Employment Law Alert UK - January 2024

Employee Relations

Court of Session finds that future unknown claims may be settled provided that the types of claim are clearly identified. The Court of Session has held that future unknown claims can be validly waived under a settlement agreement, provided that they are clearly identified. This is a significant decision, heralding yet another change in direction in relation of the settlement of claims. This is a Scottish decision and whilst generally followed by employment tribunals and the EAT, is not binding.

The Claimant worked as Chief Officer on a number of vessels operated by the Respondent until he accepted voluntary redundancy in January 2017. As part of this process the Claimant entered into a settlement agreement which included a long list of settled claims and received enhanced redundancy and notice payments. The Claimant also understood that he would also receive an "Additional Payment". However, his Additional Payment was calculated by reference to a collective agreement which only applied to officers under the age of 61. In June 2017, when the Claimant was told that no Additional Payment would be made to him due to his age he sought to bring claims of direct and indirect age discrimination. The Respondent asserted that these claims had already been settled by the settlement agreement. Section 147(1)(b) of the Equality Act 2010 requires that a qualifying settlement agreement must relate to the "particular complaint".

The EAT found that section 147 does not permit a settlement agreement to waive future unknown claims. However, the Court of Session disagreed, finding instead that a future unknown claim can be settled provided that it is "clearly identified and the objective meaning of the words used is such as to encompass settlement of the relevant claim". Whereas the EAT reasoned that Parliament's intention was to avoid a situation where parties sign away rights to claims under the Equality Act in circumstances where they do not know whether or not they may have a claim, the Court of Session took an alternative approach, reasoning that Parliament would not have any intention to limit parties' freedom of contract where that is expressed in clear and unequivocal terms. The analysis is not whether the complaint is known, but rather whether the particular complaint is expressed in clear and unequivocal terms. This case will be welcomed by employers seeking to ensure that entering into a settlement agreement means drawing a final line under any potential dispute between that employee and the company. Whilst we expect further litigation in relation to this matter in light of earlier judgments, pending any new law, focus should switch to ensuring that settlement agreement drafting is clear and comprehensive. (Bathgate v Technip Singapore PTE Ltd)

Employment Tribunal erred in its analysis of a constructive dismissal claim by failing to properly consider the Claimant's actions in the period prior to his resignation. The EAT has held that the Employment Tribunal focussed too much on the passing of time in assessing whether the Claimant had affirmed his employment contract and remitted the Claimant's constructive dismissal claim to a new Tribunal. The Claimant was a university lecturer. A complaint was raised against him in connection with his handling of an issue at a hall of residence. The complaint was investigated. No formal findings were made against the Claimant but some points of concern were noted. Subsequently the Claimant submitted a grievance and raised further concerns about the handing of the issue by the university, which were looked into. In June 2020 the university told the Claimant that no further action was going to be taken. The Claimant engaged a solicitor and after an unsuccessful period of negotiation three months later he resigned, claiming constructive unfair dismissal. At first instance the Employment Tribunal dismissed the claim, suggesting the Claimant had affirmed his employment contract by not resigning immediately after the 'last straw' incident. However, the Employment Appeal Tribunal found that the Employment Tribunal  had focussed too much on the issue of the passing of time, and rather should have considered a range of factors, including the ongoing negotiations and the Claimant's length of service. (Leaney v Loughborough University)

Government publishes guidance on holiday pay calculations. The government has published helpful guidance covering changes to the Working Time Regulations (brought into effect by the Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023) effective from 1 January 2024. The guidance covers a number of areas of holiday pay which have traditionally been complex and challenging for practitioners (i.e. irregular hour workers and part-year workers and rolled-up holiday pay) and provides helpful guidance on how to deal with these holiday pay calculations. ACAS has updated its equivalent guidance.

