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September 2019 newsletter

In this months edition...
Employers have been concerned since the implementation of shared parental leave that if they offer enhanced maternity pay, they may be discriminating if they do not offer enhanced shared parental leave pay.  A case has finally provided the legal answer, please see case 2 in this month's edition.

What's on the horizon
Recent cases

Working time regulations
Shared parental leave
HR good practice

Abbreviations used in this issue:
CA - Court of Appeal;
CJEU - The Court of Justice of the European Union;
EU - European Union;
GDPR - General Data Protection Regulation;
HSE - Health and Safety Executive;
WTR - Working Time Regulations
Updates to member's toolkit
New - HR audit checklist
The following changes are due to come into force in April 2020.  As it's still a long way off, detail is still sketchy, but this is what is on the horizon so far:-
  • Increase in holiday reference period from 12 weeks to 52 weeks: the proposal is to increase the reference period used for determining a week's pay when calculating holiday pay for workers with irregular hours from 12 weeks to 52 weeks, which is seen to be a fairer time period to use
  • Extension of the right to a written statement of employment particulars to all workers:  Written statement will be a day one right for all workers. Employers will also have to provide additional information as mandatory content for a written statement
  • Parental bereavement leave rights take effect: Provides for at least two weeks' leave for employees following the loss of a child under the age of 18 or a stillbirth after 24 weeks of pregnancy. Employees with 26 weeks' continuous service will be entitled to paid leave at the statutory rate and other employees will be entitled to unpaid leave
Working Time Regulations
Federacion de Servicios de Comisiones Obreras (CCOO) v Deutsche Bank SAE

In a recent case, the European court rules that member states must measure employees’ working time, both normal hours and overtime, to ensure staff are not working beyond the legal maximum number of hours, and that they receive stipulated daily and weekly rest periods. The case means that each EU country face the challenge of ensuring compliance across diverse industries and varying local working practices.

The CJEU ruling requires each employer to 'set up an objective, reliable and accessible system enabling the duration of time worked each day by each worker to be measured'. The aim of this measuring is to ensure that 'the fundamental right of every worker to a limitation of maximum working hours and to daily and weekly rest periods' is respected.  Each country now have the task of ensuring that employers set up a timekeeping system that meets these requirements. This is not a straightforward task, and for the UK, even more problematic as it is still unclear what laws we will follow as part of Brexit.   UK employers therefore await revised guidance on record-keeping, and the information below sets out some key areas to keep an eye on.

In the UK, regulation 9 of the WTR requires employers to keep 'adequate records' to show whether weekly working time limits and the time limits on night working are being complied with and failure to do so is a criminal offence. These records must be maintained for each applicable worker for two years.  However, this requirement does not cover daily or weekly rest and does not require all hours to be recorded.  The HSE rather than individual workers are responsible for enforcing the requirement for employers to take reasonable steps to keep adequate records for the purposes of the WTR. 

The UK government intervened in this case and argued against the decision. The ECJ held that, in the absence of a record of the time worked each day by each applicable worker there is nothing to evidence compliance with the legislation.

Amendments to the WTR would be required to meet the more detailed level of record keeping set out in this ruling.  Whether or not the Government will introduce legislation to amend the Working Time Regulations that apply in the UK to ensure they comply with this decision remains to be seen.  For now, although this ruling has direct effect for public employers and will continue to bind UK courts after the UK leaves the European Union, employers in the private sector are not required to amend their standard of record keeping, unless or until such time as amending legislation is passed by the UK parliament. 

Top tips
  • In practical terms it is recommended that UK employers consider waiting until the HSE has issued revised guidance before making changes to their record-keeping requirements
  • If employers wished to start recording all working hours in line with this decision, then of course they may do so. Without strict rules in place about how to record, it will be up to employers to choose how to do this, whether they do it online, through a clock in or out system, or using paper records.

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Shared Parental Leave
Hextall v Chief Constable of Leicestershire Police and Capita Customer Management Ltd v Ali
Court of Appeal provides clarity on shared parental pay

The CA has ruled that there was no discrimination where men taking shared parental leave did not receive enhanced rates of pay in circumstances where women on maternity leave were paid a higher rate. This case provides reassurance to employers that it is lawful to pay women enhanced maternity pay without matching those benefits for parents taking shared parental leave.

The central issues in this appeal, were whether it was either unlawful discrimination on the basis of sex (whether direct or indirect) for men to be paid less on shared parental leave than birth mothers on paid statutory maternity leave, or whether an implied sex equality clause should ensure that men and women in like circumstances are paid equally.  

Regarding the direct unlawful discrimination complaint, there is a special provision within the Equality Act which states that in a direct sex discrimination claim, no account is to be taken of special treatment afforded to a woman in connection with pregnancy or childbirth. An employer is therefore able to rely on this provision to provide enhanced rates of pay to mothers on maternity leave, without this amounting to direct discrimination.

The CA explained that statutory maternity leave related to matters exclusive to the birth mother and was not just about facilitating childcare.  The argument that following the compulsory two weeks a birth mother is a legitimate comparator to a man on shared parental leave therefore failed. The Court determined that in fact the proper comparator for Mr Ali was a female worker on shared parental leave. 

Turning to the equal pay complaint, legislation implies into all contracts of employment a 'sex equality clause'.  However, this clause does not apply 'in relation to terms of work affording special treatment to women in connection with pregnancy or childbirth.'  The CA decided that this case was actually an equal pay case, but the equal pay exclusion applied here, meaning that the more favourable maternity terms available to female employees related to the special treatment afforded to them in connection with pregnancy or childbirth. As a result, the sex equality clause did not operate.

