Monthly Highlights - UK Employment Law - January 2023

8 minute read

In our first UK Employment Law update of 2023, our team highlight key takeaways from the Employment Appeal Tribunal's (the "EAT") determination in the Ellis v Bacon marital status discrimination case and explore the scope of the test for marital status discrimination as a result. We also examine the High Court's recent interim decision which provides interesting insight into the privacy of WhatsApp messages and a recent case on dismissal for disability. Next, we set out the new Draft Code of Practice on Dismissal and Re-engagement. Finally, we look ahead and map out potential employment-related legislative changes we may see in 2023.

  1. Ellis v (1) Bacon, (2) Advanced Fire Solutions Ltd (In Administration) [2022] EAT 188In this case, the EAT confirmed that the test for discrimination on the grounds of marital status is to be narrowly construed. It was held that the reason for less favourable treatment had to be the marital status and not:

  2. (a) the identity of the spouse; or
    (b) the proximity of the relationship.

    The facts:

    • Ms Bacon initially joined Advanced Fire Solutions Ltd ("AFS") in 2005 as a bookkeeper and became a director and shareholder in 2008. In the same year, Ms Bacon married Mr Bacon. Mr Bacon was also a director of AFS.
    • In early 2017, Mr Ellis became the managing director of AFS. Later that year Mr and Ms Bacon separated, and Ms Bacon filed for divorce. The divorce was acrimonious.
    • False allegations were made against Ms Bacon in 2018. Ms Bacon was accused of misusing company IT equipment and a complaint was made to the police. This complaint was found to be entirely baseless.
    • As a result of these allegations, Ms Bacon was initially suspended and later dismissed, removed as a director and denied payments of dividends.

    Decision of the Employment Tribunal (“ET”):

    Ms Bacon initially succeeded in her claim for unfair dismissal and direct discrimination on grounds of sex and marital status against Mr Ellis. Mr Ellis was found to have been complicit with Mr Bacon and to have distanced himself from Ms Bacon after the divorce, which ultimately led to her dismissal and removal as a director. Mr Ellis appealed this decision.

    EAT decision:

    The EAT allowed the appeal and went against the earlier decision of the ET. The EAT applied and confirmed the approach in Hawkins, that the issue in this case was whether Mr Ellis treated the claimant unfavourably because she was married, not whether she was badly treated because she was married to a particular person.[1]

    Key takeaway:

    Practitioners advising on issues of marital status discrimination must ensure that the focus stays narrow and only on whether the claimant was treated unfavourably because they were married.

  3. FKJ v RVT & Ors[2023] EWHC 3 (KB): The High Court considered the position of employees when their employers use unlawfully obtained WhatsApp material in litigation.

  4. The facts:

    • On 11 January 2023, Master Davidson handed down a judgement which rejected an employer's strike-out and summary judgment for a counterclaim application and stated that it was an attempt to 'stifle' a misuse of private information claim by a former employee.
    • The Claimant had previously issued proceedings in the ET and lost against her employer with regards to claims of sex discrimination, unfair dismissal and wrongful dismissal.
    • The Claimant alleged that the employer succeeded in the ET based on its ability to provide WhatsApp messages disproving the Claimant's allegations.
    • The Claimant argued that these messages were obtained unlawfully and that her employer had 'hacked' into her WhatsApp account to gain access.

    The High Court's decision:

    The strike-out application was thrown-out as it could not be reasonably contested that the Claimant had a reasonable expectation of privacy in the messages because: (i) the materials were obtained prior to proceedings starting; (ii) they were obviously of a private nature (only 40 out of 18,000 messages were used by the ET); and (iii) the employer did not offer a satisfactory reason why the messages being on a work laptop meant that there was not an expectation of privacy.

    Key takeaway:

    Although this is only an interim decision, it may help to highlight and outline employers' duties to return private material, as not doing so may result in greater scrutiny by the ET.

  5. McAllister v Revenue and Customs Commissioners[2022] EAT 87: This case concerned an employee who was dismissed on grounds of capability in 2018 from his role in the HMRC, and consequently was awarded a payment under the Civil Service Compensation Scheme ("CSCS").

