Welcome to our latest round-up of recent employment law developments and what they mean for you.
We look at a recent case which explores the question of whether protection under the Equality Act 2010 extends to gender fluid or non-binary individuals and consider the measures employers need to put in place to ensure no individual is subjected to discrimination as a result of their gender identity.
Do paranoid delusions amount to a disability? We report on a recent case which explores this question and consider what employers can do to assist those with mental health issues.
Public Sector Exit Payments: we provide an overview of the introduction of the cap on public sector exit payments and the impact that this will have on employers.
New Coronavirus Job Retention Scheme: we consider the extension of ‘furlough’ and what this means for employers.
Yes, said the Employment Tribunal in the recent case of Taylor v Jaguar Land Rover Ltd; individuals who identify as gender fluid, or non-binary, are protected under the Equality Act 2010 by virtue of having a protected characteristic.
Until now, a person with the protected characteristic of gender reassignment had to be going through, proposing to go through, or indeed have gone through, a formal gender reassignment process “for the purpose of reassigning the person’s sex”. Whilst this could be through medical or non-medical treatment, it was generally accepted that the gender reassignment had to be permanent and long-standing.
Being gender fluid, or non-binary, means that a person does not ascribe to either gender, or binary of gender (male or female), on a permanent basis. The Tribunal therefore had to consider whether a person who just identified as gender fluid, and was not going through a formal process of changing sex, should be able to claim a protected characteristic under the Equality Act 2010.
Facts of the Case
Ms Taylor worked as an engineer at Jaguar Land Rover for almost 20 years. In 2017, having previously presented as male, she began identifying as gender fluid and wearing women’s clothes to work.
She started suffering insults from her work colleagues and was the subject of abusive jokes. She also encountered difficulties with accessing appropriate toilet facilities in the workplace. When she raised these issues with management, she claimed to have received little support. As a result, she resigned and brought a claim in the Tribunal for harassment, direct discrimination and victimisation because of gender reassignment and sexual orientation, alongside a claim for constructive unfair dismissal.
The Tribunal was unanimous in its decision that Ms Taylor had the protected characteristics of gender reassignment, acknowledging in its ruling that gender is a “spectrum”.
As a result, the Tribunal found that Ms Taylor had suffered direct discrimination, victimisation and harassment as a result of gender reassignment. She was also found to have been constructively unfairly dismissed.
Jaguar Land Rover agreed to pay Ms Taylor compensation of £180,000 and committed to a number of positive steps, recommended by Ms Taylor, to avoid a recurrence of the situation. The Executive Director of HR also issued her with an official apology.
Actions for Employers
The outcome reflects a broadening approach to viewing a person’s gender identity and it also reminds us that equality legislation is not set in stone.
Individuals may now identify as, amongst others, gender fluid, non-binary, trans, transgender (man or woman), gender variant, agender or gender queer. It is therefore important that employers familiarise themselves with the range of gender identities and are sensitive to the preferences of each individual within their organisation.
Jaguar Land Rover was heavily criticised, and penalised, by the Tribunal for the “egregious way” in which Ms Taylor was treated. As such, where an employee identifies as a different gender it is vitally important to take time to understand their individual situation and steps that can be taken to support them in the workplace.
In terms of the wider workforce, employers should implement measures to demonstrate best practice and ensure no person is subject to discrimination as a result of their gender identity. This could include:
- Appointing a Diversity and Inclusion Champion (as Jaguar Land Rover was ordered to do by the Tribunal);
- Running awareness training for managers and staff;
- Inviting employees to state their preferred pronoun on their email signatures;
- Reviewing employment contracts and policies to ensure gender-neutral language is used;
- Ensuring a robust diversity and inclusion policy, or gender equality policy, is in place and anti-bullying policies are fit for purpose;
Reviewing workplace facilities to ensure that, where appropriate, they are gender-neutral and accessible to all.
No, confirmed the Employment Appeal Tribunal in the case of Sullivan v Bury Street Capital Ltd; an employee who suffered from paranoid delusions that affected his time-keeping, attendance and record-keeping did not have a disability for the purposes of the Equality Act 2010 as his delusions, and therefore the impact on his ability to carry out daily activities, were temporary and intermittent.
