29/01/2020

Employment Eye January 2020

Welcome to our latest round-up of recent employment law developments and what they mean for you.

Featured case

WhatsApp and the workplace

Sarah Lamont looks at social media in the workplace and reports on two recent cases which considered the risks in the context of employee WhatsApp messages.

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Briefing

Employees paying tax on their pensions – what’s the problem, and what can be done to help?

Philip Woolham reports on the current issues surrounding pension tax.

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News round-up

 

The year ahead

Rachel Newman provides an overview of the key employment law and HR developments to look out for in 2020.

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WhatsApp and the workplace

Employers are increasingly faced with employee misuse of social media platforms and the effects on the workforce.  With the risk of being held vicariously liable, there is a delicate balance between an employer’s desire to protect itself (and the duty to protect its staff) and an invasion of the fundamental principle that individuals are entitled to freedom and privacy, including their personal use of social media.  This article looks at two recent cases which considered these issues further in the context of WhatsApp messaging.

Getting the balance

In order for a dismissal under section 98 of the Employment Rights Act 1996 to be fair, a Tribunal will take into account the Article 8 right to privacy in the European Convention of Human Rights. There is no presumption that as soon as an employee puts their information into the public domain they lose that right. The focus is on the ‘reasonable expectation of privacy in relation to the communications in question’ and whether interference by the employer was in accordance with law and proportionate.

The recent cases

The cases of Wells v Cathay Investments 2 Ltd and C v Chief Constable of the Police Service of Scotland, were both heard in the English and Scottish High Courts respectively this year.

In Wells, two senior employees were dismissed for gross misconduct following obscene sexist and pornographic messages sent by multiple employees through a work WhatsApp group. These messages surfaced when the employer carried out an analysis of an employee’s phone. Whilst this was a case of wrongful dismissal brought in the High Court as opposed to unfair dismissal in the Employment Tribunal, the High Court had no hesitation in saying that obscene WhatsApp messages could amount to a material breach of an employment contract and therefore gross misconduct. 

The case of C v Chief Constable of the Police Service of Scotland did examine the privacy issue more closely and concerned a petition to judicially review dismissals of several police officers for gross misconduct after they posted offensive messages in a work WhatsApp group.  These messages were disclosed following their discovery during a criminal investigation. The employees argued there was a breach of Article 8 by the employer disclosing their private messages from a separate investigation. The claim was rejected on the grounds that there was no expectation of privacy, and that the disclosure had a clear legal basis, which was necessary and proportionate in order to maintain public safety and prevent disorder and crime.

A key feature of the C case, however, was that police officers are considered to be in a special category with limitations on their privacy.  The High Court was clear that for most individuals who do not work in a regulated environment, messages such as those exchanged in the case would remain private regardless of how inappropriate their content was. 

What does this mean for me?

Whenever employers are considering misuse of an employee’s personal social media account in the context of disciplinary proceedings, it is always important to establish reasonable justification for what could otherwise be considered an invasive interference of an employee’s right to privacy.  Relevant factors will include whether the employee was on notice of monitoring, the extent and legitimacy of any intrusion and any alternative methods of obtaining the information.

Practical tips

Ways in which employers can mitigate the risk of social media misuse and unlawful interference include:

  • Adopting a standalone Social Media Policy setting out clear expectations for employee usage (during and outside of work) consistent with other policies.
  • Reminding employees that online activity is not necessarily private and can, in some circumstances, be monitored with disciplinary consequences for breaches of employee policies.
  • Training staff on policies in line with their rights to privacy.
  • Reminding staff about the restrictions on IT use and their obligations in relation to confidential information, IP and data protection.
  • Requiring staff to state on blogs that any views are theirs and do not represent the employer.

Please do not hesitate to contact Sarah Lamont to discuss any of these issues further.

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Employees paying tax on their pensions – what’s the problem, and what can be done to help?

What’s the problem?

There has been a lot of publicity about pensions and tax recently.  There have always been limits on how much you can save into a pension tax-effectively.  But people unexpectedly hitting tax thresholds on their pension saving is becoming an increasing issue for all pension schemes, and in particular for the public sector.

In essence, if you save into pensions above a set level in any one year, or across your lifetime, you will have to pay tax on that extra saving.  It is a particular problem in the public sector because benefits are relatively generous compared to the now more common money purchase pension schemes in the private sector.  So the value of your saving is greater in proportion to the amount you as an employee and your employer actually pay in.  As a result, it’s easier to hit the Annual or Lifetime Allowance thresholds.

