Frontline UK Employment Law Update

Welcome to the latest edition of Frontline UK.

In our feature article, Associate Naveen Fosker unpacks some of the key elements to consider when sending employees on international assignments.

Our case updates include a landmark Supreme Court judgment on post-termination restrictive covenants; an EAT decision on vicarious liability regarding offensive employee social media activity; a Court of Appeal confirmation that a one-off, direct approach to employees regarding pay arrangements does not unlawfully bypass collective bargaining; and an EAT decision stating that covert recordings by employees does not always constitute gross misconduct.

Our immigration update details new Tier 2 and 5 guidance for migrant sponsors.

Finally, our legal updates cover an important Northern Irish judgment in favour of employees regarding holiday pay, which is expected to be appealed before the Supreme Court and could potentially have wide ramifications on this topic for employers UK-wide; further updates to the IR35 legislation published by the Government; the introduction of draft legislation by the Government on further obligations for employers regarding National Insurance Contributions on larger termination payments; and the launch of a Government consultation into sexual harassment in the workplace.

International assigments: expanding horizons and avoiding roadblocks

In the current political climate, and with increasing pressure to tighten immigration controls, there has been speculation about whether workplaces would enter an era of "deglobalisation," with less desire and opportunity for international mobility.

On the other hand, we are in an era of change and adaptation - businesses are expected to keep up with changing work culture and attitudes as well as technological development, and to embrace flexible and non-conventional methods of working.

Many employers find themselves under significant pressure to accommodate employees' plans and desires to live in and explore other parts of the world.


Join us for our Annual Employment Law Update!

Wednesday 25 September 2019

The pace of change in employment law has been as fast as ever this year. One year on, GDPR continues to trouble HR teams, and the compliance challenge is about to get even greater with changes to IR35 rules on taxation of independent contractors, due to come into force in early 2020. Developments in case law on restrictive covenants, and a continued focus on equality and diversity at work are also adding to the workload of HR and legal teams.

Join our London Employment Team for an overview of some of the key developments and trends in the employment law world, as well as their thoughts on some of the upcoming changes for the year ahead.

The event will close with sundowners on our eleventh floor terrace, weather permitting.

We hope you can join us!

Click here for more details.

RSVP here >>

Case Summary

Supreme Court takes pro-employer stance on severing restrictive covenants

Tillman v Egon Zehnder Limited (Supreme Court)

The Supreme Court has handed down a landmark judgment on the interpretation of post-termination restrictive covenants. This was the first judgment on this issue by the highest UK court for a century and has been nervously awaited by HR professionals, concerned about its impact on their ability to enforce covenants against departing employees. The decision provides a broad overview of the legal principles governing this contentious topic and a number of helpful lessons for employers who may be seeking to draft or enforce post-termination restrictions against their employees.


Employer not liable for employee's offensive Facebook posts

Forbes v LHR Airports Limited (EAT)

The EAT has held that an employee who posted racially offensive imagery on Facebook, but did not reference her employer and did not direct the content at her colleagues, had not made the post "within the course of her employment". Her employer was therefore not vicariously liable for her actions, which a co-worker alleged amounted to harassment under the Equality Act 2010.


Direct offer to employees did not unlawfully bypass collective bargaining

Kostal UK Ltd v Dunkley (Court of Appeal)

The Court of Appeal has confirmed that a one-off, direct approach to employees regarding pay arrangements was not an "unlawful inducement" for the purposes of bypassing established collective bargaining arrangements. It stated that the prohibition on unlawful inducements is intended to catch employer actions which seek to take terms outside of the agreed or imposed scope of collective bargaining on a permanent basis and does not cover isolated offers which aim to break a specific impasse.


Covert recordings by employees not necessarily gross misconduct

Phoenix House Limited v Mrs Tatiana Stockman (EAT)

The EAT has confirmed that whilst the covert recording of HR meetings by employees will generally constitute misconduct, it does not necessarily meet the threshold of gross misconduct justifying summary dismissal. The severity of such misconduct will depend on all the circumstances, including the employee's motive, the subject matter of any recording and the employer's communicated position (including through policy documentation) on covert recording.