The CA explained that because on the facts of this case, this was an equal pay claim and therefore the individual was not also able to bring a claim for indirect sex discrimination, but went on to explain that a claim this would have been rejected in any event. The indirect sex discrimination claim would have failed because the correct pool for comparison could only consist of employees on shared parental leave. Any disadvantage to Mr Hextall would have been justified as being a proportionate means of achieving the legitimate aim of the special treatment of mothers in connection with pregnancy or childbirth.

This is not necessarily the end of the story as the individuals are seeking leave to appeal.  While the Government in its guidance on shared parental leave has said from the outset that there is no requirement for employers to match enhanced benefits, there was always the risk that a claim for discrimination may be successful in challenging this view.

However, for the time being these decisions give clear comfort to employers across all the potential claims of sex discrimination that they can treat maternity pay and maternity leave as a special case without the risk of claims by men for comparable terms. 

Top Tips
  • Employers may rely on this decision to defend a potential sex discrimination claims where they offer enhanced maternity pay to employees who take maternity leave, but pay statutory shared parental pay to employees taking shared parental leave
  • Generally speaking the take up of shared parental leave has been low, with statistics suggesting the take up for couples that qualify for shared parental leave could be as low as 2%. For employers that are able to offer enhanced shared parental leave pay, the take up is likely to be higher.
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Handling employment references alongside GDPR 

GDPR is now over a year old.  The aim of the GDPR was to increase the protection of individuals’ personal data.  Employees are better informed than ever of their data protection rights, with employers receiving an increased number of subject access requests from their employees.

Providing a reference about an employee to a prospective employer, will generally involve the disclosure and therefore the processing of personal data and so will accordingly need to be compliant with GDPR.  It is important to note that, except in certain specifically regulated sectors, an employer is under no obligation to provide a reference and employers can generally decline to do so, however companies should be consistent in their approach or else the possibility of discrimination or victimisation claims may arise.
Responding to a request - lawful basis for processing
When responding to a reference request, employers will need to consider and document their lawful basis for processing the personal data of the employee. This is central to the concept of 'fair and lawful processing' which is at the heart of data protection legislation.  In an employment context the lawful grounds or conditions which should usually be relied upon will be either that the processing is necessary for the performance of the contract with the employee or that it is necessary to fulfil a legal obligation. However neither of those fit easily with the provision of a reference.  Consent is an additional ground. 

Most commentators on data protection and indeed the Information Commissioner suggest however that in most cases any consent given by employees will not be valid because of the imbalance in the power relationship. However the situation is arguably different in the case of references where it is the employee who wishes the reference to be given and they are not in any way under pressure from the current employer such as might invalidate any consent given.  It may be possible, when responding to a reference request, to base the processing on the backstop condition of the 'legitimate interests' of the employer or, more likely those of the third party prospective employer seeking to ensure that they appoint a suitable candidate but depending upon the scope of the reference the ability to rely upon this ground may be uncertain. In those circumstances most employers responding to a request for a reference may accordingly want to rely on the data subject’s consent to process the data contained within the reference. In order to be GDPR compliant such consent will have to be unambiguous and clearly documented.

There are two ways an employer can document a data subject’s consent. Firstly, at an exit interview they can ask the employee for their consent to retain information and process it for the purposes of providing future references and record this in a suitable format. Secondly, the current employer could put the onus on the prospective employer and make sure that they document and produce the employee’s consent to the current employer providing a reference. Employers will want to keep a copy of the evidence of consent in order to be able to demonstrate their lawful basis for processing.  Any consent form used should document precisely what the data subject has consented to their former employee disclosing. 

Accessing reference content
Interesting, however, under the previous data protection legislation, individuals were not entitled access to a confidential employment reference written about them, either from the author of the reference (the ex-employer), or from the recipient of the reference (the new or prospective employer).  In order for ex-employers to refuse disclosure (should they wish to do so), the reference should clearly state that it is confidential, intended for the attention of the recipient only and that the author does not give permission for it to be disclosed to the subject.  This protection was however undermined by the fact that the employees could then apply to the recipient employer for a copy of that reference which was not able to rely upon the same exemption.

Under the GDPR employees still have the right to make subject access requests. However, the loophole in the previous legislation has been closed and  personal data held by either the giver or the recipient of a reference may be withheld where it consists of a reference given or to be given in confidence for the purposes of the:
• Education, training or employment, or prospective education, training or employment, of the data subject.
• Placement, or prospective placement, of the data subject as a volunteer.
• Appointment, or prospective appointment, of the data subject to any office.
• Provision, or prospective provision, by the data subject of any service.

Factual only?
The author of a reference owes a duty of care to both the subject of the reference and the reference recipient.  The reference must be true, accurate, fair and must not give a misleading impression.  Most job offers are conditional upon receipt of satisfactory employment references.  Clearly, an unfavourable reference can harm an individual’s future employment prospects and result in the prospective employer withdrawing an offer or dismissing an employee during their probationary period. 

If a reference is revealed to an employee and the individual believes the ex-employer had provided a negligent reference, they could bring a claim in the county court and request that the court orders disclosure of the reference.   

Top Tips
  • As a result of these developments and the additional risks of disclosure, we are likely to see even more employers adopting a policy of providing purely factual references or at least strict  restrictions on the nature of the information which may be disclosed
  • Companies should carefully review their reference policy and procedure to ensure risks are adequately managed.
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This bulletin is for general information only.  It is not intended to constitute professional advice.  Though The Sevier Consultancy Group is confident of its accuracy, no duty of care is assumed to any recipient of the bulletin and no liability is accepted for any omission or inaccuracy.
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