Those allowances, although now stable or in the case of Lifetime Allowance rising slightly, have been cut drastically over the past decade.  When once only the very highest-paid and longest-serving pension savers might have been affected, they are now hitting a much wider group of employees than was ever originally expected.  Although the tax charges are meant to be the same as what you would pay if you had received the additional pension saving as income, the charges often come as a shock when they are calculated as a lump sum at the end of a tax year.

What’s happened in the NHS?

The greatest focus has been on the National Health Service Pension Scheme.  Senior staff have very publically been cutting hours, not working extra shifts or even retiring early because their pension saving has been taxed.

The Department of Health has proposed a new temporary solution to the tax issue that has meant that senior medical staff in particular have felt unable to take on additional duties or work extra hours.

The NHS Pension Scheme has always had a provision called ‘Scheme Pays’, as have most pension schemes offering similar benefits.  When someone has to pay a tax charge on their pension saving, the Scheme can pay it for them.  Their eventual benefits drop accordingly.  This stops staff having to find the money themselves up front, which already to some extent reduces the impact of the charge.

The proposal is that for the current tax year (until April 2020), if staff use Scheme Pays to pay any tax charge, the NHS will make good this drop in benefits when they eventually take their benefits.  We do not know the exact mechanism for this.  NHS employers are however expected to publicise the proposal to staff straight away to allow them to take on extra work.

This means that although staff will still pay pension tax charges now via the Scheme, not directly, they will not lose out in the long run.  They can in fact save tax free above the usual limits.

It will cover all clinical staff with annual allowance issues in the NHS Scheme.  Earlier proposals talked about ‘senior clinicians’ only, so this should have a wider effect.

The immediate proposal seems to be a pragmatic short-term solution to deal with a real problem on the ground in the NHS caused by pension tax decisions, although it is not available to non-clinical staff or staff in other public pension schemes.

Does this have any wider effects, including outside the public sector?

This is, however only available for medical staff in the NHS Pension Scheme, not for any other NHS employee or any other public sector worker.  It has been put in place in response to a very public problem, but it does effectively mean that this one group of workers can save tax free above the universal thresholds. 

Even if temporary, it is still in complete opposition to the principle that everyone should be taxed in the same way on their pensions.  It is not a solution either other public sector employers or private sector employers can offer, because it relies on a specific exemption allowed by the Government.  Employers could offer directly to pay tax charges, although this would in itself be taxable as income or a benefit in kind – again, that does not apply to the NHS so far as we know.

For the NHS, the Government is looking at a longer-term solution that will not have the same impact on the current tax rules.

If the pre-election proposals are carried out for April 2020 onwards, staff in the NHS Scheme will be able to pick at what level they and their employer pay in to the Scheme.  They can then save at a level that won’t cause them allowance tax charges.  It does put a lot of emphasis on individual employees managing their pension tax affairs, and extra burdens on employers and administrators.

An employer not in the public sector may well have more freedom to make changes. For example, it is more straightforward to agree with staff that they can receive a pay rise if they choose to give up their future pension scheme membership.  It is also possible to provide a secondary pension scheme, in which contributions are taxable, to top up their existing pension saving.  They can also, usually with the consent of their pension scheme trustees, make changes to their rules to mirror the longer-term proposals, so that employees can save at a tax-efficient rate.

Unless there is a wholesale change in how pensions are taxed, and particularly in the saving thresholds, this is likely to be an issue that affects more people in both the public and the private sectors.  If you would like to discuss options for dealing with this, our our pensions specialists, Philip Woolham and Jaspal Basra, would be delighted to hear from you.

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The year ahead

Rachel Newman summarises some of the key employment law and HR developments to look out for in 2020.

Parental bereavement leave

For deaths from 6 April 2020, bereaved parents will be entitled to at least two weeks’ paid leave following the loss of a child under the age of 18 or a stillbirth after 24 weeks of pregnancy. The change in law has been anticipated since 2018 and is officially coming into force on 6 April 2020.

Following consultation, the legislation now also includes this same right for primary carers.  Individuals who may have taken responsibility for the child’s care in the absence of parents, such as close relatives or family friends, will have the same rights as the biological parents.

The time off can be taken in either a single two-week block or as two one-week periods, within 56 weeks of the child’s death, allowing people to take the time when they need it, such as anniversaries or other prominent dates.

