24 year olds


National living wage (workers aged 25 and over)



Taxation / NIC changes


From April 2019

  • the income tax personal allowance rate will increase to £12,500 and
  • the higher rate threshold (the sum of the personal allowance and the basic rate limit) will increase to £50,000.

The requirement to make National Insurance Contributions on termination payments over £30,000 has been delayed until April 2020. Currently, only income tax, and not National Insurance Contributions, is deducted from termination payments over £30,000.

Apprenticeship levy

Also from April 2019, businesses which are required to pay the apprenticeship levy will be able to invest up to 25% of the levy to support the training of apprentices in their supply chain.

Legal advice privilege / 'cloaking' redundancy case on appeal

By way of a post-script to our report on the case of X v Y, featured in the last edition of Employment Eye, this case will now be appealed to the Court of Appeal. This was a decision of the Employment Appeal Tribunal which held that an email from a lawyer was not covered by legal advice privilege, and was therefore disclosable in litigation over a dismissal. This was because there was strong evidence of 'inequity': the email exchange between a lawyer and their client advised that a genuine redundancy exercise could be used as a 'cloak' or disguise a potentially discriminatory dismissal.

Whistleblowing compensation – personal liability of directors

The Court of Appeal has decided, in a case called Timis v Osipov, that two non-executive directors (NEDs) were jointly liable for compensation which was payable to a whistleblower. One of the NEDs made a decision to dismiss the claimant after he made a whistleblowing disclosure; the other NED implemented that decision. The claimant was found to have been unfairly dismissed for making a whistleblowing disclosure. Both the NEDs were found to be personally liable for the compensation which was due to the claimant, on a 'joint and several' basis with the company which employed Mr Osipov. Awards for whistleblowing claims can be significant, as there is no statutory cap on the level of compensation. In Mr Osipov's case, the employment tribunal awarded damages of approximately £1,7 million for detriment and dismissal, against the company and the two NEDs. As the company was insolvent, Mr Osipov pursued the two individuals.

Possible re-introduction of Employment Tribunal fees

The Ministry of Justice has made a statement to the House of Commons Justice Committee that the government believes that it can find a way of re-introducing employment tribunal fees in a manner which will not act as an impediment to justice.  At the moment there is no indication of the level at which fees would be set, or any timescale on when this might occur.  Employment tribunal (and appeal tribunal) fees were introduced in 2013 and could cost litigants up to £1200.  The fees regime was quashed by the Supreme Court in July 2017, on the basis that the level at which fees had been sent acted as an unlawful bar to justice.  Since then, there has been no fee payable for using the employment tribunal service, and the government has refunded approximately £15million in fees which were paid before the Supreme Court’s decision.

New sleep-in payments guidance

New guidance has been published by the Department for Business, Energy and Industrial Strategy which is intended to assist care homes with assessing when they should be paying the national minimum wage / national living wage, particularly when employees are required to work a ‘sleep in’ shift overnight. The guidance can be downloaded here and section on sleep-in shifts can be found at page 32. The guidance is in line with the decision in the case of Royal Mencap Society v Tomlinson-Blake which ruled that, if workers are expected to sleep during their shift and have been provided with suitable facilities for sleeping, they must only be paid the minimum wage for periods during which they are awake and undertaking work at night. If they are  not expected to sleep and/or have not been provided with suitable facilities for sleeping, they should be paid the national minimum wage for the entire shift. Please click here for more information on the decision in Mencap and its practical ramifications for care providers. The sector continues to wait to see if Unison's appeal to the Supreme Court can proceed.

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Events and training  

Employment law & HR - the hottest topics of 2018 and future developments

Our next series of free employment law training sessions will be running at the end of November and early December 2018, in Bristol, London, Leeds and Birmingham.

The agenda includes the following topics.

Health and wellbeing at work. This is an issue which has come to the fore for HR this year, as the workplace is identified as a playing an important role in the wellbeing agenda. What should you be doing to protect employees and manage your potential liability?

Disability discrimination. Caselaw on this topic has moved forward again this year, with important new rulings on knowledge of disability and discrimination arising from disability. We will provide an update on the latest legal position and discuss practical issues around managing disabled employees, particularly those who are away from work with long term conditions.

What does the future hold? We can't promise any certainty on how Brexit will unfold, but we will look at the current thinking on its impact on your overseas recruitment and your likely post-Brexit immigration obligations. Aside from Brexit, we will also look at general cases, legislation and policy developments to look out for in 2019 and beyond. 

The update will be followed by refreshments and further opportunities to network and meet the Bevan Brittan Employment, Pensions and Immigration team.

For further information and booking for this free training, please click the link for the location and date you would like to attend.

Leeds, Tuesday 27 November 2018

Bristol, Monday 3 December 2018

London, Wednesday 5 December 2018

Birmingham, Tuesday 11 December 2018

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