ACAS Code of Practice on handling flexible working requests published. On 11 January 2024 the DBT published a revised ACAS Code of Practice on requests for flexible working, together with an explanatory memorandum. This Code of Practice is intended to come into force alongside changes to the legal framework for making flexible working requests in April 2024. Although the code of practice does not itself impose any legal obligations, its provision could be taken into account by a court or tribunal where relevant. As a result, it is worth noting that the Code of Practice advocates employers exploring all available options where it may not be possible to accept an original request in full.

Diversity, Equity & Inclusion

Claimant who used the N-word during training session receives £490,000 award. The Claimant brought successful claims of unfair dismissal, and discrimination arising from disability earlier last year. The Claimant, a long-standing manager at Lloyds Bank with a clean disciplinary record, was dismissed following an incident during a race discrimination training session. While discussing intent versus effect, the Claimant used a racially offensive term in a question. He did not intend to cause harm and immediately apologised, but was subsequently dismissed for gross misconduct. The ET recognised the offensive nature of the term and its potential impact but determined that no reasonable employer would have dismissed the Claimant under the specific circumstances of the case, particularly considering the context of a training session. The ET also acknowledged the Claimant's dyslexia, which likely influenced his manner of expression and inadvertent use of the offensive term. The recent remedy award was significant and included awards for past and future loss of earnings, together with awards for injury to feelings, aggravated damages and personal injury. It is worth noting that the remedy judgment included a recommendation that the board read the judgment and inform the FCA. The case serves as an important reminder that having a zero-tolerance policy with respect to the use of racially offensive language does not dispense with the need to fully investigate issues and importantly to consider all mitigating factors, particularly in circumstances where an individual's action could have been influenced by a disability. ( Mr C Borg-Neil v Lloyds Banking Group PLC )

Key provisions of the Retained EU Law (Revocation and Reform) Act 2023 are now in force. The Retained EU Law (Revocation and Reform) Act 2023, effective from 1 January 2024, marks a significant shift in UK employment law post-Brexit by redefining retained EU law as "assimilated law" and removing the principle of EU law supremacy. Please see our Insight with more details.

The changes introduced by the 2023 Act could have a profound impact on employment law protections in the UK over the medium to long term, depending on the extent to which courts and the government take advantage of the new powers to depart from existing principles embedded through assimilated law.

The Equality Act 2010 (Amendment) Regulations 2023 came into force on 1 January 2024; these aim to retain general principles of EU law and principles established through case law in domestic equalities law. However, as with any codification of principles set out in case law, there may be challenge as to whether or not the position has, even inadvertently, been changed.

Changes have also been introduced from 1 January 2024 in relation to working time under The Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023 to incorporate principles established over the last couple of decades of CJEU case law and to provide more clarity.

Draft Paternity Leave (Amendment) Regulations 2024 published. On 10 January 2024 the Draft Paternity Leave (Amendment) Regulations 2024 were published. The Regulations are expected to come into force on 8 March 2024, with the changes coming into effect in relation to children whose expected week of childbirth or placement for adoption is on or after 6 April 2024. Eligible employees will be allowed to split their leave into two blocks of 1 week which can be taken at any time in the first year after the birth or adoption of a child. Partners or fathers will still be required give notice of their entitlement to paternity leave and pay 15 weeks prior to the expected week of childbirth, but they will then only be required to give 4 weeks' notice prior to each period of leave.

Other interesting things

European Parliament and Council reach provisional agreement on EU AI Act. On 9 December 2023, the European Parliament and Council reached provisional agreement on the EU AI Act, which aims to establish harmonised rules for artificial intelligence and is intended to have a significant impact on those developing and using AI in the EU and beyond. The Act covers different categories of AI use, with more extensive obligations for the more sophisticated AI. Of particular relevance to employment lawyers AI used for recruitment and for decision making in employment will be categorised as "high-risk". Those systems will have extensive obligations with respect to risk assessment, record keeping and human oversight. The final text of the Act is still to be finalised, but this is expected around Q2 this year.