Procurement Bill 2022

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The big news for procurement watchers is that the Government has finally published its Procurement Bill. The Bill follows a public consultation and announcement during the 2021-22 Parliamentary Session, but failed to find Parliamentary time. The Procurement Bill re-regulating public sector procurement was introduced in the House of Lords on 11 May, and the Second Reading is scheduled for 25 May. This article considers some of the key issues which impact on the HE sector.

Impact on Higher Education Institutions

The first, and most fundamental question is whether Higher Education Institutions (“HEIs”) remain in scope of procurement law. To recap, under the current rules, the HEIs are treated as within scope of procurement law to the extent that they fall within the legal definition of “body governed by public law”. That term has a specific and narrow euro-definition, so that it is common across the EU. In brief, that usually means that HEIs undertake an annual assessment of their income streams. If more than 50% of its income is from public financing, then they are caught. This explains why some of the more historic institutions (with large endowments and extensive property and investments) or research-intensive institutions with commercial income have considered themselves outside of the scope of the procurement rules. There has always been a question whether student funding through the Student Loans Company is public finance. It is hardly a surprise that the lawyers can’t agree when the Office for National Statistics struggles with how to categorise it. Not only is this not clarified in the Bill, but this is made even more unclear.

On the one hand, neither the Green Paper nor the Explanatory Notes to the Bill raised any suggestion that the scope of procurement law would change. On the other hand, the Bill provides that the concept of public authority includes an authority with “functions of a public nature” that is “funded wholly or mainly from public funds” which echoes the broadly similar and widely drafted definition in the Human Rights Act and merged into an amalgam of both pieces of legislation.

The courts have already decided that a private provider of social housing could be a public authority under that Act as it performs “functions of a public nature”: R (Weaver) v London and Quadrant Housing Trust. The courts have not decided whether SLC funding is public funding and, most importantly, have not decided whether that, in any event, matters. It merely “includes” those that are publicly funded and does not exclude those that are not, and creates new uncertainty for those HEIs that are currently outside of the scope of procurement.

What are the Key Changes?

The key change is that the Bill consolidates the current Public Contracts Regulations, Defence and Security Public Contracts Regulations, Concession Contracts Regulations and the Utilities Contracts Regulations into one handy Act. One of the benefits of the Bill is to “slash” red tape by “removing” more than 350 complicated and bureaucratic rules. The Bill is still 116 sections (not including Schedules) so the jury is out on whether that objective has been met.

Streamlined Procedures

The Bill does certainly have the useful change in that it streamlines the current raft of procurement procedures to three: open competitive procedure, the inelegantly described “other” competitive procedure and direct award. The “other” competitive procedure now encompasses the panoply of competitive procedures which range from the extremely formal restricted procurement procedure (i.e. inviting a manageable number of bidders to tender) through to the still pretty formal competitive dialogue and negotiated procedures. This will likely be unequivocally welcomed, in order to allow some sensible flexibility to the operation and management of a procurement process.

An end to MEAT

The Bill proposes an end to the requirement to award the contract on the basis of the “most economically advantageous” (“MEAT”) criteria and replace this with the “most advantageous tender” (“MAT”). MEAT provides for an evaluation of price or cost (which could include the best price-quality ratio), but only permitted social or other criteria which were linked to the subject-matter of the contract. This means that buyers can now include criteria that go beyond the subject matter of the contract and award contracts to suppliers that contribute to wider economic, social or environmental outcomes.

Below-threshold Contracts

A real difficulty with the current state of procurement law is not so much the regulations, but law which is not part of the regulations. Despite their length, the Public Contracts Regulations are not a complete code of procurement law and are supplemented by rules which are derived from case-law derived from the EU Treaties, including on the advertisement and procurement of contracts which are below the value threshold set out in the Regulations. Section 4 of the EU (Withdrawal) Act 2018 maintains rights and remedies which are recognised under English law. This could certainly include the obligation to consider and to advertise below-threshold contracts, which has been recognised by the English High Court in Mansfield DC v DCLG. Unhelpfully the Bill does not set out whether those rights continue or whether they have been repealed leaving this puzzle very much one for my learned friends.

Transparency

The Government notice promises that the Bill will deliver “a step-change in transparency and openness”. The Bill retains the existing current obligations to publish notices for contracts and award decisions, but now also includes new obligations. The Bill introduces “planned procurement notices” (which rename, rather than replace the optional “prior information notices”), and also oblige buyers who have an annual contract spend of £100 million to publish “Pipeline Notices” for any contracts which may have a value of £2million.

Buyers are obliged to include at least three key performance indicators in contracts with a value over £2 million and, in addition are obliged to publish details of the supplier’s performance against those KPIs including where there has been a settlement agreement between the parties. While the Green Paper alluded to the principle of “transparency by default”, I am not sure that the market was expecting transparency of defaults, including potentially, overriding the commercial confidentiality of settlements of claims.

Transparency will be implemented through a central data platform and enforced by, among other things, a new Procurement Review Unit (job advertisements are still open at the time of writing …) which proves, if nothing else, that even an efficiency drive can be implemented by another layer of government.

You can find out more at the Parliamentary website.

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The new Procurement Bill raises important questions for higher education institutions

Blog | Education

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The big news for procurement watchers is that the Government has finally published its Procurement Bill. The Bill follows a public consultation and announcement during the 2021-22 Parliamentary Session, but failed to find Parliamentary time.

The Procurement Bill re-regulating public sector procurement was introduced in the House of Lords on 11 May, and the Second Reading is scheduled for 25 May.

Which bodies are covered by the new procurement Bill?

The procurement rules in the Bill will apply to both public bodies and to utilities. So far, this simplifies the existing legislation by consolidating the regulation of public bodies and utilities under the current suite of rules: the Public Contracts Regulations (PCRs), Defence and Security Public Contracts Regulations, Concession Contracts Regulations and the Utilities Contracts Regulations.

The draft bill uses the defined term “public authority”, which excludes certain listed authorities. These excluded authorities include Scottish authorities, which are governed by the Scottish law regulations - those remain firmly aligned to the EU Directives, in case that particular parachute cord needs be pulled - and the security services.

What is the definition of “Public Authority”?

The concept of a public authority would be fine, but the Bill provides the entirely unhelpful non-definition of public authority as follows:

“’public authority’ includes any authority with functions of a public nature that:
(a) is funded wholly or mainly from public funds, or
(b) is subject to contracting authority oversight.”

Using the term “includes” unhelpfully means that the concept is now an open list. While those authorities which exercise functions of a public nature and are wholly or mainly publicly funded are within that list, conceivably this could also include those authorities which are not.

Unlike the current PCRs, this definition does not even include a legislative test which you can apply in order to determine whether an entity falls within the scope of the definition or not and leaves it to judicial discretion. This legislative approach where “you will know it when you see it” is completely counter to the principle of legal certainty.

It contrasts with, for instance, the Freedom of Information Act which contains a schedule clearly defining the scope of public authority for the purposes of that Act and is more in line with the definition of public authority in the Human Rights Act. It makes much more sense to adopt the FOI, rather than HRA definition as a matter of legal policy and principle: it would provide legal certainty and in principle, it shares the same underlying policy goal of FOI which is to provide transparency.

How does this affect higher education institutions?

The current procurement rules under the PCRs currently apply to higher education institutions to the extent that they derive more than 50% of their funding from public sources. There has always been a puzzle with determining whether Student Loans Company funding was treated as public funding or not. This is because on the one hand the funding is referable to a student, but on the other, the funding never leaves public control and even the ONS treats student loans, in part, as public funding on the basis that around 45% of them are never repaid.

With this definition we now have the double-puzzle of (a) identifying whether SLC funding is “public funds”; and (b) even if it is not, whether a higher education institution is nonetheless subject to the procurement rules if it exercises functions of a public nature.

You can find out more and register for a Government webinar tomorrow at the following website.

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Employment spring 2022 update: News in brief

Technical | Employment

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A quick round-up of recent employment law developments

Click below to jump to the relevant piece

Fire and rehire – Statutory Code of Practice

The government has announced that a new Statutory Code of Practice will be published on "fire and rehire" practices used to bring about changes to employees' terms and conditions. The government has been under pressure to address the use of fire and rehire for a while and has previously said it will not legislate. This announcement follows events surrounding the mass redundancies made by P&O Ferries, which took place without prior notice or consultation.

The Code of Practice will detail how businesses must hold fair, transparent and meaningful consultations on proposed changes to employment terms and will include practical steps that employers should follow. Tribunals and courts will be required to take the code into account when considering relevant cases, including claims for unfair dismissal, and will have the power to apply an uplift of up to 25% of an employee's compensation where the employer unreasonably fails to follow the code.

We understand a draft code will be published and representations, including from trade unions, will be considered in accordance with section 204 of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA), although no timescale has been given.

Digital fit notes

The Social Security (Medical Evidence) and Statutory Sick Pay (Medical Evidence) (Amendment) Regulations 2022 (SI 2022/298) came into force on 6 April 2022 enabling fit notes to be issued digitally.

Given the significant shift to virtual GP consultations since the outbreak of the COVID-19 pandemic, there has been increasing demand for fit notes to be provided in digital form.  The new regulations prescribe a new form of fit note, which will be used in parallel with the existing version of the form. The regulations remove the requirement for the fit note to be signed in ink and the new form of fit note no longer contains a signature box.

Employment tribunals road map

The presidents of the Employment Tribunals in England and Wales and in Scotland have published a new ‘road map’ for employment tribunal proceedings in 2022/23. The road map indicates that preliminary hearings will continue to default to video, and that this is likely to become permanent. However, the presidents wish to reduce the reliance on video, and intend to move towards greater use of in-person hearings, especially for final hearings of standard track and open track claims.

The majority of hearings across Great Britain are still taking place on a fully remote basis, and, in some parts of the country, over 90% of hearings are still by video. The presidents state that they want to bring that percentage down. However, they accept that, in some cases, a video hearing reflects the preferences of the parties and their representatives, and can be less costly and less disruptive to the lives of those participating.

Changes to immigration rules

The government has announced changes to the UK immigration rules. Key changes include the introduction of several new entry routes, including:

  • Global Business Mobility route. There are five new routes for businesses based overseas who wish to establish a presence in the UK.

  • High Potential Individual route. This route is for graduates of top global universities to come to work in the UK without a job offer.

  • Scale-up route. This route is for migrants with a job offer from a qualifying “Scale-up business” i.e. with an annualised growth of 20% or more in terms of turnover or staffing for a three-year period.

  • Representative of an Overseas Business route.

  • Skilled Worker route.