  6. The facts:

    • Mr McAllister suffered from anxiety, depression and had lengthy periods off work for other illnesses, which had impacted on his team's morale and productivity.
    • HMRC had taken all reasonable steps to make adjustments for McAllister.
    • Mr McAllister brought a claim for discrimination arising from disability in relation to his dismissal.
    • He was unsuccessful in the ET and his entitlement to the CSCS was reduced by 50%. Mr McAllister appealed the decision.

    EAT decision:

    The EAT rejected Mr McAllister's claim in relation to this dismissal on the premise that HMRC could justify the unfavourable treatment as a proportionate means to achieve its aims. These aims included ensuring staff could show satisfactory attendance and that the sickness management regime was fair and transparent. The EAT did however adjust the CSCS payment to a much more modest reduction of 20%. This was decided on the basis that a 50% reduction was considered disproportionate.

    Key takeaway:

    This judgment can give some comfort to employers that requirements such as satisfactory attendance levels and the impact on team morale were considered legitimate aims that could contribute towards a lawful dismissal.

  7. Draft Code of Practice on Dismissal and Re-engagement

  8. The Government has launched a 12-week consultation on the new draft statutory Code of Practice on Dismissal and Re-engagement (the “Code”), introduced to set out good industrial practice in respect of the existing use of ‘fire and rehire’ practices, to adopt changes to employees’ terms and conditions. The Code seeks to deter employers from using threats of dismissal during negotiations to put pressure on employees to accept new terms in light of the potentially serious consequences for employees. The Code sets out detailed steps that employers should take when seeking to make changes to contractual terms and where considering dismissing and re-engaging employees. It does not apply where an employee is dismissed because there is a genuine redundancy. Once finalised, the Code will be issued under S.203 of the Trade Union and Labour Relations (Consolidation) Act 1992 and the Government has stated the Code will be brought into force when Parliamentary time allows.

    Key Code content:

    • Communicate the proposed changes to the employees and/or their representatives and share appropriate information at an early stage.
    • Comply with information and consultation obligations outside the Code, which currently only apply when collective consultation obligations are triggered.
    • Actively re-examine business strategy where agreement is not reached over changes to contractual terms.
    • Provide employees and/or their representatives with any further information which could help reach consensus.
    • Consult meaningfully with employees and/or their representatives in good faith.
    • Consider whether unilateral changes are to be imposed, if so, set out the new terms in writing and explain the nature and impact of the changes.
    • Consider whether dismissal and re-engagement is necessary.
    • Comply with any redundancy obligations and re-engage employees as quickly as possible on the new terms set out in writing.
    • Where multiple changes to terms and conditions are being sought, that where possible these are implemented over a period of time and the business need for these changes is kept under review, so that original terms may be re-introduced, if the original reason for changing the terms ceases to be pertinent.

    Key takeaways:

    The process of fire and rehire is sometimes used when harmonising terms and conditions following an acquisition or as part of a wider business re-organisation. The Code makes it clear that imposing changes should be seen as a last resort and is likely to slow the process by which employers can vary terms and conditions of employment and assist employees in resisting these. Further, the Code expects employers to continue to engage with employees about the changes after new terms have been agreed.

    The Code does not impose any legal obligations and render an employer liable to proceedings but employment tribunals will be required to take it into account where an employer dismisses those who do not agree to contractual changes. Employment Tribunals have the power to increase compensation by up to 25% to reflect unreasonable non-compliance and also have the power to decrease compensation by up to 25% where it holds that the employee who has unreasonably failed to comply.

  9. Potential employment-related changes to look out for in 2023

  10. The following bills are currently progressing through Parliament with Government backing:

We also expect that the Supreme Court will release its judgment this year onChief Constable of The Police Service of Northern Ireland and another v Agnew and others. The hearing took place between 14-16 December 2022 and the judgment could affect how employers calculate holiday pay.

For further advice on any of the issues raised above, please contact a member of the London Employment team.

[1] Hawkins v Atex Group Ltd & Ors [2012] UKEAT/0302/11/LA