Frontline: UK Employment Law Update December 2017

Welcome to the December 2017 edition of Frontline UK.

A slightly lighter edition for the festive period, this month we consider an ECJ decision that appears to invalidate national backstops on a worker's ability to claim backdated holiday pay; a High Court decision suggesting that employers may be vicariously liable for data breaches caused by rogue employees; and EAT guidance on the inability to cherry pick the specific elements of 'protected conversations' to which privilege will apply.

Our legal updates include commentary on the recently announced deadline for Tier 1 (General) Indefinite Leave to Remain applications; the first prosecution of a company that failed to comply with the UK's pensions auto-enrolment regime; and an apparent Home Office crackdown on illegal working that has (so far) led to the disqualification of 20 directors across the country.

From the team here in London, we hope you had a merry Christmas and have a very happy, HR-headache-free New Year!

Case Updates

Employers facing claims for unlimited backdated holiday pay

King v The Sash Window Workshop Ltd and another (European Court of Justice)

The ECJ has ruled that workers, who are wrongly classified as self-employed contractors and therefore do not utilise their statutory entitlement to paid holiday, should be able to obtain backdated holiday pay in respect of the entire duration of their engagement by an employer.


Employer innocence no defence to data breach liability

Various claimants v WM Morrisons Supermarket PLC (High Court)

The High Court has confirmed that an employer was vicariously liable for an employee’s breach of the Data Protection Act 1998 (DPA), following his intentional disclosure of personal data relating to around 100,000 colleagues on the internet.


Not all "protected conversations'" are protected

Graham v Agilitas IT Solutions Ltd (Employment Appeal Tribunal)

The EAT has confirmed that an employer cannot both: (i) invoke the benefits of a without prejudice/protected conversation to prevent details of a conversation being referred to in proceedings; and (ii) also waive privilege in relation to certain beneficial parts of the same conversations for disclosure before a judge.


Legal Updates

Time to settle: deadline for Tier 1 (General) Indefinite Leave to Remain applications confirmed as 5 April 2018

The changes to the Immigration Rules affecting Tier 1 (General) migrants is fast approaching. Individuals who have permission under this category, and have (or will have, by the deadline) accumulated five years' Tier 1 (General) leave, have until 5 April 2018 to apply for indefinite leave to remain (ILR) in the UK. From 6 April 2018, applications for ILR from Tier 1 (General) migrants will no longer be accepted by the Home Office.

The importance of the changes for Tier 1 (General) migrants, and their sponsoring employers, cannot be overstated. If successfully granted ILR, an individual is permitted to live and work in the UK without time limitation or immigration restrictions. Furthermore, after a year with ILR, the individual will become eligible to naturalise as a British citizen. With Brexit on the horizon, and businesses no clearer in terms of the Government's strategy for migration, we strongly recommend that HR teams conduct regular audits on their workforce to, among other things, identify individuals who are eligible to apply for settled status.

Our dedicated immigration team regularly assist clients with global mobility queries and would be very happy to advise on any ILR applications, or indeed discuss the alternative options that are available to the business and its migrant workforce.

First prosecution for deliberate failure to auto-enrol workers

The Pensions Regulator has been successful in its first prosecution for a company's wilful failure automatically to enrol its staff into a workplace pension as required under the UK's Pensions Act 2008. Stotts Tours (Oldham) and its managing director pleaded guilty to a total of 16 offences at Brighton Magistrates Court, on the basis that it should have enrolled 36 of its staff into a qualifying pension scheme and paid mandatory minimum contributions since June 2015. The organisation is separately facing potential civil fines from the Pensions Regulator for non-compliance.

Whilst the Pensions Regulator has previously imposed fines in respect of such failures, a move to prosecution marks a strong shift in its approach to enforcement. In the press releases that have subsequently been released, they have been keen to stress that "automatic-enrolment is not an option, it is the law" and that criminal prosecution is now a real option where organisations wilfully fail to comply with the regime. As such breaches may attract unlimited fines in a magistrates' court, or two years' imprisonment in a crown court, organisations would be wise to prioritise auto-enrolment compliance where this has not yet been implemented.

A full statement from the Pensions Regulator can be found here.

Insolvency Service disqualifies 20 directors in country-wide illegal working crackdown

UK companies will generally be aware of their responsibility not to employ workers who do not have appropriate permissions to work in the UK. As part of this duty, organisations are required to undertake, document and retain right-to-work checks on all workers as part of their recruitment processes. Where illegal working is found to have occurred, the Home Office may issue civil penalties of up to £20,000 in respect of each illegal worker and can also pursue criminal proceedings, closure notices and compliance orders in serious cases. The Insolvency Service also retains investigative and enforcement powers in respect of directors who may be responsible for facilitating illegal working, including the use of civil disqualification orders.

The Insolvency Service has recently exercised these powers to disqualify 20 directors of 16 businesses in a new countrywide crackdown on illegal working. 18 directors received six-year disqualifications, and two received seven-year bans, following the imposition of earlier fines by the Home Office (totalling £505,000, with an average penalty of between £10,000 and £15,000 for each illegal worker) which remained unpaid. Organisations should take note of this proactive and robust approach to enforcement from the authorities, and may wish to review the right-to-work procedures applicable to their workforce to ensure they meet current standards. Our dedicated business immigration team would be delighted to assist with any queries you may have.

A press release from the Insolvency Service can be found here.


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