Compensation limits

This year's compensation limit increases are:

  • A week's pay (basic award / redundancy payment) - £571 (up from £544)

  • Maximum compensatory award - £93,878 (up from £89,493)

The new limits apply to dismissals occurring on or after 6 April 2022.

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Employment case law update | Spring 2022

Technical | Employment

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Here we take a quick look at some key employment case law decisions from recent months.

Click below to reach your chosen case

Macken v BNP Paribas

Ms Macken was employed as a financier at BNP Paribas from 2013. She remains an employee but was placed on long-term sick leave from July 2018. She brought three employment tribunal claims against BNP Paribas in 2017, 2018 and 2019 in relation to various issues.

In March 2019, the employment tribunal upheld Ms Macken’s claims against BNP Paribas for direct sex discrimination, victimisation and equal pay arising from conduct by senior colleagues. This included one of Ms Macken’s colleagues placing a witch’s hat on her desk and another colleague dismissing her using the phrase “not now Stacey”, which was later copied by other colleagues. Another of her senior colleagues would answer the phone with greetings such as “hi sexy”. Ms Macken’s relationships with her senior colleagues worsened after she raised a complaint internally regarding inequality in pay and bonuses and resulted in her performance ratings worsening. In March 2021, a remedy hearing took place in respect of Ms Macken’s successful claims.

The Employment Tribunal awarded Ms Macken a staggering £2,081,449.70 in compensation, one of the largest ever awards made by an Employment Tribunal, and a timely reminder of the potential cost of discriminatory behaviour.

Breaking down each of the heads of loss, the tribunal awarded Ms Macken a total of £614,461.95 for past losses, comprising of £401,797.86 for equal pay and £212,664.09 for personal injury. In relation to the award for personal injury, the tribunal held that, as Ms Macken had been on long-term sick leave due to the discriminatory treatment she suffered at BNP Paribas, and as there was no intervening act which broke the chain of causation, Ms Macken was entitled to compensation for losses arising from being ill.

Furthermore, Ms Macken was awarded £860,120.11 for future losses. While the tribunal acknowledged that Ms Macken may be able to work in the future, it was accepted that she would never be in a position to return to her role at BNP Paribas, nor would she be likely to obtain a new position that paid her as much as she was entitled to through her Private Health Insurance (PHI) with BNP Paribas.

The tribunal concluded that, as Ms Macken would continue to satisfy the definition of ‘incapacity’ under the PHI until she retired, the best way for her to mitigate her losses was by remaining employed by BNP Paribas, but not carry out any role, and continuing to receive the PHI benefit for 15 years, until she was 65.

An additional £124,315 was awarded as compensation, which included an injury to feelings award of £35,000 and aggravated damages of £15,000. The tribunal also made adjustments of £479,789.57, including an ACAS uplift of £317,016.34. Furthermore, the Employment Tribunal ordered BNP Paribas to carry out an equal pay audit under regulation 2 of the Equal Pay Audit Regulations 2014.

Kocur v Angard Staffing Solutions & Another

Mr Kocur was employed by Angard Staffing Solutions (Angard), an employment agency. Angard is a wholly owned subsidiary of the Royal Mail, which provides agency workers exclusively to Royal Mail to assist with fluctuations in demand for postal workers. Mr Kocur was supplied to the Royal Mail by Angard to work in its Leeds Mail Centre in an operational post grade (OPG).

Vacancies for permanent positions arose at the Leeds Mail Office. These vacancies were advertised on the notice board and were first offered to OPGs who were either already in permanent posts or were reserve class OPGs. Mr Kocur was told that agency workers were not eligible to apply for these posts but could apply when the posts were advertised externally and that when he did apply, he would be in competition with external applicants. Mr Kocur brought a claim under regulation 13(1) of the Agency Workers Regulations 2010 (AWR). The Employment Tribunal upheld Mr Kocur’s claim stating that the right to receive information extended to an implicit right to apply for vacant posts.

However, on appeal, the Employment Appeal Tribunal (EAT) disagreed and held that regulation 13(1) entitles agency workers to be notified and given the same level of information about the vacancies as directly recruited employees. However, regulation 13(1) did not mean that agency workers have a right to be entitled to apply and be considered for internal vacancies on the same terms as directly recruited employees. Mr Kocur then appealed to the Court of Appeal.

The Court of Appeal unanimously upheld the decision reached by the EAT and dismissed Mr Kocur’s appeal. In its decision, the Court of Appeal concluded that on a natural reading of regulation 13(1) of the AWR, it does not provide agency workers with anything other than the right to be notified of a vacancy. The Court of Appeal rejected Mr Kocur’s arguments and concluded that there was no basis for implementing a broader interpretation of regulation 13(1). Furthermore, the Court of Appeal agreed with the EAT’s analysis that the consequences of giving agency workers a right to apply for, and be considered for, vacancies would be to prevent the hirer from being able to give preference to in-house candidates. If the legislator had intended this to be the case, it would have been expressly set out in the legislation.

R (on the application of Palmer) v Northern Derbyshire Magistrates’ Court

West Coast Capital (USC) Limited (USC) was placed into administration by its director on 13 January 2015, when Mr Palmer was appointed as one of the administrators. (Two others were also appointed, but due to the division of responsibilities, it resulted in only Mr Palmer being subject to proceedings.)

On the same date, a pre-pack sale of the business occurred, which expressly excluded a warehouse. The following day, Mr Palmer notified the 84 warehouse employees that they were at risk of redundancy and that a consultation meeting would be held later that day. Around 15 minutes later, the employees were handed a letter advising them that, following the consultation, USC could not identify any alternative to redundancy and they were dismissed.

On 30 January 2015, the Redundancy Payments Service asked the administrators whether a form HR1 had been lodged. Due to an apparent oversight, form HR1 was not lodged by the administrators until 4 February 2015. In July 2015, the Secretary of State issued proceedings against Mr Palmer (and the director) for failure to follow redundancy procedures under s.194 TULRCA and, specifically, failure to lodge form HR1 with the Redundancy Payments Service in the required timeframe.

The Magistrates’ Court found that Mr Palmer (as administrator) could be prosecuted for offences under s.194 TULRCA. Mr Palmer sought a judicial review of that decision to ascertain whether it was in theory possible to prosecute an administrator under s. 194. The Court held that administrators are capable of being prosecuted under s.194 TULCRA. From the date they are appointed, only they are in a position to notify the Redundancy Payment Service as they are carrying out a managerial function in place of the directors. The case will now proceed in the Magistrates’ Court to determine whether Mr Palmer committed a criminal offence.

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The Terminator: Termination guidance for CIGA Moratorium monitors

Case Law Update

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Re Corbin & King Holdings Ltd and other companies; Minor Hotel Group MEA DMCC (a company incorporated under the laws of Dubai) v Dymant and another [2022] EWHC 340 (Ch)

The courts have given their first judgment on moratoriums under the Corporate Governance and Insolvency Act 2020 (CIGA), clarifying when monitors of moratoriums should terminate them because the company is unable to pay pre-moratorium debts.  The case involved the company that operates restaurants including the Wolseley and the Delaunay in London.  It’s a perfect example of a CIGA moratorium being used to constrain secured creditor action.

The key takeaways:

  • the monitor can factor in the possibility of third party funding to discharge critical debts and aid rescue as a going concern;

  • the monitor has a degree of latitude in judging whether to terminate (required if they think that the company is unable to pay debts to which the moratorium does not apply). However, that latitude is not unlimited.  If the company doesn’t have the immediate prospect of receiving third party funds, or doesn’t have assets capable of immediate realisation, to discharge those debts the monitor must terminate, and

  • the court will conduct a ‘balance of harm’ excise when deciding whether to exercise its discretion to terminate a moratorium or not.

In this case Minor Hotel Group (Lender), an associate of the Corbin & King group’s parent company (Parent), had lent Parent a secured loan with secured guarantees granted by the operating companies (OpCos) and:

  • Parent failed to repay the loan when due and Lender served a demand;

  • a credit fund (Bidder) offered to buy Parent and OpCos for an amount equal to the loan.  That offer was rejected and the directors of the OpCos implemented a CIGA moratorium;

  • Lender made demands against each of the OpCos under their guarantees and appointed administrators over Parent;

  • the Bidder made an offer to Parent’s administrators to purchase the OpCos.  Lender put Parent’s administrators on notice that they would challenge any action by the administrators if they accepted the offer.  Lender also applied to the court for orders terminating the moratoria of the OpCos, on the basis that the monitors’ failure to terminate them had unfairly harmed Lender’s interests, and Lender wished to appoint administrators over the OpCos; and

  • the OpCo guarantees were contracts involving financial services and therefore outside the moratorium, and the OpCos remained bound to pay them, which they could not.  However, the monitors did not terminate the moratoria as they considered it likely that the OpCos would be rescued as a going concern and that the loan would be repaid in full in the reasonably near future.

Lender also sought an injunction to restrain repayment of the loan, arguing that accepting the Bidder’s offer would breach a shareholders’ agreement. That application was unsuccessful.

The court clarified the matters a monitor should consider as follows:

  • a monitor’s duty to terminate a moratorium arises once the monitor thinks that a particular state of affairs exists, which allows a degree of latitude. A decision will only be open to challenge if it was made in bad faith or was clearly perverse – if no reasonable monitor would have reached it.

  • the statutory test for monitors considering whether a company is unable to pay relevant debts involves a flexible and commercially realistic approach in the circumstances as a whole.  In this case that included the Bidder’s offers, and TopCo’s subsequent ability to discharge the loan, thereby relieving the OpCos of their guarantee liability; and

  • the question to be addressed is whether the company is unable to pay a presently due pre-moratorium debt in respect of which it does not have a payment holiday.  This is to be distinguished from the question of whether the company is unable to pay its debts as they fall due for the purposes of cash-flow insolvency (which introduces any element of futurity).

The court held that the monitors’ decisions in this case were ones which no reasonable monitor, who applied the correct test, would have reached.  It was obvious that Parent’s administrators could not accept the Bidder’s offer to purchase OpCos without an open market sale process – which made immediate realisation impossible.  In contrast, a later revised offer of interim funding to replace the loan could have properly caused the monitors to think that the loan was able to be repaid.

However, the court still had a discretion to terminate the moratorium, even if it reached the view that the monitors ought to have done so.  Conducting a balancing exercise based on the facts at the hearing, the court assessed the harm suffered by Lender to be less than the harm suffered by the OpCos if Lender was able to commence insolvency proceedings; given that each OpCo was trading successfully and there was an immediate prospect of the loan being repaid and the OpCos’ guarantee liabilities falling away.  Accordingly, the court decided to allow the OpCo moratoria to continue.  In reality the loan was then actually repaid and the OpCos rescued as going concerns.