A person has a disability under Section 6 of the Equality Act 2010 if they have a physical or mental impairment which has a substantial long-term adverse effect on their ability to carry out normal day-to-day activities. An impairment is considered to have a long-term effect if: (i) it has lasted for at least 12 months; (ii) it is likely to last for at least 12 months; or (iii) it is likely to last for the rest of that person’s life.
Mr Sullivan was employed as a Senior Sales Executive for a small finance company. His employer had concerns about his time-keeping and attitude from the outset. In mid-2013, his relationship with a Ukrainian woman broke down and he started to believe that he was being followed and stalked by Russian gangs. His attendance and performance at work deteriorated for a period, but by September 2013 matters had improved and, even though he continued to experience some paranoid delusions, he was able to concentrate on work. In late 2014 a new employee joined the company and, having sat near Mr Sullivan, claimed to know nothing of his delusions or to have noticed any changing behaviours.
In April 2017 however, Mr Sullivan’s mental health worsened and his employer’s previous concerns about his behaviour and time-keeping came to the fore again. Following a performance and remuneration review in September 2017, Mr Sullivan informed his manager that he would be signed off sick for four weeks. His employer decided to terminate the employment for reasons relating to his capability and attitude.
Mr Sullivan’s Claims
Mr Sullivan brought a number of claims in the Employment Tribunal, including for unfair dismissal and disability discrimination. His claim for unfair dismissal was successful. However the Tribunal found that he did not have a disability within the meaning of Section 6 of the Equality Act 2010. Whilst the Tribunal accepted that he had a mental impairment as a result of the delusions that he had experienced, they held that any substantial adverse effect had lasted approximately 4 months in 2013. The delusions then recommenced a few months before his dismissal in September 2017, but there had been no adverse effects in the intervening period.
Mr Sullivan appealed.
The Employment Appeal Tribunal (“EAT”) upheld the Tribunal’s findings that even though Mr Sullivan had experienced periods of delusions in 2013 and again in 2017 which had, at each time, a substantial adverse effect on his ability to carry out normal day-to-day activities, these delusions were temporary and intermittent and therefore the adverse effect would not likely last for twelve months or even recur.
Mr Sullivan argued that the fact his delusions had in fact recurred in 2017 demonstrated that the Tribunal was wrong in its decision on this point. The EAT disagreed. The Tribunal had to assess matters based on the information that was available when the condition first occurred and consider if it was likely, at that point in time, that the substantial adverse effect would recur. The fact that it subsequently did was irrelevant to the assessment. In any event, the Tribunal believed that the recurrence of paranoid delusions in 2017 was triggered by the performance and remuneration review, and that Mr Sullivan’s condition would have improved shortly afterwards.
As such, the EAT agreed that Mr Sullivan did not satisfy the definition of a disabled person under the Equality Act 2010.
Whilst this was not part of Mr Sullivan’s appeal, the EAT also considered and agreed with the Tribunal’s decision that the employer did not know and could not reasonably have been expected to know of Mr Sullivan’s condition. Mr Sullivan’s position was that the Tribunal should have focused on corporate knowledge, including that of the CEO who was aware of his episodes in 2013, rather than the evidence of a single colleague when considering if there was any adverse effect on his ability to carry out his day-to-day activities in the workplace. The EAT saw nothing wrong with the Tribunal’s reliance on the colleague’s evidence, especially where it also found Mr Sullivan’s evidence to be less than credible.
Implications for Employers
Whilst this is a fact-specific case, it shows the hurdles to establishing a disability under the Equality Act 2010; specifically the need for the impairment, whether physical or mental, to have a long term adverse effect on an individual’s ability to carry out normal day-to-day activities. If an individual has suffered from an impairment over a long period of time, but there are fluctuations in the effect of that impairment on them, they may not meet the statutory definition of disability and therefore they may not benefit from the protection of the Equality Act 2010.
It also serves as a useful reminder to employers that not all disabilities are obvious and visible, and if they suspect that an employee is suffering from a disability, such as a mental health issue, the employer must act cautiously.
