Newsletter May / June 2018


The General Data Protection Regulation comes into force on 25 May. If you are not already aware of this then I would be quite surprised. Just this weekend I received what must be interpreted as a privacy notice from my daughter’s singing teacher. The Regulation is cutting pretty deep.

I have encouraged all clients to recognise this not as an employment law measure but as a wider compliance duty affecting all personal data held within the business, of which employee information is likely to be just one part. Many of the core obligations are the same as or developments of existing data protection duties. However, what the GDPR is intending to herald is a culture change: a more pro-active attitude to the responsibility of holding and protecting personal data, involving ongoing monitoring.

I continue to encourage you all to take expert advice on the legal and practical (including security) aspects of this, even if initially by just looking at the guidance on the ICO website. This is not a situation for sticking plasters. That said, if anyone is struggling with what to do, for example, as regards privacy notices to be sent to staff then they should feel able to contact me.

Darryl Evans
T: +44 (0)7771 725341

Tax treatment of payments in lieu of notice

From 6 April this year important changes have been made to the tax treatment of that part of any severance payment which represents notice pay.

The previous rules had become pretty well known, although had led to some inconsistency. Notice pay was taxable in HMRC’s eyes if it was paid pursuant to a contractual provision, whether express (so a PILON clause in a contract) or implied (for example, by employer past practice or an employee’s reasonable expectation). It was open to the employer and employee to maintain that on the precise facts the payment was not made pursuant to the contractual term, an argument easier to win if there was no express PILON clause.

All of that has gone for terminations after 5 April. The new rules are fiddly, but the fundamental intention is to tax (and subject to class 1 NICs) as earnings the basic pay an employee would have earned had her or she worked his or her notice in full. Whether there is a contractual PILON clause is now irrelevant. Employers must treat a slice of a relevant termination award, which reflects basic pay for any part of a notice period that is not served, as earnings and subject that slice to tax and NICs (employer and employee).

Parental pay vs maternity pay

Now here is an interesting decision, tackling an issue many employers have been grappling with.

The Employment Appeals Tribunal (EAT) has reversed an Employment Tribunal's decision and has held that failure to pay a male employee enhanced shared parental pay, in circumstances where it did pay enhanced pay to women on maternity leave, was not direct sex discrimination.

The purpose of shared parental leave, concluded the EAT, is different to maternity leave. The latter primarily concerns the health and wellbeing of the mother, and the underlying EU Directive requires member states to provide a minimum of 14 weeks' maternity leave paid at least at the same level as statutory sick pay. The Parental Leave Directive, on the other hand, focuses on the care of the child and makes no provision for pay.

A father taking shared parental leave was therefore not in a comparable situation to a mother taking maternity leave. The correct comparator would be a woman on shared parental leave. In any event, the tribunal should have found that the more favourable treatment given to women on maternity leave was rendered lawful by section 13(6)(b) of the Equality Act 2010.

I don’t know about this. I can see the merits of the legal arguments applied here, but I doubt that this race is run yet. How do adoptive parents fit into this analysis? Watch this space. (Capita Customer Management Ltd v Ali and another UKEAT/0161/17.)

Constructive dismissal – resignation in Ignorance of rights

In Mruke v Khan (2018 EWCA Civ 280) the employee resigned as a result of having been paid at the rate of 33 pence an hour. She did not specifically allege ‘constructive dismissal’ but in an eminently sensible decision the Court of Appeal said she did not have to. This was such an egregious breach of national minimum wage law that it was obvious that the employee had resigned in response to that breach, even if she was not aware what her rights were.

It will be interesting to see how far this principle extends.

Parity of terms for agency workerss

At last we have an appeal court decision on the meaning of regulation 5(1) of the Agency Workers Regulations 2010. This requires agency workers to be afforded "the same basic working and employment conditions" as permanent employees after 12 weeks.

The key finding is that it is each term which must be individually assessed, rather than the package overall. The agency worker received 28 days of leave and one hour's rest break per shift, of which 30 minutes was paid; whereas the employees had 30.5 days of annual leave and one hour's paid rest break per shift. It was not lawful, said the EAT, to compensate for the shortfall by paying an enhanced hourly rate to the agency worker.

However, the EAT agreed with the Employment Tribunal that there was no requirement to provide an agency worker with precisely the same number of working hours as the hirer's employees. Such a requirement would be unworkable, and would deprive the relationship between the hirer, agency and agency worker of the flexibility considered important by the Directive. (Kocur v Angard Staffing Solutions Ltd UKEAT/0181/17.)

Age discrimination in share schemes

The Court of Appeal has supported an Employment Tribunal which dismissed an age discrimination claim in relation to a long-term incentive plan (LTIP).

Under the LTIP in question, generally all unvested awards were forfeited on termination of employment. However, the LTIP contained an exception which provided that award holders who left employment ‘on or after a customary retirement age’ (set at 55) were permitted to retain their awards. Mr Cockram resigned at the age of 50 and forfeited his unvested LTIP awards. He claimed that this was unlawful direct age discrimination.