Following the rationale of this judgment the following guide appears to be a sensible start for a monitor considering whether a company is able to pay pre-moratorium debts that are due and not caught by the payment holiday and whether they should terminate a moratorium:

  1. the company should be considered able to pay debts that are reasonably likely to be paid within five business days;

  2. consider whether the company can pay the debt itself out of cash resources; and

  3. if not, consider whether the company either has the immediate prospect of receiving third party funds or has assets capable of immediate realisation to pay it. Immediate receipt / realisation is a matter of commercial judgment – although anything over five business days will require specific assessment.  Consideration should also be given to whether the debt will be discharged by co-obligors.

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Obligations of confidence – updated guidance from the Court of Appeal

Blog | Intellectual Property

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Following a recent series of cases, the Court of Appeal has provided further guidance on equitable obligations of confidence.

What are equitable obligations of confidence?

Obligations of confidence can arise in a number of different ways.  They can be imposed expressly by contract, for example through NDAs and contracts of employment, or they can be implied, either because of the circumstances of the disclosure or because of a special relationship between the parties, for example an employee’s duty of fidelity and good faith.

The law will also impose an equitable obligation of confidence where a person receives information which they know or ought to know should be regarded as confidential ¹

A case in question – the background

In October 2020, in The Racing Partnership Limited (TRP) (1) Arena Leisure Limited & others v Sports Information Services Limited (SIS), the Court of Appeal considered whether an equitable obligation of confidence was owed by SIS to TRP in relation to the distribution of horse racing data.

SIS had previously held the rights to collect and distribute live horse racing data collated at various race courses to off-course bookmakers for fixed odds betting services.  Those rights had expired at the end of 2016 and had been acquired by TRP, while the rights to supply similar data for pool betting services continued to be held by The Tote.

The data in question included factual information relating to the courses and the relevant races, for example, the weather conditions, the state of the course, non-runners, changes of jockeys, the “off” and any stewards enquiries.

TRP alleged that, in breach of an equitable obligation of confidence, SIS had distributed horse racing data which it had received from The Tote under an agreement between SIS and the Tote.

At trial, it became clear that when SIS was negotiating the agreement with The Tote, SIS had expressed some concerns and it had made inquiries and had received assurances from The Tote regarding use of the data which it collected.  In addition to those assurances, SIS also insisted on including a warranty in the agreement under which The Tote warranted that it could provide the data in issue.

The outcome

At trial, SIS was found to have misused confidential information and it appealed the decision.

On appeal, the majority of the Court of Appeal found that individually the horse racing data was not confidential, since much of it could be accessed through live television.  Conversely, the Court of Appeal found that when viewed as a compilation of racing data, it could be confidential, however the compilation had been made by The Tote and so any value or control belonged to The Tote.

The Court of Appeal also considered whether the data had nevertheless been provided to SIS in circumstances which carried with it an obligation of confidence.

Lord Justice Lewison concluded that the judge at the original trial shouldn’t have focussed on what the correct legal analysis may be but should have instead focussed on what a reasonable person would be expected to understand.

The starting point for considering what a reasonable person would have understood should have been the warranty and the assurances that had been given.  Only then should it have been considered whether SIS should have second guessed the truth of such a warranty.

Lewison L.J. concluded that the correct question to be answered was …should SIS have realised that The Tote was bound by an obligation of confidence even though there was no contractual restriction on its ability to disseminate information which it had collected and compiled itself.

Further guidance was provided by Lord Justice Philips who concluded that when a reasonable person receives information from a reputable counterparty under warranty, that person is not put on notice that the information is supplied in breach of a duty of confidence unless there are sufficient indications to the contrary.

Contrary to the decisions of Lewison L.J. and Philips L.J., in the dissenting judgment given by Lord Justice Arnold, he concluded that secrecy was a necessary criterion for confidentiality and what was relevant was the data’s inaccessibility during a transmission delay (typically seven seconds) before the data was available on television.

Arnold L.J. also agreed with the trial judge who at trial had concluded that an obligation of confidentiality had been imparted because a reasonable person in The Tote’s position would have:

  1. known the steps taken by the race courses to preserve the confidentiality of the data for fixed odds betting purposes;

  2. appreciated that it had acquired the data for pool betting purposes; and

  3. appreciated that the information was acquired in circumstances importing an obligation of confidence and couldn’t be used for fixed betting purposes.

Key points to takeaway

The area of confidential information and sport is clearly a valuable one particularly where bookmakers offer live or ‘in-play’ betting (e.g. which team or player will score next).

There was no doubt that the compilation of horse racing data could constitute confidential information despite it arising in the full view of members of the public and despite it only having commercial value for a very short time.

Perhaps what was most surprising were the views of Phillips L.J. which suggest that in the context of equitable obligations of confidence, it may now be reasonable for a third party recipient to rely on contractual assurances, which are given by a discloser as to the legality of a data source, unless it can be shown it was not reasonable to rely on them.   This is despite the fact that the third party recipient would be able to rely on the warranty in the event that the assurances were misplaced.

What does seem likely is that because the Court of Appeal was split, it is unlikely to be the last word on the issue.

Case 2 – the background

In 2021, the Court of Appeal was again asked to consider equitable obligations of confidence in the case of Travel Counsellors v Trailfinders Limited.

Trailfinders is a national travel agent with 37 branches in the UK and Ireland employing over 700 sales consultants.

Travel Counsellors (TCL) is a competitor of Trailfinders and uses a franchise model with franchisee travel consultants.

In 2016, four sales consultants employed by Trailfinders left to join TCL.  Trailfinders alleged that when the individuals left, they took names, contact details and other information about their clients which was stored in Trailfinders’ computer system and that after they had left, they had accessed another Trailfinders computer system to obtain further client information.

A successful claim was brought against the four individuals for breach of implied terms in their contracts of employment and breach of equitable obligations of confidence owed to Trailfinders.

Additionally, Trailfinders successfully brought a claim against TCL for breach of an equitable obligation of confidence.

At the trial, the judge had found that:

  1. TCL didn’t supply new franchisees with potential customers.   Instead, travel consultants were expected to and positively encouraged to bring their customer contact list with them.  There was no warning that doing so may amount to a misuse of confidential information.

  2. TCL had added the Trailfinders client information to their own computer system.  This was quite extensive and for one of the individuals, it amounted to over 300 contacts.

  3. A reasonable person in the position of TCL’s CEO and other persons of significance within TCL would have been aware that at least part of the contact information brought by the individuals was likely to have been copied from Trailfinders’ customer data.  Furthermore, those persons at TCL knew or ought to have known that Trailfinders reasonably regarded the information as confidential.

  4. TCL consequently received the information subject to an equitable obligation of confidence and it was in breach of that obligation because it used the information for the benefit of its business.

TCL appealed the first instance decision, principally on the ground that the judge applied the wrong legal test in holding that TCL owed an equitable obligation of confidence to Trailfinders in connection with the information received from the individual defendants.

TCL relied on the fact that the judge hadn’t found that the individuals had given any indication to TCL that they’d copied the data and TCL asserted that (i) an equitable obligation of confidence would only arise if the recipient knew or had notice that the information was confidential, and (ii) whether the recipient had notice should be objectively assessed by reference to a reasonable person standing in the position of the recipient.

Lord Justice Arnold, who gave the main judgment, did not agree with this approach.  He concluded that where the circumstances were such that it is brought to the attention of a recipient that that the information, or some of it, maybe confidential to another, then the reasonable person’s response may be to make enquiries.  Whether they would make enquiries and if so what enquiries, would inevitably depend on the context and the facts.

Arnold L.J. did also not agree with TCL’s submission that nothing less than blind-eye knowledge that the information was confidential was enough because blind-eye knowledge is to be equated with actual knowledge, and is subjective.

Arnold L.J. explained that if a recipient was aware that some of the information was likely to be confidential, a reasonable person in TCL’s position would make enquiries.  In accordance with The Racing Partnership decision it is also relevant to consider what, if any, enquiries a reasonable person would make.

Applying this to the facts, Arnold L.J. concluded that the individuals could not have carried all of the data in their heads.  This therefore made it probable that they had copied at least some if it from Trailfinders.  Consequently, TCL should have been on notice that at least some of the information was likely to be confidential.

Furthermore, TCL should have warned the individuals not to bring any of Trailfinders’ confidential information and had not asked whether they had done so.  Had TCL made those enquiries and had the individuals told the truth, TCL would have discovered that some of the information came from Trailfinders.

Key points to takeaway

This case is a clear warning to businesses who receive information from a competitor that on receipt of the information, the business should take a step back and consider its status.

In a scenario where there is potential for a business to receive confidential information, it should:

  1. discourage employees from using information where that information has been taken from a competitor’s business without consent; and

  2. if any information is disclosed to the business, it’s incumbent on the business to make reasonable enquires as to whether any of the information is confidential and if it is, not to use it.

As a consequence of these decisions in combination with previous case law, there are a number of issues which should be considered when assessing whether an equitable obligation of confidence may arise:

  • Whether confidential information is disclosed in breach of an obligation of confidence and the recipient knows, or has notice, that that is the case;

  • Whether confidential information is acquired or received without having been disclosed in breach of confidence and the recipient knows or has notice that the information is confidential;

  • Notice is to be objectively assessed by reference to a reasonable person in the recipient's position;

  • Notice is to be objectively assessed by reference to a reasonable person in the recipient's position;

  • If a reasonable person has notice that the information, or some of it, may be confidential to another, their response may be to make enquiries. Whether they would actually make enquiries, and if so what enquiries, inevitably depends on the context and the facts; and

  • If the reasonable person would make enquiries, but the recipient of the information doesn’t do so, then an obligation of confidentiality will arise.

¹ Campbell v NGN Ltd 2004 

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Legacy loop: spring edition 2022

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Taking a look at the recent case of Higgins v Morgan and others [2021] EWHC 2846 (Ch) involving a 1975 Act claim brought by an adult step-son where the court considered the claimant to have both a “moral claim” and grounds for recovering their CFA success fee.

Background to the case

A claim was brought against the estate of Stewart Higgins by his stepson, Barrie Higgins. Stewart died intestate and under the intestacy rules his estate passed to his cousins as beneficiaries and Barrie was not to benefit. Barrie alleged that Stewart had promised that Barrie would be included in his will and subsequently the distributions under the intestacy rules were against Stewart’s wishes.

Barrie was encountering financial difficulties and depended upon his wife’s profession in wedding photography, which had been impacted by the Covid-19 pandemic. Barrie subsequently brought a claim as a person treated as a child of the deceased under section 1(1)(d) of the 1975 Act. This was defended by the beneficiaries.