If an employee notifies the employer of an actual or potential mental or physical impairment, the first step should be to establish a communication channel so that there is regular communication and an ongoing opportunity to monitor the employee. Open discussions regarding the working environment and any reasonable adjustments that could be made will limit the risk of subsequent discrimination in the workplace.
The Restriction of Public Sector Exit Payments Regulations 2010 (“Regulations”) came into effect on 4th November 2020. HM Treasury’s Guidance and Directions were published on 29th October 2020, alongside the Equalities Impact Assessment.
The Guidance document acknowledges that exit payments are important for employers to be able to reform and react to new circumstances but go on to state “these payments must represent value for money and be fair to the taxpayers who fund them”.
It is this premise that has led to the introduction of the Regulations and a cap of £95,000 on exit payments in the public sector.
As a reminder:
- The cap applies to a single exit payment to an individual by a public sector organisation (as identified by the Regulations) or, if a person is exited from two or more such organisations within 28 days, the combined total of payments made.
- Most types of payments made to an exiting employees are affected:
- redundancy payments;
- pension strain costs, i.e. employer-funded payments to enable an employee to leave employment before pension age but still take an unreduced pension;
- severance or ex gratia exit payments, including voluntary exit payments;
- compensation payments made under the ACAS arbitration scheme (save where related to discrimination or whistleblowing claims);
- payments made in the form of shares or share options on loss of employment;
- PILON (save where the payment in lieu does not exceed one quarter of the individual’s annual salary);
- any other payments made as a consequence of termination of employment or loss of office (whether under a contract of employment or otherwise).
- Excluded from the cap are payments in respect of death in service or incapacity as a result of accident, injury or illness; payments in lieu of accrued but untaken holiday entitlement; and any payment ordered by a court or tribunal.
- Also excluded are payments that result from an individual’s accrued right to pension as these are not considered to be exit payments for the purpose of the Regulations.
- In ‘exceptional’ circumstances – some discretionary, and some mandatory – the cap can be relaxed, provided ministerial clearance is given or it is set out within the Directions (see below).
The Guidance confirms that:
- The legal obligation to cap exit payments only applies to those organisations identified in Schedule 3 of the Regulations. (However, organisations that operate within the public space but that are expressly excluded from the Regulations are still expected to have in mind the “value for money” principle when considering their exit payments.)
In respect of multiple exit payments and individual’s responsibilities:
- It is for individual authorities to establish if and how the cap applies to each element of a capped exit payment. There is no prescribed order for prioritising the different elements, (however, under the Regulations, there is an express prohibition on reducing any statutory redundancy payment).
- If multiple authorities are making payments within a 28 day period, the cap should be applied chronologically.
- An individual who is an employee or office holder of two or more relevant authorities has an obligation to notify the others where they have received an exit payment from one of those authorities.
In respect of records and reporting:
- Except where the cap is relaxed in accordance with Treasury Directions, there is no requirement under the Regulations to keep a record of capped exit payments; this is required under the Guidance however.
- Where the cap is relaxed, the relevant authority must keep, for a minimum of three years, a separate record of the payment showing payee, amount and type of payment, date and the reasons for the relaxation.
In respect of compliance with the Regulations:
- Any payment that exceeds the cap and is not compliant with the Regulations or Directions is a “payment beyond the organisation’s legal competence” which may result in sanctions being imposed on the organisation. Authorities are also expected to make a value assessment on whether to pursue a civil claim for repayment.
In respect of transparency of payments:
- Authorities must publish information about any decision to relax the cap, which the Government recommends is captured in the annual accounts. The requirement is to publish the amount and types of payments, dates and reasons for the relaxation.
In respect of in-scope payments:
- A PILON payment which represents up to a quarter of the individual’s annual salary is exempt from the cap. Only the remainder of the PILON is included.
- ‘Salary’ includes any benefit in kind.
In respect of relaxations to the cap:
- Relaxation of the cap – either mandatory or discretionary – is expected to be granted only in exceptional circumstances that meet the criteria in the Guidance document (which themselves expand on the grounds set out in the Directions), as follows:
- Mandatory relaxation is required where:
- an exit payment is made as a result of a TUPE transfer;
- payment is made to avoid employment tribunal litigation in relation to a complaint: that a person has been subject to a detriment or dismissal as a result of whistleblowing, or in connection with their activities to prevent or reduce risks to health and safety at work; or of discrimination under the Equality Act 2010; or
- certain payments made by the Nuclear Decommissioning Authority.