The Tribunal accepted that applying the retirement exception only to employees aged 55 or over was a proportionate means of achieving three legitimate aims: intergenerational fairness and consistency between members of different company pension schemes; rewarding experience and loyalty; and ensuring a mix of generations of staff so as to promote the exchange of experience and new ideas.

Mr Cockram appealed successfully against the Tribunal’s decision to the EAT, but the Court of Appeal reversed the EAT’s ruling on the grounds that the Tribunal could legitimately reach the conclusion it did and that there had been no error of law.

Justifying an age-linked benefit such of this will be very fact dependent and will rely on a fully thought through analysis of why the preferential treatment is in place and evidence that it is proportionate. Even then it will depend on whether a Tribunal is willing accept the rationale. But this case shows that it is possible. (Air Products Plc v Cockram 2018 EWCA Civ 346).

Part-timers’ holiday

In Brazel v The Harpur Trust (UKEAT/0102/17), the EAT has held that an Employment Tribunal was wrong to read words into Regulation 16 of the Working Time Regulations 1998 that part-time, term-time only workers should have their annual holiday pay entitlement capped at 12.07% of annualised hours.

Although the 12-week averaging calculation under the Regulations 1996 may result in a part-time worker who only works for part of the year having the same entitlement to holiday pay as a part-time worker who works throughout the year, that was not a sufficient reason for adding in the implied words.

Negligent misstatements in references

In Hincks v Sense Network Ltd (2018 EWHC 533 (QB)), Sense Network issued a reference for Mr Hincks which contained opinions formed following an investigation into his conduct.

Mr Hincks brought a claim for negligent misstatement on the grounds that, where a reference contains such opinions, the referee should be satisfied that the investigation was reasonably conducted and procedurally fair, consistent with the standard to be expected of a reasonable employer.

The High Court rejected the claim. It decided that there were formidable difficulties with requiring a reasonable reference writer to inquire into the procedural fairness of earlier investigations. The referee should take reasonable care in considering and reviewing the underlying material so that they could understand the basis for the opinion and be satisfied that there was a proper and legitimate basis for it. Unless a "red flag" prompted further inquiry, there was no duty to examine the procedural fairness of the underlying investigation any further.

Strong belief of disability not the same as knowing

Mr Toy was a constable with the Leicestershire Police who lost his job during probation owing to performance concerns. During the termination process, he raised the issue of dyslexia, having not previously done so during either his work or his academic training.

The EAT agreed with the tribunal that the Constabulary did not, and could not reasonably have been expected to, know that Mr Toye was disabled at the time, so it could not be liable for complaints of discrimination arising from disability and a failure to make reasonable adjustments. It may have been possible that he was dyslexic, but that was "not clear or certain”. (Toy v Chief Constable of Leicestershire Policy UKEAT/0124/17).

‘Negative acceptance’ of contract changes

I have always been a little sceptical about relying on ‘negative acceptance’ where an employer wants to make changes to terms and conditions. In essence, that means imposing the change and telling the employees that the change will be deemed to be accepted if they carry on working. Practical and efficient: yes; legally watertight: not necessarily, as the case of Abrahall v Nottingham City Council (2018 EWCA Civ 796) demonstrates.

The Council wanted to regularise a variety of pay systems by reducing them to a single system with pay scales determined on a spinal column points basis. Soon after, the Council introduced a two-year pay freeze. The union objected strongly and threatened industrial action, although no actual action took place (just a consultative ballot). No employee raised a formal grievance. When the Council proposed an extension of the freeze, the unions activated a collective grievance procedure and then brought legal claims for unlawful deductions from pay.

The Court of Appeal found the employees were contractually entitled to annual incremental pay progression. That being established, the key issue was whether the employees had accepted a variation of their contracts by working for two years under the pay freeze. The Court of Appeal held that, whilst it was possible for acceptance to be deemed from a failure to object, that was not the case here. Each case would depend on its own facts. The principles to be used in deciding whether acceptance should be inferred included the following:

  • acceptance of a variation of contract should only be inferred from conduct where there is no other reasonable explanation of the conduct other than acceptance;
  • acceptance is less likely to be inferred where the variation is wholly disadvantageous to the employees;
  • collective protest may suffice to negative acceptance, even if the individual employees themselves say nothing;
  • an employer's reliance on inferred acceptance will be weakened where it represented that there was no variation of contract and thus that acceptance was unnecessary.

The information and any commentary contained in this newsletter are for general information purposes only and do not constitute legal or any other type of professional advice. Darryl Evans and Evans Employment Law Limited do not accept any and, to the extent permitted by law, exclude all, liability to any person for any loss which may arise from relying upon or otherwise using the information contained in this newsletter. If you have a particular query or issue you are strongly advised to obtain specific, personal advice and not to rely on the information or comments in this newsletter.

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