What was the outcome?

It was concluded that showing a need for maintenance plus a relevant relationship is generally not enough to be successful in such a claim, and that in instances where an adult child claims inheritance who is well capable of living independently, ‘something more’ was required. This included being able to demonstrate a form of moral claim.

Having regard to s.3 factors taken into consideration by the court when considering whether an award is to be made, the court awarded Barrie £40,800 for his claim, which was subsequently increased to £55,000 to take into account his success fee (as his solicitors were acting under a conditional fee agreement or “CFA”). The judge considered that the promises made to Barrie by the deceased constituted ‘some form of moral claim’ owed to Barrie. The judge also considered their close relationship in comparison to the existing beneficiaries.

What does the outcome of this case mean for charities?

This case demonstrates that something more than being a child of the deceased is required in claims where the child is now an adult. As well as having the relevant relationship to the deceased, an adult child must have a moral claim against the estate. If charity beneficiaries are faced with a claim brought against the estate by an adult child claimant, it is important to seek legal advice early to establish the true merits of that claim and the strength of the position to take in defending the claim.

The court’s attitude to recovery of CFA success fees

From a costs recovery perspective, the judgment in Hirachand v Hirachand [2021] EWCA Civ 1498 (the Re H appeal), handed down very shortly after Higgins v Morgan, provided further clarity on the Court’s willingness to consider a claimant’s CFA success fee when making an award. This significant court of Appeal judgment confirmed that awards under the 1975 Act can include a lump sum to discharge all or part of a claimant’s success fee. This decision may prove to encourage more claimants (and their solicitors) to consider pursuing a 1975 Act claim by way of a CFA.

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China Tang Trade Mark Dispute – Key points to Takeaway from the Decision

Intellectual Property | Judgment update

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GNAT and Company Limited and China Tang London Limited -vs- West Lake East Limited and Honglu Gu [2022] EWHC 319 (IPEC)

A judgment has been handed down in relation to a trade mark dispute between the up-market “China Tang” restaurant (located at the 5-star Dorchester Hotel) and a Chinese takeaway, also called “China Tang”, in Barrow-in-Furness.  According to the evidence in the case, the former provides high-end Cantonese meals to celebrities like Kate Moss, Tony Blair and Naomi Campbell, whereas the Defendant’s business provides Chinese fast food “more tailored to the British taste”.

The decision is of interest as it provides food for thought on various trade mark issues including comparison of logo trade marks, assessing reputation, and the ability to rely on honest concurrent use as a defence.

The Trade Mark

The restaurant’s trade mark consists of a logo containing the words CHINA TANG in a stylized font.

After an agreed deletion of self-service restaurants following a non-use challenge, the Trade Mark is registered for the following services in Class 43:

Restaurant services; cocktail lounge services; bars; cafes; catering services; snack bars; mobile catering services; cafeterias; tea houses.

This does not therefore include takeaways but does include other types of food and restaurant related services.

A likelihood of confusion with the Defendant?

In order for there to be infringement under section 10(2) of the Trade Marks Act 1994, there must be a likelihood of confusion between the Trade Mark and the Defendant’s own “China Tang” sign.

When comparing the services covered by the trade mark and the use made by the Defendant, the Judge concluded that while there was not an exact overlap, takeaway services are very similar to those in the Trade Mark’s specification, particularly “restaurant services”.

When comparing the marks, the Judge found that the dominant and distinctive element of the Trade Mark consists of the words “China Tang”, despite the stylization of the words and the border design within the logo, and that this wording element is identical aurally to the Defendant’s sign, and is visually similar.

As a result of these similarities, the Judge found that there was a likelihood of confusion, and so infringement under s.10(2).

Unfair advantage or detriment to the distinctive character or the repute of the trade mark?

The trade mark proprietor also argued that there was infringement under section 10(3) of the TMA, which requires the proprietor to show that the trade mark has a reputation, and that the Defendant’s use either takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trade mark.

The overall test for showing a reputation here was whether the Trade Mark was known by a significant part of the UK public concerned with restaurant services.  The Judge found that the Trade Mark did not meet this requirement when assessed on an economic basis, as the market share of that one restaurant was “tiny”, and that the sums spent in marketing the restaurant were “very small”, both when assessed in the context of the restaurant market of the UK as a whole.  This is despite significant turnover for one restaurant of between 5 and 6 million pounds per year, and the business being recipient of multiple awards and press coverage.

Similarly, the Judge found nothing in support of the suggestion that the reputation of the trade mark is clearly being exploited, or that there was a change (or likelihood of change) in the economic behaviour of the average consumer consequent on the use of Defendant’s sign to establish detriment.  The claim therefore failed on this ground.

Honest Concurrent Use

The Defendant sought to rely on the defence of honest concurrent use, arguing that it had started trading in 2009 and was not aware of the Claimant, and that there had been co-existence in the 12 years since then.

The Judge however concluded that the Defendant ought to have been aware of the Claimant’s existence, for example as a result of undertaking a trade mark or internet search prior to opening in 2009.  He saw no reason to distinguish between the sizes of businesses in terms of who should be expected to undertake such a search, noting that “a public register of other parties’ rights is there to be consulted, in part so that those rights may be respected.

While expressing some sympathy for the Defendant, the Judge added that had the owner conducted even a basic internet search for “China Tang”, he would likely have found the Claimants’ website and/or reviews and commentary about it.  Honest practices would then have required him to obtain legal advice about the intended trading name for his business.

Points to Takeaway
  • The power of a trade mark – here a registered trade mark for a logo incorporating the trading name was successfully used against a company trading using a different logo (albeit containing the same words). That other company here may not even be seen as direct competition to the trade mark proprietor, as there was unlikely to be an overlap between the customers of a high-end restaurant and a local takeaway.  Nevertheless, the Judge found a likelihood of confusion on the part of the public.

  • Difficulties establishing “reputation” - If relying on infringement under section 10(3), a trade mark proprietor will need to show reputation across the UK, not just locally (e.g. in London). This may require significant revenue in the relevant goods/services market concerned, and expenditure on marketing comparative to other operators within that market.  This may restrict the potential use of section 10(3) to only the largest brands in any relevant market.  The proprietor will also need to have real reasons/evidence to suggest an unfair advantage or detriment, rather than “mere suppositions” as put forward by the Claimant in this case.

  • A very narrow honest concurrent use defence? The Judge indicated that even where the Defendant is a small, single location business, it is expected to have undertaken trade mark and/or internet searches for competitors using the same or similar brand names prior to deciding on its own brand name.  The benefits of instructing an IP professional to undertake such a clearance search are therefore clear for any sized business. Indeed the Judge commented that: “setting up even the smallest business is likely to require competent legal advice on a variety of matters and that should include the trading name.” Instances where this defence may successfully be raised are arguably now going to be rare, particularly now it may be said that all new businesses will have access to the internet to undertake searches themselves as a minimum starting point.

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He advises clients on the full spectrum of intellectual property rights, including patents, trade marks, designs, and copyright. Danny has particular experience advising clients in the retail, brewing, education, technology, online and social media, and IT sectors.

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Employment winter update: News in brief

Technical | Employment

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A quick round-up of recent employment law developments
Click below to jump to the relevant piece

New Statutory Rates

Each year in April there is traditionally an increase in various statutory rates in line with the Consumer Prices Index (CPI). This year will be no different.  With effect from 11 April 2022, Statutory Sick Pay will increase from £96.35 to £99.35 and the statutory weekly rates for maternity pay, adoption pay, paternity pay, shared parental pay, parental bereavement pay and maternity allowance will all increase from £151.97 to £156.66.

From 1 April 2022 the following increases to the National Minimum Wage rates and the National Living Wage will apply:

National Minimum Wage

Screenshot 2022-02-02 at 13.57.21

Fire and Rehire Practices

The ethics of ‘fire and rehire’ practices has been a popular topic of late. This refers to those instances when employers dismiss and then rehire employees on new terms (usually less favourable ones). Keir Starmer has publically stated that the process will be outlawed if Labour comes to power. ACAS has now published guidance to help employers avoid such practices. ACAS is urging employers to consider in the first instance whether a contract change is definitely necessary to solve the relevant issue; there may be other ways of achieving the same goal. If a change in contract is necessary, employers are urged to consider the risks and their options, bearing in mind the circumstances. ACAS provides detailed information in its guidance as regards consultation requirements and how employers can seek to reach an agreement with their employees. Indeed, it encourages them to ensure that they take the time to do so; advising that fire and rehire should very much be a last resort.

Gender Pay Gap

The Government states that the pay gap has significantly fallen, with an additional 1.9 million women in employment since 2010.  However, new research carried out for the Institute of Fiscal Studies (IFS) Deaton Review of Inequalities has concluded that taking account of women’s increased educational achievement, there has, in fact, been hardly any change to the gender pay gap in the last 25 years. The research measures the gender earnings gap across three different margins; employment, hours and wage rates.  It concludes that, while raising the National Minimum Wage has assisted with closing the gap for lower earning workers, it has not had any effect on the gap for graduates. Parenthood is also a critical turning point it states, at which point the gap in both employment and hours immediately and substantially increases. Ultimately, the researchers conclude that policies are inadequate as they still accept “traditional gender norms” and the perception of women as caregivers.

COVID-19: Repayment of CJRS Grants

On 2 December 2021, HMRC updated its Guidance, Pay Coronavirus Job Retention Scheme grants back. It details how employers must pay back all or part of their CJRS grant if they have overclaimed. The guidance also adds a new section that addresses what actions must be taken if employers have not paid employees enough. This includes employers being required to top wages up to the required levels (the lower of either 80% of their wages or the rate of £2,500 per month (or equivalent) for hours they did not work). This must be done within a “reasonable period” and usually by the indicative date set out in the guidance. Employers must ensure they are on top of this and have complied with the CJRS grant scheme and if not, address any shortcomings as per the guidance. It should not be forgotten that there are consequences of erroneous, or worse, fraudulent claims, which include clawback, potential corporate offences and criminal liability.

Workplace safety for pregnant women during the pandemic

Maternity Action has concluded in a new report, Unsafe and Unsupported: workplace health and safety for pregnant women in the pandemic, that workplace health and safety rules are not “fit for purpose” for pregnant women. A poll conducted by the charity found that 69% were fairly or very worried about catching COVID-19 because of their work and 20% took time off or even left their jobs because of this concern. The report notes that the guidance has been inconsistent and confusing and that there has been insufficient advice and action from the Health and Safety Executive (HSE) and local authorities, leaving pregnant women without any way to address their concerns, and the impossible choice of either taking their employers to an employment tribunal (a costly and lengthy process) or continuing to work in unsafe conditions.  The report has consequently detailed 16 recommendations, including: updating guidance on the requirement for risk assessments; an annual HSE report on the number of requests for advice on health and safety raised by or in relation to expectant employees; and also extended timeframes for expectant employees or new mothers to bring employment tribunal claims.