- Discretionary relaxation may be granted where:
- imposing the cap would cause undue hardship on an individual;
- it is necessary to exit an individual to give effect to urgent workforce reforms within the organisation; or
- where the parties agreed an exit package in writing prior to 4th November 2020, with the intention that the exit would occur before that date but the delay is not attributable to the individual.
- Mandatory relaxation is required where:
- An application for a decision to relax the cap must follow a prescribed process, with a detailed business case and a value for money assessment, both supported by evidence. A Proforma for Discretionary Waivers is published within the Guidance document.
- A decision on relaxation may take up to 4 weeks.
What does this mean for Public Sector Employers?
Whilst the cap may result in savings to the public purse, there are several employment law and pension law issues arising from this legalisation and appropriate advice should be taken if there are any concerns.
On a practical level, HM Treasury has confirmed that existing contractual terms and agreements that require exit payments in excess of the cap will be unenforceable. Therefore, employers should undertake a review of their employment terms to ensure that, where such terms exist, they are fully aware of their existence and, if making an exit payment, take time to carefully consider the structuring of such payment having in mind the various elements that may be capped by the Regulations.
Due to the inclusion of employer-funded pension payments it is not just high earners that are potentially impacted by the cap. Longer-serving employees who may be affected by an internal or management restructuring, may find their exit payments are now subject to the cap. This may make redundancy exercises more complex and, where this is the case, employees will require careful management and ample time to understand the impact on their future plans.
In addition, there has to be consideration of the impact of these Regulations on other legislation. Although by no means the only clash, there is a clear conflict with the Local Government Pension Scheme (“LGPS”) rules which, in certain circumstances, allows members to take early retirement without any reduction in their pension by virtue of an employer-funded pension strain costs. Based on the Regulations alone, where the cap applies, any pension strain cost that takes the exit payment over the cap would be prohibited. We recommend our webinar delivered in conjunction with Lawyers in Local Government on this impact of the Regulations.
The way forward is not yet clear and whilst the Guidance document sets expectations for compensation scheme rules and pension scheme rules to be amended to reflect the introduction of the cap, it should be noted that the Minister of Housing, Communities & Local Government has recently concluded its consultation on the impact of the Regulations on local government workers. Any changes arising from this consultation will take some time to implement.
The other potential, although smaller, impact is that of Brexit on the TUPE waiver in the Directions. TUPE is an EU derived right which may be affected by the outcome of the Brexit negotiations. We have yet to see.
Finally, the introduction on the cap on exit payments may have a negative effect on employees behaviours and inadvertently drive some employees who are potentially to be exited from an organisation to try and negotiate a payment within the exceptions to the cap. This could be more costly and time-consuming for the employer as a result.
- The Restriction of Public Sector Exit Payments Regulations 2020
- The Restriction of Public Sector Exit Payments: HM Treasury Directions
- The Restriction of Public Sector Exit Payments: Guidance on the 2020 Regulations
- Webinar: LLG Brief: The Cap on Exit Payments: Practical Implications and Issues
Further to our earlier Article, on 6 November 2020 the Government published its guidance on the latest iteration of the Coronavirus Job Retention Scheme (“CJRS”); the guidance is contained in multiple documents and has already been updated twice since publication, on 13 and 19 November. The corresponding Treasury Direction was published on 13 November 2020.
Whilst, in many respects, the latest version merely replicates the earlier version of CRJS, which came to an end on 31 October 2020, there are some key differences as set out in the table below. The one that will potentially have the biggest impact on employers is the restriction on claiming for an employee who is serving notice from 1 December 2020 onwards. Employers who are undertaking workforce planning will need to have this in mind if redundancies are a potential outcome of that exercise.
Scope of the CRJS
The ‘new’ CRJS runs from 1 November 2020 to 31 March 2021. However, the ability for employers to claim for and employees to receive 80% of their normal salary for hours not worked, up to a maximum of £2,500 per month, is only guaranteed until 31 January 2021. Employers are still required to pay NIC and pension contributions.