Employees with 26 weeks’ continuous service will receive paid leave at the statutory rate and other staff will be entitled to unpaid leave.

Although the legislation is clear, it is still worthwhile for employers to either create a new policy or review any current compassionate leave policy in line with the impending changes. Other supportive measures such as Employee Assistance programmes should also be considered.  

Agency worker regulations

The Swedish derogation is the more commonly used name for a special type of employment contract, which is provided for in Regulation 10 of the Agency Workers Regulations 2010 (AWR). The correct name is a “pay between assignments” contract.

Agency workers who are engaged on these contracts with a temporary work agency, give up the right to pay parity (i.e. the right to the same basic working and employment conditions as direct recruits once they have undertaken the same role with the same hirer for 12 continuous calendar weeks) in return for a guarantee to receive a certain amount of pay when they have gaps between assignments.

Following a consultation, The Agency Workers (Amendment) Regulations 2019 will come into force on 6 April 2020 to revoke the Swedish derogation provisions set out in regulations 10 and 11 of the AWR.

This means that from 6 April 2020 all agency workers will be entitled to “pay parity” once they have undertaken the same role with the same hirer for 12 continuous calendar weeks. Those agency workers currently engaged under a Swedish derogation contract have to be provided with a written statement advising that, with effect from 6 April 2020, those provisions no longer apply. Agency workers will have the right to bring a claim in the employment tribunal where the above statement is not provided.

Agency workers asserting rights under the new Regulations will be protected from detriment and unfair dismissal.

For a company who engages agency workers who are currently employed under Swedish derogation contracts, these changes could have significant financial implications after the 12-week qualifying period. We would advise an urgent review of the current agreements in place with agency workers.

The Good Work Plan

As detailed in previous employment law updates, there are some key changes that will be effective as of 6 April 2020. We consider the changes below are the ones most applicable for the largest number of employers:

  • A written statement of particulars must be given on, or before the first day of employment (rather than within the first two months) and to workers as well as employees. More information is to be provided to the individuals than previously;
  • The reference period for determining an average week’s pay will be increased from 12 weeks to 52 weeks, (or the number of complete weeks for which the worker has been employed if less than 52 weeks); and
  • Lower thresholds for requesting information and consultation arrangements (2% of employees).

Ethnicity pay gap reporting

In October 2018, the Department for Business, Energy and Industrial Strategy (BEIS) and the Race Disparity Unit launched a consultation on the implementation of ethnicity pay gap reporting, to mirror the statutory gender pay reporting obligations introduced in April 2017. Following this it had been widely predicted that a legal obligation for ethnicity pay gap reporting would come into force from April 2020. This is now unlikely to happen by that date.

In any event, businesses would be wise to start preparing for ethnicity pay gap reporting as it remains likely to become mandatory.

At this time, businesses can be reviewing the personal data they currently store to consider if this is going to be sufficient to enable them to produce a report.

It is also worth considering completing a voluntary pay gap report on areas such as ethnicity as a useful foundation, ahead of any formal reporting requirements that might be introduced at a later date. This may help a business to identify any current disparity in pay.

Menopause in the workplace

A matter attracting increased media coverage is the menopause and how this can impact the employer/employee relationship.

An increasing number of menopausal women are now in the workforce owing to more women working generally and also later in life. The symptoms of menopause can range in severity and can include a combination of hot flushes, headaches, heavy periods, sleep disturbance, poor memory, depression and anxiety.

Acas published guidance for employers on World Menopause Day in October 2019 following the Labour Party Conference in September 2019 during which it was mentioned there were plans to require large employers to treat menopause-related absence separately from other absences.

Even without a change in the legislation, employers need to be aware of the HR and legal implications relating to the menopause and depending on the nature and extent of any symptoms, the potential for it to amount to a ‘disability’ under the Equality Act 2010.   Employers should be mindful of this and it is advisable to draft and carefully implement a menopause policy.

In order to assist employees experiencing symptoms of the menopause, an employer could consider training line managers to increase confidence to discuss menopause with employees, equalities training to include awareness of menopause transition, allowing frequent breaks to allow access to toilets, providing ventilation/desk fans and allowing some form of flexible working.

We envisage there will be an increase in Tribunal claims in 2020 alleging disability discrimination on the basis of the menopause.

If you would like to discuss any of the issues in this article further, please contact Rachel Newman.

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