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Employment case law update | Winter 2022

Technical | Employment

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Here we take a quick look at some key employment case law decisions from recent months.

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Menopause at work: difficulties with symptoms

In a recent case, Rooney v Leicester City Council, the Employment Appeals Tribunal (EAT) held that an employment tribunal had erred in striking out the claimant’s disability and sex discrimination, harassment and victimisation claims at a preliminary hearing.

The claimant, Ms Rooney, had made claims of constructive unfair dismissal, sex discrimination and disability discrimination due to her severe menopausal symptoms. In addition, she had brought claims for non-payment of holiday pay, outstanding expenses and unpaid overtime. Ms Rooney’s solicitors had incorrectly stated in the claim that Ms Rooney was not claiming that she had made a protected disclosure and that she accepted that her work-related stress and menopause symptoms did not amount to a disability under the Equality Act 2010.  She was unaware of this and therefore applied to amend her original claim to include protected disclosure detriment and disability discrimination.

At a preliminary hearing, the employment tribunal held that Ms Rooney was not suffering from a disability in relation to her menopause symptoms, anxiety and depression, and her disability discrimination claim was dismissed, along with her claims of harassment and victimisation. Ms Rooney's sex discrimination claim was struck out for having no reasonable prospects of success.

Ms Rooney appealed. The EAT held that the tribunal had erred in law in deciding that Ms Rooney was not disabled at the relevant time. Ms Rooney had given evidence regarding her menopause symptoms and the effect that they were having on her day-to-day activities (both physical and mental). In addition, she had been suffering from those symptoms for over 12 months at the time of her resignation. Her appeals were allowed and the claims were remitted to an employment tribunal for a decision.

This case is an example of the challenges faced by menopausal women in the workplace in showing that their symptoms amount to a disability. Following an inquiry by the Women and Equalities Committee, it is expected that there will be recommendations to amend legislation further to adequately protect menopausal women from discrimination at work.

Direct offer to employees bypassing collective bargaining was an unlawful inducement

In the case of Kostal UK Ltd v Dunkley and others, the Supreme Court held that a one-off direct offer to employees concerning pay, bypassing stalled collective bargaining, did constitute an unlawful inducement within the meaning of section 145B of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA).

Section 145B of TULRCA prohibits employers from inducing their workers to bypass collective bargaining in certain circumstances.

Kostal concluded a recognition agreement with Unite the Union (Unite) in 2015. This established a framework for collective bargaining and gave Unite "sole recognition and bargaining rights". The parties accepted that the agreement was "binding in honour upon them" but did not constitute a legally binding agreement. During annual collective bargaining negotiations in 2015 (relating to 2016), the company had made an offer to Unite which included a 2% increase in basic pay and a Christmas bonus equating to 2% of basic pay, in return for a reduction to overtime rates, sick pay, etc.  In a union ballot, that offer was rejected by 78% of members. Before the dispute resolution procedures in the Recognition Agreement had been exhausted, the company made direct offers to the workforce, informing staff that they would not receive the Christmas bonus if they did not accept by a deadline.  A majority of staff accepted those individual offers.  In January 2016, the company made a similar offer to those who had not yet accepted, this time without a Christmas bonus, but warning that if not accepted it may lead to termination of their employment. There was no indication as to whether there would be an offer of new employment following the termination. A large group of employees brought claims in the employment tribunal, alleging that their rights under section 145B of TULRCA had been infringed

The employment tribunal found in the employees’ favour and made a total award of £421,800. The company appealed but the EAT rejected the appeal. The EAT found that if acceptance of the direct offers meant that at least one term of employment will or would, as a consequence of acceptance, be determined by direct agreement, and not through collective bargaining, that was sufficient to amount to the "prohibited result" under section 145B. There was no requirement that the offer made, if accepted, would take future determination of terms out of the collective arena altogether.

The Court of Appeal allowed the company’s appeal. It held that a one-off direct offer to employees concerning pay, bypassing stalled collective bargaining, did not constitute an unlawful inducement within the meaning of section 145B of TULRCA.

The employees appealed to the Supreme Court, which held that there had been an unlawful inducement within the meaning of section 145B of TULRCA.

Whilst there are some uncertainties from this case, as can be seen from the inconsistent outcomes at various stages of appeal outlined above, employers should adhere to the collective bargaining framework they have signed up to (or has been imposed by the Central Arbitration Committee). Failure to follow a dispute resolution process will no doubt result in an employer on the wrong side of the law so far as section 145B of TULRCA is concerned.

Equal pay: Morrisons’ retail workers employed on common terms with distribution centre workers

In Abdar and others v Wm Morrison Supermarkets plc and another, an employment tribunal has held that retail (shop floor) workers in Morrisons and Safeway supermarkets could compare themselves for equal pay purposes with logistics (warehouse) workers in their regional distribution centres. At a preliminary hearing, the tribunal held that the majority of the claimants were employed on common terms with the logistics workers for the purposes of section 79(4) of the Equality Act 2010 (EqA 2010).

The EqA 2010 provides that, in order to bring an equal pay claim, an individual must be able to identify a more highly paid comparator of the opposite sex performing equal work at either: the same establishment; or a different establishment where common terms and conditions apply.

The claims set out that retail workers are predominantly female whereas logistics workers in the distribution centres are predominantly male, and the retail workers receive a lower hourly rate compared with the logistics workers.

Morrisons argued that because distribution centres each have their own collectively bargained terms and conditions, staff from one site could not compare themselves with staff from another site in the same group for the purpose of an equal pay claim. The employment tribunal did not agree with Morrisons on this point.

The decision is clearly a favourable one for retail workers, and whilst this is a key hurdle in the litigation process, the next step is for the tribunal to determine whether the retail worker roles are of equal value to the roles of the logistics workers.

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New OfS Regulatory Advice on Reportable Events – what it means for providers

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In February 2021 the Office for Students concluded its consultation on reportable events. The Office for Students' consultation on reportable events - Shakespeare Martineau.

The OfS has now published its updated regulatory advice on reportable events, which is effective from 1 January 2022. We explore what this means for providers.

“Reportable events” are the events or matters registered providers are required to report to the OfS, and in the original consultation the OfS proposed a new definition for a reportable event, and new guidance to assist providers in deciding whether to make a report in recognition of the difficulties providers were having with the current approach.

Regulatory advice 16: Reportable events - Office for Students

There is now a new definition of a reportable event:

“A reportable event is any event or matter that, in the reasonable judgement of the OfS, negatively affects or could negatively affect:

  1. The provider’s eligibility for registration with the OfS.

  2. The provider's ability to comply with its conditions of registration.

  3. The provider's eligibility for degree awarding powers, or its ability to comply with the criteria for degree awarding powers, where the provider:

    • holds degree awarding powers; or
    • has submitted an application for degree awarding powers to the OfS, and for which the OfS has yet to reach a final decision.
  4. The provider's eligibility for university title, where the provider:

    • holds university title; or

    • has submitted an application for university title to the OfS, and for which the OfS has yet to reach a final decision.

In interpreting ‘the reasonable judgement of the OfS’, the OfS will, as a matter of policy, consider whether a reasonable provider intent on complying with all of its conditions of registration and acting in the interests of students and taxpayers (rather than in its own commercial, reputational or other interests), would consider the event or matter to be material.”

Whilst this is broadly similar to the proposed definition in the consultation, the OfS has gone further to make it clear that the third and fourth criteria also apply to providers who have submitted applications for degree awarding powers/university title.

What matters should be reported, and when?

The guidance contains a table (Table 1) containing a non-exhaustive, illustrative list of reportable events, which includes some events that are and have always been reportable.  These include a merger, change of ownership, loss of student sponsor licence, breach of a financial covenant attached to a loan, change in the identity of the accountable officer or chair of the governing body and the closure of a campus, department or subject area.

A provider is required to report an event within five working days of the date that the event is identified or, if that is not possible due to exceptional circumstances beyond the control of the provider, as soon as reasonably practicable thereafter and without undue delay. The guidance provides further details with regard to timings for events that have yet to happen but are in contemplation, eg. a merger or closure of a subject area, and events that have already happened but which the provider might only become aware of later, eg a possible fraud.  The OfS will consider whether a provider met the timescales for reporting an event as part of the assessment of the event.

A report must be made online via the OfS portal.

One thing to note is that the OfS has made clear that the new reporting requirements are not intended to have a retrospective effect, and so events that occurred during the period when reduced reporting requirements were in place, which were not reportable at the time, will not need to be reported under the revised requirements.

OfS assessment of a reportable event

The OfS will review the information submitted (and may ask for further information) and following consideration will determine one of the following next steps:

  1. The information contained in the report should be recorded but no further action is required from the provider at this time.

  2. A more extensive assessment is required because the information contained in the report is likely to affect the provider’s eligibility for registration, its compliance with its conditions of registration, or its eligibility for degree awarding powers and university title, or its ability to comply with the criteria for degree awarding powers (where relevant).

  3. A more extensive assessment is required because the information contained in the report adds new information to a known issue or to a pattern of events or issues.

If an extensive assessment is carried out and the OfS decides there is an effect on the provider’s eligibility for registration, a change in the OfS’s risk assessment for one or more conditions of registration (with risk increasing or decreasing, or crystallising into a breach of a condition), or an effect on the provider’s eligibility for degree awarding powers or university title or its ability to comply with the criteria for degree awarding powers (where relevant), further assessment or action will be taken in response.

What does this mean for providers?

Providers will need to ensure that they have the optimal internal processes in place to identify reportable events in a timely way. Therefore, steps should already have been taken and if not, should be put in place rapidly, to make sure that potentially reportable events are considered at an appropriate level, systems are in place for recording decision-making and that the processes for reviewing potentially reportable events are reviewed periodically to check that they are operating effectively.

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Employment case law update | Autumn 2021

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Here we take a quick look at some key employment case law decisions from recent months.

Knowledge of employee’s disability

In Seccombe v Reed in Partnership Ltd, the tribunal found that the claimant was not disabled and that, even if he was, the employer did not know and could not reasonably have been expected to know, that he was disabled.