Changes to the scheme from February 2021 onwards will be published in updated guidance; the approach that the Government takes will depend on the state of the nation and the spread and impact of the virus, at that time.
Employee’s Agreement to Furlough
There is no restriction on the number of employees who can be furloughed under the ‘new’ CRJS, and no prohibition on furloughing employees who have not previously been furloughed.
As before, an employer must agree with their employee that they will be furloughed. The latest guidance confirms that any retrospective agreement for an employee to be put on furlough from 1 November 2020 must have been put in place on or before 13 November 2020. The implication is that without this in place, employers will only be able to claim payments from 13 November 2020 onwards. It is also unclear whether the employer can rely on verbal agreements if a written agreement is not in place.
Employees who were employed and on the payroll on 23 September 2020 but who were made redundant or stopped working for their employer after that date (including anyone on a fixed term contract), can be re-employed and claimed for under the CRJS, provided the employer had made a RTI submission to HMRC in respect of that individual between 20 March 2020 and 30 October 2020.
The guidance does not state any deadline by which employees have to be re-hired in order for the employer to claim under the CRJS however, when re-hiring an employee, consideration must be given to issues such as date of re-hire, preservation of continuity of service, employment rights when the furlough period expires and treatment of any termination payments already made.
For employees either (i) on furlough pre-31 October 2020, or (ii) on their employer’s payroll on or before 19 March 2020, the pay calculation is that used in the previous CRJS i.e. the grant covers 80% of their salary in the last pay period to 19 March 2020 on the basis of their contractual hours at the time.
For all other employees (including those being placed on furlough for the first time), the calculation is based on:
Examples calculations are contained within the guidance.
Claims for Notice periods
Employers are unable to make a claim for payment for an employee who is serving any part of their contractual or statutory notice period, whilst furloughed, after 1 December 2020. This includes notice of retirement or resignation.
The effect of TUPE
Employers are able to claim for employees who transferred to them under TUPE, provided that the transfer took effect on or after 1 September 2020, the employee was employed (by either the old or new employer) on 30 October 2020 and they were included on an RTI submission between 20 March 2020 and 30 October 2020.
There is no longer a requirement for any individual to formally shield. Employees who are, as per the Guidance, “clinically extremely vulnerable, or at the highest risk of severe illness from coronavirus and following public health guidance” and those who are unable to work due to caring responsibilities, can be furloughed. However, employees who are merely trying to protect someone who is vulnerable or at high risk, and thereby choosing not to work, are unable to participate in the scheme.
For transparency and to reduce fraudulent claims, from December HMRC will be publishing the names and registration details of companies and LLPs who claim under the CRJS from that month onwards. This will include an indication of the value of the claim(s) made. The only exception will be if there is a serious risk of violence towards, or intimidation of, staff. Further guidance on this will follow shortly.
In its guidance for employees, HMRC actively encourages individuals to report any instances of abuse of the scheme so employers should ensure clear records are kept of claims made in order to respond to any subsequent enquiry or investigation.
Guidance on the application of the scheme from 1 February 2021 to 31 March 2021 is expected in due course, with further Treasury Directions to follow. We will provide an update when those documents are published.
The current guidance documents are all accessible via the Coronavirus Job Retention Scheme page on GOV.UK: Coronavirus Job Retention Scheme
Finally, there are some key dates for Payroll teams to be aware of:
- 30 November 2020 is the last day for submitting or amending claims ending on or before 31 October 2020;
- Any claims for the period 1 – 30 November 2020 must be submitted by 14 December 2020;
- Subsequent claim periods, from 1 December 2020 onwards, must be made 14 days after the end of the relevant claim period.
HMRC has made it clear that it will not accept any late claims unless there is a “reasonable excuse” for the delay (examples of which are in the guidance). With the increased scrutiny over the Government’s spending during the coronavirus pandemic, employers should expect HMRC to be fairly rigid in its management of this latest CRJS.
If you would like advice or assistance in relation to the CRJS, redundancy processes or any other 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.