Immigration Update

New Tier 2 & 5 guidance for migrant sponsors published

On 17 July 2019, the Home Office published an updated version of its "Tier 2 and 5: Guidance for Sponsors – Addendum". This updates the previous version 03/19 of the same.

Among other more minor amendments, the following notable changes have been made to the guidance:

  • information on the "Immigration Skills Charge" has been redrafted for clarity and additional information has been included on "top-up" charges;
  • information on digital technology sponsors has been redrafted for clarity;
  • guidance on appropriate rates for Tier 2 (General) has been redrafted for clarity and updated to reflect currently salary thresholds;
  • guidance on Tier 2 (ICT) appropriate salary has been redrafted for clarity and updated to reflect currently salary thresholds;
  • guidance on post-study work switching provisions has been redrafted for clarity and to reflect current Rules;
  • guidance on points criteria for restricted CoS has been amended and updated to reflect changes to the Immigration Rules;
  • information on the Tier 5 visa concession has been significantly redrafted and updated to include guidance on entry through Ireland and the use of ePassport gates;
  • the list of relevant international agreements has been amended to make clear that some apply to contractual service suppliers only, and to include reference to the Least Developed Country service waiver; and
  • information on leaving and returning to the UK has been redrafted for clarity.

Legal Updates

Holiday Pay: NI Court of Appeal casts uncertainty on Bear Scotland

The Court of Appeal of Northern Ireland ("CANI") has delivered an important judgment in favour of employees of the Police Service of Northern Ireland (PSNI), who had previously succeeded in their claim before an Employment Tribunal that they were owed significant back-payments of holiday pay based on historic underpayments.

Significantly, the CANI endorsed the Tribunal's opinion that the previous (and widely reported) decision in Bear Scotland v Fulton was wrong to hold that that a gap of three months or more between underpayments would automatically break a "series of deductions" for the purposes of an unlawful deductions claim, and thereby inhibit further historic claims in respect of insufficient holiday pay. Instead, the CANI suggested that this was an arbitrary approach and that the focus should instead be on the factual link between any series of deductions (rather than solely the period of time between them).

We understand that this decision is to be appealed before the Supreme Court, whose judgment would have effect across the United Kingdom. If it agrees with the NICA, this could have significant cost consequences for employers as it would increase the prospect of employees claiming in respect of holiday back pay: (i) for the last two years in England, Wales and Scotland; and (ii) back to 1998 in Northern Ireland (Northern Ireland does not have a two-year backstop on the ability to claim holiday pay).

Government publishes updated IR35 legislation for the private sector

The UK government has published its draft Finance Bill 2019-2020 (available here), which includes the new legislation which will introduce the long-discussed changes to the IR35 off-payroll working rules in the private sector from next April.

We have written extensively on this major development – for a full explanation of what you can do to prepare for the upcoming changes to IR35 before April 2020, please click here.

UK government legislates for NICs on Termination Payments from 2020

The UK government has introduced draft legislation (see here) which will introduce an obligation on employers to make payments of Class 1A National Insurance Contributions ("NICs") (but not employee NICs) on the balance of termination payments over and above £30,000.

Under current tax rules, no element of a "termination award" (as defined under Income Tax (Earnings and Pensions) Act 2003) is chargeable to NICs. Under these proposals, this will change from 6 April 2020 and lead to a further liability for employers when making termination payments. The current rate of Class 1A NICs stands at 13.8%, so this additional charge will add potentially significant cost for employers making larger termination payments.

Government launches consultation into Sexual Harassment in the Workplace

The Government Equalities Office ("GEO") has launched a consultation into Sexual Harassment in the Workplace. In particular, the consultation seeks views on and will assess whether current laws are providing adequate protection for employees, considering whether there are any gaps in the laws and thinking about what more can be done at a practical level to ensure people are properly protected at work. Individuals and organisations are each invited to participate in the consultation, with the deadline for response being 2 October 2019.

Read more about the consultation on the government website here.

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