Mr Seccombe was a supply chain manager for the respondent but was dismissed due to his poor performance after less than two years’ service. Following his dismissal, Mr Seccombe appealed unsuccessfully and then decided to bring a claim in the employment tribunal, claiming his dismissal was an act of disability discrimination and that his employer had failed to make reasonable adjustments for him.  Mr Seccombe claimed to be suffering from severe anxiety and depression and that this condition rendered him disabled for the purposes of the Equality Act 2010.

Having considered the evidence, the tribunal concluded that Mr Seccombe was not disabled, as he was not suffering from a mental impairment that was substantial and long-term.  It went on to find that even if Mr Seccombe was disabled, it was satisfied that the respondent had no knowledge of any such disability.

Mr Seccombe appealed to the Employment Appeal Tribunal, who agreed with the tribunal and upheld their original decision.  The EAT was satisfied that Mr Seccombe had not demonstrated that he suffered from a mental impairment, that was substantial and long term, and agreed that the employer could not have had knowledge of any such underlying condition.  Mr Seccombe had not raised this with the respondent during his employment and had even completed an equal opportunities form which indicated that he did not have any health concerns.

Disability discrimination and absence management

In Martin v City and County of Swansea, the EAT considered whether there can be a substantial disadvantage to a disabled employee where an absence management policy contains a discretion?

Mrs Martin began working for the respondent in 2014 and had a number of stress-related absences. In March 2017, an occupational health report advised that she had a chronic medical condition exacerbated by stress. The respondent had an absence management policy under which an employee might be dismissed if they were incapable of fulfilling their role. The policy gave the respondent a discretion to find an alternative role for such an employee (in lieu of dismissal).

The respondent made significant efforts to accommodate and assist Mrs Martin during her employment, placed her on its redeployment list and gave her a temporary position within its employee services department, where she had access to help in applying for alternative roles.  The respondent even extended the redeployment period from 12 to 29 weeks, but Mrs Martin became disengaged and did not apply for some suitable roles. She told the respondent that she expected to be dismissed at her forthcoming final absence review meeting and did not want her departure to be delayed. She was dismissed in October 2017.

Mrs Martin had argued that the respondent's absence management policy was a provision, criterion or practice (a PCP) that put her at a substantial disadvantage, as her disability made her more likely to suffer absences than a non-disabled person and she was at an increased risk of dismissal. The tribunal found that the policy did not put her at a substantial disadvantage, because such disadvantage was removed by the respondent’s discretion to find her an alternative role rather than dismissing her. It further concluded that, in any event, the respondent had taken all reasonable steps to avoid any disadvantage to Mrs Martin.

On appeal, the EAT determined that the tribunal had erred in finding that an employer's absence management policy was not a PCP that put a disabled employee at a substantial disadvantage merely because the policy gave the employer a discretion to redeploy the employee rather than dismissing her for insufficient levels of attendance. The EAT concluded that the application of the absence management policy – even with the employer’s discretion to redeploy Mrs Martin instead of dismissing her – still put her at a disadvantage because she was at a greater risk of absence than people who are not disabled and so, because the discretion to find an alternative role might not be exercised in her favour, she remained at greater risk of dismissal.

However, the real question in this case, was whether the respondent had taken such steps as were reasonable to avoid the disadvantage. Both the employment tribunal and the EAT found that the employer had made all reasonable adjustments to avoid the disadvantage to Mrs Martin, meaning that the EAT’s findings regarding the PCP that the respondent had applied ultimately had no bearing on the outcome of this case.

Whistleblowing and unfair dismissal

In Kong v Gulf International Bank (UK) Ltd, the EAT has clarified that, when determining the reason for dismissal in an unfair dismissal claim, it will rarely be possible to attribute to the employer the motivation of any person other than the one who decided to dismiss.

Ms Kong was the Head of Financial Audit for the respondent, Gulf International Bank (UK) Limited. Her role involved carrying out risk-based audits for all of the company’s business activities in ensuring they complied with regulatory requirements.  In the performance of her role, Ms Kong raised a variety of concerns to the company’s Head of Legal, stating that legal documents in use were not fit for purpose.

Subsequently, Ms Kong was dismissed by the respondent after the Head of Legal suggested that Ms Kong had inappropriately questioned her professional integrity and legal knowledge such that she could not see how she could continue to work with Ms Kong.  The Head of Legal made these thoughts known to the Head of HR and CEO, who agreed that Ms Kong’s employment should be terminated.

Following an unsuccessful appeal, Ms Kong brought claims of ordinary unfair dismissal, unlawful detriment and automatic unfair dismissal for having made protected disclosures.  At her first attempt, the tribunal decided that the conduct of the Head of Legal was detrimental treatment because of Ms Kong’s protected disclosures. However, unfortunately for Ms Kong, that claim was brought out of time and so it could not succeed.

The tribunal did find in Ms Kong’s favour in her unfair dismissal claim, in finding that the dismissal was not fair and was not in the band of reasonable responses for an employer acting reasonably in these circumstances.  The tribunal dismissed the claim for automatic unfair dismissal, as it was satisfied that those making the decision to dismiss were not motivated by the protected disclosures raised by Ms Kong and that their decision was down to how Ms Kong had raised her concerns and her misconduct.

Ms Kong took her case to the EAT in challenging the tribunal’s rejection of her automatic unfair dismissal claim.  The EAT rejected her appeal and was satisfied that the tribunal had correctly concluded that Ms Kong had not been dismissed because of her protected disclosures and that the automatic unfair dismissal claim should not succeed.  The EAT was satisfied that the decision makers had reached their decision based on how they believed Ms Kong had behaved and that this was separate to the contents of the protected disclosures that she raised.

Application for anonymity order for non-party to tribunal proceedings

Since 2017 all tribunal judgments and written reasons entered on the public register have been published online and are readily available to the general public.   However, Rule 50 of the Employment Tribunal Rules of Procedure (the ET Rules) gives the tribunal the power, either on its own initiative or following an application, to make an order preventing or restricting the public disclosure of any aspect of the proceedings.

In October 2016, the appellant in TYU v ILA Spa Ltd (referred to in the EAT's judgment as “TYU”) resigned from her employment with ILA Spa Ltd.  In March 2018, the tribunal heard separate claims for unfair and wrongful dismissal brought against ILA by two former colleagues of TYU, however, TYU was neither a party nor a witness in the claims brought by her former colleagues.

Neither claim by TYU’s former colleagues was successful, however, the judgment in the dismissal claims stated TYU's name and position while working for ILA. In addition, TYU was named in connection with allegations of serious and criminal misconduct during her employment with ILA. This included having signed off the payment of false invoices, theft resulting in a police investigation and threatening behaviour.

Subsequently, TYU contacted the tribunal, requesting that her name be anonymised or certain parts of the judgment redacted. She said that a Google search of her name brought up the judgment, which was damaging to her reputation and employment prospects and caused her significant distress.  This eventually resulted in an application for an order under Rule 50 of the ET Rules again asking for her name to be anonymised in the judgment and for other personal information to be redacted.

The tribunal rejected TYU’s application, determining that TYU's rights under Article 8 of the European Convention on Human Rights (right to respect for private life) were not engaged. The employment judge stated that TYU could not have any reasonable expectation of privacy because information revealing her identity had been discussed in a public trial. The fact that TYU was not a party to proceedings gave her no greater or lesser rights under Article 8 than a party to proceedings. Alternatively, the employment judge found that, even if TYU's rights under Article 8 were engaged, they did not outweigh rights protected by Articles 6 (right to a fair trial) and 10 (freedom of expression) of the ECHR and the principle of open justice.

The EAT disagreed, holding that the tribunal had erred in assuming that  TYU’s Article 8 right to private life was not engaged. It also failed to adequately carry out the balancing exercise of TYU’s Article 8 right against Articles 6 and 10 or to make an assessment of the impact on TYU.  It subsequently ordered the anonymisation of the EAT and tribunal judgment as an interim measure.

It is clear from the fact-specific nature of the EAT's judgment that, whether or not an order is justified will depend upon the particular position of the applicant, including but not limited to any prior publicity.  This judgment provides helpful confirmation that there is no general rule that, having been named in a public tribunal hearing or judgment will defeat an application for an order under Rule 50 of the ET Rules but such applications can be successful, depending on the facts and circumstances of each case.

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Employment autumn update: News in brief

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A quick round-up of recent employment law developments

Carer’s leave to be introduced

The government has confirmed that it will be introducing carer’s leave “when parliamentary time allows”. The new statutory entitlement will be available to an employee irrespective of how long they have worked for their employer (a day one right). The person being cared for will include a spouse, civil partner, child, parent, a person living in the same household as the employee (other than by reason of them being their employee, tenant, lodger or boarder) or a person who reasonably relies on the employee for care. The person being cared for must have a long-term care need.

The entitlement will allow carers to take up to one week (five working days) of unpaid leave per year which can be taken either as a single block of one week or more flexibly on individual days.

In order to protect employees from being penalised at work for making use of carer’s leave, dismissals for reasons connected with exercising the right to carer’s leave will be automatically unfair.

Consultation on Sexual Harassment in the Workplace: Government Response

The consultation ran from 11 July to 2 October 2019 and it was found that many were supportive of a new duty to prevent harassment. The government, therefore, intends to introduce a duty on employers to prevent sexual harassment, in order to encourage employers to take positive, proactive steps to make the workplace safer for everyone. In the interests of providing clarity, the government will also introduce explicit protections from third-party harassment.

The government also intends to look closely at extending the time limit for bringing Equality Act 2010 based cases to the employment tribunal from three months to six months.

All of the commitments made as a result of the consultation will apply to Great Britain (England, Wales and Scotland) and those which require legislative changes will be introduced as soon as parliamentary time allows.

Coronavirus (COVID-19): right to work checks

Temporary changes to the right to work checks were introduced in March 2020 because of the pandemic. These changes allow employers to carry out checks over video calls and job applicants and existing workers to send scanned documents, or a photo of documents, by email or a mobile app, rather than sending originals.

The end date for these changes has now been deferred (again) to 5 April 2022. The government advises that the end date has been deferred to ensure that the scheme continues to operate in a manner that supports employers, whilst the government looks to implement a long-term post-pandemic solution.

Employers will not need to carry out retrospective checks on those who had a COVID-19 adjusted check between 30 March 2020 and 5 April 2022. Employers will maintain a defence against a civil penalty if the check they have undertaken during this period was done in the prescribed manner or as set out in the COVID-19 adjusted checks guidance.

From 6 April 2022, employers must once again either:

  • Check the applicant's original documents.
  • Check the applicant's right to work online, if they have provided the employer with their share code.

However, the Home Office has reiterated its intention to introduce a new digital right to work check solution to include many who are currently unable to use the Home Office online checking service, including UK and Irish citizens. This will enable checks to continue to be conducted remotely but with enhanced security.

Tipping and Service Charges – It’s a Load of Tronc!

The Government has responded (some may say at last!!) to the consultation on tipping, gratuities, cover and service charges which closed in 2016. The Government's proposals will benefit the UK’s 2 million hospitality workers by creating legislation around how tips, gratuities and service charges will be applied.

Whilst as always the devil is likely to be in the detail of any proposed legislation the recommendations will no doubt place a bigger burden on hospitality businesses to ensure that proper systems are in operation and that any tips are distributed fairly and without deductions (save for appropriate tax deductions, of course). Any new legislation will be included in the Employment Bill which will be progressed when parliamentary time allows. That may not be in this calendar year!

These proposals come at a time when around 80% of all tipping is now taken by cashless payment which is currently unregulated. Many hospitality businesses have previously been criticised for making deductions from cashless tips to pay for the additional bank/administration charges they incur.

It is proposed that legislation will be introduced to:

  • Ensure that employers do not make deductions from tips received for their staff (which will include any admin charges);
  • Require employers to introduce a policy on how tips will be dealt with (ensuring a fair and transparent process is adopted);
  • Allowing employees to make requests for information around the employers tipping record (any response to be provided within 4 weeks of any request); a
  • A statutory code of practice will also be introduced on tipping generally. Enforcement of these rights is likely to be in an employment tribunal where fines against employers and compensation awards given to the affected employees may be made.

Whilst these proposals will no doubt be good to strengthen the hospitality sector and encourage positive recruitment, there are some concerns that any additional costs in operating and managing cashless tips will cause hospitality businesses extra expense that they cannot recover. In addition, given some of the complexities around tips and managing tronc systems, some businesses may need to engage external partners to ensure tips are fairly distributed among staff, by establishing and operating a tronc system. These additional costs come at a time when the hospitality sector is struggling to return to some normality following the various lockdowns and forced closures.

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COVID-19 cases reach the employment tribunal

Despite the easing of restrictions employers have had to deal with a number of previously unheard of issues such as furlough leave, self-isolation and making workplaces “COVID secure”. It has been a steep learning curve and, perhaps inevitably, these situations have not always been handled in the best way. We are now seeing cases reach the employment tribunal and, in this article, we examine some of those cases that have been heard recently.

Even though the end of restrictions is in sight, many staff will remain concerned about commuting and attending their workplace and employers will need to be sensitive to this. Although the cases below are only at tribunal level and so not legally binding, they provide useful guidance on some of the issues that employers may encounter in the coming months.

Gibson v Lothian Leisure

Background

Mr Gibson, a chef, was furloughed when the first national lockdown began. During his furlough leave and in the run-up to the end of lockdown, his employer asked him to come into work. Mr Gibson was worried about catching COVID-19 and passing it on to his father who was clinically vulnerable. When he raised concerns about the lack of PPE and a non-secure COVID-19 working environment, his employer summarily dismissed him via text message, with no notice or accrued holiday pay. The message said that Lothian Leisure was changing the format of the business and would be running it with a smaller team after the lockdown. Mr Gibson brought various tribunal claims, among them one for automatic unfair dismissal.

Tribunal decision

Under section 100(1)(e) of the Employment Rights Act 1996 (ERA) employees who, in circumstances of danger that they reasonably believed to be serious and imminent, took or proposed to take appropriate steps to protect themselves or other persons from danger, are protected from dismissal. There is no need for the employee to have two years’ service.

In this case, the tribunal was satisfied that Mr Gibson’s actions met the requirements of section 100(1)(e) because he had taken steps to protect his father in what he reasonably believed to be circumstances of serious and imminent danger. Alternatively, since the wording of the employer’s text message suggested a possible redundancy situation, Mr Gibson had been unfairly selected for redundancy under section 105(3) because he had taken those steps. The circumstance of danger were the growing prevalence of COVID-19 infections and the potential significant harm that could be done to his father should he contract the virus. Mr Gibson reasonably believed this to be ‘serious and imminent’, hence raising the issue of PPE.

Comment

The decision demonstrates that it is possible for a claim for unfair dismissal under section 100(1)(e) ERA to succeed in these types of situations. Here the claimant's concerns about his clinically vulnerable father led him to take steps to reassure himself that the workplace would be a safe environment so that he could protect his father from the possibility of picking up COVID-19.

Employers should note that this protection applies from day one of employment and there is no need for two years’ service. However, each case will be assessed on its own facts as the following case illustrates.

Rodgers v Leeds Laser Cutting

Background

Mr Rodgers messaged his manager on 29 March 2020 to state that he would be staying away from his workplace "until the lockdown has eased" because he was worried about infecting his vulnerable children, a baby and a child with sickle-cell anaemia, with COVID-19. A month later, he was dismissed.

Mr Rodgers did not have sufficient service to claim ordinary unfair dismissal. Instead, he alleged that he had been automatically unfairly dismissed for exercising his rights under sections 100(1)(d) and (e) of the ERA 1996.

Section 100(1)(d) protects employees who are dismissed because, in circumstances of danger, which the employee reasonably believed to be serious and imminent and which the employee could not reasonably have been expected to avert, the employee left or refused to return to their workplace.

Section 100(1)(e) protects employees who, in circumstances of danger that they reasonably believed to be serious and imminent, took or proposed to take appropriate steps to protect themselves or other persons from danger.

Tribunal decision

The tribunal found that a reasonable belief in serious and imminent workplace danger had to be judged on what was known when the relevant acts took place. On the facts, such a belief could not be established, so sections 100(1)(d) and (e) were not engaged and the claim failed.

In particularly, despite Mr Rodgers' concern about COVID-19, he had breached self-isolation guidance to drive a friend to hospital on 30 March 2020 (the day after leaving work). Mr Rodgers' message to his boss did not mention concerns about workplace danger and he could not show there had been any such danger. In March 2020, government safety guidance advised hand washing and social distancing. The employer had implemented both precautions. Mr Rodgers had not taken any steps to avert danger or raised concerns with his manager before absenting himself from work and this was not appropriate.

The tribunal rejected Mr Rodgers' argument that COVID-19 created circumstances of serious and imminent workplace danger regardless of the employer's safety precautions. The tribunal found that, accepting this submission could lead to any employee being able to rely on sections 100(1)(d) and (e) to leave the workplace, simply by virtue of the pandemic.

Comment

This case serves as a reminder to employers that, while there were no circumstances of serious and imminent danger in this case, a failure to put in place adequate COVID-19 safety measures may expose them to the risk of claims in the future. However, the mere existence of the virus is not enough and employers who have implemented safety measures are unlikely to face successful claims of this kind.

Accattatis v Fortuna

Background

Mr Accattatis told his employer he was not comfortable commuting into the office nor working from the office due to the risks of the COVID-19 pandemic, and asked his employer to place him on furlough or allow him to work from home. His employer, Fortuna Group (London) Ltd (“Fortuna”) sold and distributes PPE. Fortuna rejected Mr Accattatis’ proposals due to the fact that the employee could not do his job from home and furlough was not an option because the business was busy. As an alternative, the employer suggested the employee take paid or unpaid annual leave.

After Mr Accattatis made three further requests to be placed on furlough, each of which was rejected, Fortuna dismissed him.

As Mr Accattatis did not have sufficient service to claim ordinary unfair dismissal, he claimed automatic unfair dismissed under section 100(1)(e) of the Employment Rights Act 1996 for having taken steps to protect himself from danger.

Tribunal decision

Whilst the tribunal accepted that Mr Accattatis reasonably believed he was faced with being put at serious and imminent danger (due to the government announcing in February 2020 that COVID-19 posed an imminent threat to public health), the tribunal concluded that it was his duty to take steps to protect himself from danger, or to have clearly expressed the circumstances of the danger to his employer. Fortuna had reasonably concluded that Mr Accattatis' job could not be done from home and that he did not qualify for furlough but had instead suggested taking holiday or unpaid leave. Mr Accattatis' response was not only that he wanted to stay at home (which was agreed), but also to demand that he be allowed to work from home (on full pay) or be furloughed (on 80% of pay). These demands were not appropriate steps to protect himself from danger, so his claim failed.

Comment

This case reinforces the idea that an employee cannot simply refuse to attend work due to concerns over COVID -19, particularly if their employer has addressed their concerns and has undertaken the appropriate risk assessments within the workplace to accommodate working from the usual place of work.

Khatun v Winn

Background

Ms Khatun was employed as a solicitor at Winn Solicitors Limited. In March 2020, in response to the first national lockdown, the firm decided to make changes to allow for greater workforce flexibility, furloughing 50% of their staff. The staff still working were expected to ‘babysit’ the cases of the furloughed staff and to agree to a variation of their employment contract, requiring them to go onto furlough leave or have their hours and pay reduced, on five days' notice.

On 23 March 2020, Ms Khatun’s head of department explained to her that all staff would need to agree to the variations, which were non-negotiable, or face immediate dismissal. On 24 March 2020, the head of department sent the contract variation to all staff by email, explaining that staff were to sign it within 24 hours or it was highly likely that they would be dismissed. On 25 March 2020, Ms Khatun emailed the head of department, to explain that she could not agree to the variation of contract. After further email correspondence, the head of department had a five minute phone call with Ms Khatun, in which he re-iterated that the variation was non-negotiable and Ms Khatun would be dismissed if she did not agree to it. Ms Khutan said that she would consider the variation if and when the need for changes should arise. On 26 March 2020 Ms Khatun was dismissed.

Ms Khatun brought a claim for unfair dismissal.

Tribunal decision

The tribunal held that Ms Khatun’s dismissal was unfair. The tribunal agreed with the firm that their reasons for implementing the variation were ‘sound, good business reasons’. However, the dismissal of Ms Khatun was not a decision that fell within the ‘band of reasonable responses’.

The tribunal concluded that the firm would not have needed to negotiate with three hundred employees; they would only have needed to have one meaningful discussion with Ms Khatun and was taken aback by a firm of solicitors having ‘so little regard’ for contractual terms and due process. The tribunal also took the view that the meeting on 23 March 2020 was a one-sided conversation and was not a meaningful discussion with Ms Khatun. It was clear to the tribunal that the directors of the firm had decided that, if Ms Khatun were to disagree with the variation to her contract, they would immediately proceed to dismiss her, without any process being applied. The firm acted quickly in dismissing Ms Khutan within 48 hours of sending her the variation to sign and Ms Khutan had not been offered the right to appeal. A reasonable employer would have done more.

Comment

This judgment demonstrates the importance of carrying out fair, meaningful consultation, prior to the dismissal of an employee who refuses to agree to contractual variations triggered by a genuine business need. This case is particularly relevant in light of COVID-19, as many employers have needed to implement rapid contractual changes in response to the economic challenges posed by the pandemic. However, as the case illustrates, the dismissal and re-engagement process can be high risk.

We’re here to help

If you need support with any employment-related issue, speak to a member of your local employment team.

Our employment team is ranked as a Leading Firm in the Legal 500 2021 edition.

Our updated guide to recovery and resilience covers everything you need to navigate your business out of lockdown, unlock your potential and make way for a brighter future. Further advice in relation to COVID-19 can be found on our dedicated coronavirus resource hub.  

From inspirational SHMA Talks to informative webinars, we also have lots of educational and entertaining content for life and business. Visit SHMA® ON DEMAND.

 

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Employment case law update | Summer 2021

Here we take a quick look at some key employment case law decisions from recent months.
Overtime and holiday pay  

Many people were hoping that the Supreme Court decision in East of England Ambulance Trust v Flowers and others would bring clarity to whether the calculation of holiday pay under the Working Time Directive should include an element for regularly-worked voluntary overtime. However, clarity on this issue now seems unlikely, at least in the short term.

For most employees who are paid a regular salary, their pay will remain the same when taking annual leave. However, for employees whose earnings vary significantly due to overtime, on-call pay, or bonuses, the situation becomes more complex. Employers must be able to calculate the employee’s normal rate of pay, so that the employee can be correctly paid a normal daily rate during any periods of annual leave.

In this case, there was a dispute between the East of England Ambulance Trust (the ambulance service) and Mr Flowers and other ambulance service staff. The ambulance service did not include overtime in the claimants' holiday pay calculation, resulting in claims being brought for breach of contract and breach of the Working Time Directive.

The matter was due to be heard by the Supreme Court on 22 June but was removed from the court listing before this date. We understand that the case has been settled following an NHS-wide deal on holiday pay (effective in England only) which takes into account the inclusion of regularly worked overtime and additional standard hours.

This will come as a disappointment to some who were hoping for guidance from the Supreme Court on the correct approach to take.

Indirect discrimination and changing working arrangements

Managing work and childcare can be a challenge at the best of times, but with the added complications of school closures and rules on self-isolation, this has been particularly difficult for many parents during the pandemic. For this reason, many employers afforded staff greater flexibility in their working arrangements than had previously been the case. However, with the end of restrictions seemingly in sight, many employers will now be considering how the workplace will look going forward and will be seeking to formalise arrangements and regain some certainty and structure.

The Employment Appeal Tribunal (EAT) has recently decided two cases in favour of working mothers which are a useful reminder that employers should exercise caution if seeking to change or impose new working arrangements.

Dobson v North Cumbria Integrated Care NHS Foundation Trust

In Dobson v North Cumbria Integrated Care NHS Foundation Trust, the Employment Appeal Tribunal held that the Employment Tribunal had erred in failing to take judicial notice of the fact that women are less likely than men to be able to accommodate flexible working patterns because of childcare responsibilities

This case involved community nurses. They were initially employed to work fixed days, but this was changed and they became required to work flexibly, including on weekends. The claimant was unable to comply with the flexible working requirements as she cared for her three children, two of whom have disabilities. This led to the claimant’s dismissal. She brought a claim for unfair dismissal and indirect sex discrimination.

The claimant lost her case in the first instance, but succeeded on appeal, arguing that the tribunal had not taken into account the so-called “childcare disparity”. This refers to the fact that, in general, women bear a greater burden of childcare, and are subsequently less likely to be able to comply with a requirement for flexible working. The “childcare disparity” is well documented in the case law of the tribunal, although there is no statutory rule that compels tribunals to consider it in judgments.

The case is perhaps not as ground-breaking as some reports in the press suggested, but is more of a reminder of the correct approach. It is interesting that the EAT did not find that the childcare disparity always means a requirement to work flexibly will put women at a disadvantage compared to men. As the EAT noted, a blanket approach could give rise to unfairness and illogical outcomes because some flexible working arrangements are favourable to those with childcare responsibilities.

Hughes v Progressive Support Limited

In Hughes v Progressive Support Limited, the Employment Appeal Tribunal (EAT) considered whether it can be indirect discrimination if an employer requires an employee to go to work regardless of childcare needs, even if the employer does not actually penalise the employee for non-compliance.

The claimant was a support worker with a contract of employment that guaranteed minimum hours of work. She was also a parent with childcare responsibilities and worked on a considerate hours policy to allow her to manage work and her childcare responsibilities. However, this policy was subsequently removed and the claimant was asked to work hours that suited the business. This could include any hours, as the business involved caring for individuals that needed care 24/7. The claimant was unable to do this and therefore worked fewer hours. The employer did not treat her inability to work the prescribed hours as a disciplinary matter, but did threaten to move her to a zero hours contract.

Although the claimant was later moved back to the considerate hours policy, she brought a claim for the period in which this was not in place. The EAT found that she was subject to a discriminatory provision, criteria or practice (PCP) that required her to work hours that were impossible because of her childcare responsibilities. It did not matter that she had not been punished for failing to work the hours required by the PCP. The claimant had lost out by virtue of working fewer hours than she would have done but for the PCP and had suffered the threat of losing out on guaranteed hours with the prospect of a zero hours contract.

Forstater v CGD Europe & Ors

In Forstater v CGD Europe & Ors, the Employment Appeal Tribunal overturned a decision and judged that a “gender critical belief” could amount to a philosophical belief and therefore attract the protection of the Equality Act 2010.

The judgment featured prominently in news media, and centred around Maya Forstater’s claim for unfair dismissal and discrimination based on her “gender critical beliefs”. The beliefs in question dealt with gender and biological sex, with Ms Forstater stating that she rejected the idea that “trans men are men” or “trans women are women” and that people were unable to change their biological sex. After tweeting statements professing her gender critical beliefs, her employer had ended her employment by not renewing her contract. A claim for discrimination and unfair dismissal followed, with Ms Forstater losing in the first instance as the tribunal decided her views were “not worthy of respect in a democratic society”.

However, the claimant succeeded before the Employment Appeal Tribunal (EAT), with the decision remitted to the tribunal to hear once more.

The judgment of the EAT dealt primarily with the limits to the legal restrictions on freedom of speech, and the very high threshold for which they would state a particular belief was not worthy of respect. Ultimately it was judged that Ms Forstater’s view did not amount to an attempt to direct harm to others (some organisations dispute this aspect of the judgment). The views were also judged to not amount to “Nazism or totalitarian” which would have avoided any protection in law.

The EAT’s judgment also took account of the fact that in English and Welsh law, gender is still depicted as only binary male or female with very little acknowledgement of anything in-between such as intersex or people who identify as non-binary. The judgment also considered that Ms Forstater’s beliefs were not unique to her, and acknowledged that this area was subject to significant public debate.

Lastly, the judgment was clear in pointing out that their decision was not intended to express an opinion on the ‘gender critical beliefs’, and that transgender people were still protected by law under the Equality Act. Employers should continue to support transgender workers and protect them against discrimination and harassment just as they would protect people with any other protected characteristic.

We’re here to help

If you need support with any employment-related issue, speak to a member of your local employment team.

Our employment team is ranked as a Leading Firm in the Legal 500 2021 edition.

Our updated guide to recovery and resilience covers everything you need to navigate your business out of lockdown, unlock your potential and make way for a brighter future. Further advice in relation to COVID-19 can be found on our dedicated coronavirus resource hub.  

From inspirational SHMA Talks to informative webinars, we also have lots of educational and entertaining content for life and business. Visit SHMA® ON DEMAND.

How can we help?

Our expert lawyers are ready to help you with a wide range of legal services, use the search below or call us on: 0330 024 0333

SHMA® ON DEMAND

Listen to our SHMA® ON DEMAND content covering a broad range of topics to help support you and your business.

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Employment summer update: News in brief

A quick round-up of the key employment law developments to watch out for in the coming months.

Employment Bill

The Queen's Speech delivered in December 2019 brought together a number of measures under a new Employment Bill. These measures included the creation of a single enforcement body, making flexible working the default, the right to request a more predictable contract, and leave for neonatal care, amongst other things.

In May 2021, the Queen's Speech set out the government's legislative programme for the coming year but made no mention of the Employment Bill, even though the Prime Minister had previously promised such a bill in response to concerns that workers' rights could be eroded following the UK's departure from the EU.

In a subsequent statement made in the House of Commons, the Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (BEIS) has confirmed that the government intends to bring forward the Employment Bill “when parliamentary time allows”. It is unclear when this will be, although there have been separate announcements on some of the areas within the bill, although in both cases mentioned below, the timing still remains unclear.

  • Flexible working consultation

The government has confirmed it plans to consult on flexible working, including whether flexible working would become the default option unless there are good reasons for this not to be the case.  According to The Guardian, a government spokesperson has stated that this would not go as far as giving staff a legal right to work from home.

  • Government publishes response to the consultation on single enforcement body

On 8 June 2021, the Department for Business, Energy and Industrial Strategy (BEIS) published the government’s response on the proposal to create a single enforcement body for employment rights, bringing together the HMRC National Minimum Wage Enforcement; Employment Agency Standards Inspectorate; and the Gangmasters and Labour Abuse Authority. The proposal was made in the government's Good Work Plan policy paper published in December 2018 and consulted upon in the latter half of 2019.

The new enforcement body will have a wide remit to protect workers in relation to the national minimum wage, labour exploitation and modern slavery, holiday pay for vulnerable workers and statutory sick pay. The government will legislate to implement the single enforcement body when parliamentary time allows.

Firing and rehiring

The government has confirmed that it currently has no plans to legislate to prevent so-called "fire and rehire" practices, which have been the subject of some controversy in recent months. Instead, it has asked Acas to prepare more detailed guidance on how and when dismissal and re-engagement should be used.

On 8 June 2021, Acas published its report into so called "fire and rehire" practices which had been commissioned by BEIS and delivered to minsters in February 2021. Intended as a fact-finding exercise, rather than to recommend reforms, the report notes a wide range of opinions amongst participants over the use by employers of fire and rehire. Although use of the practice has increased during the COVID-19 pandemic, participants in the survey did not agree over whether this was because employers were using the pandemic opportunistically as a "smokescreen" to diminish employees' rights or whether it was merely a response to the scale of the challenges faced by businesses during this time.

Responding to the report in the House of Commons, Paul Scully MP, Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy, confirmed that the government does not propose to put forward "heavy-handed legislation" to ban fire and rehire at this stage. Instead, Mr Scully confirmed that the government has instructed Acas to prepare clearer guidance on when fire and rehire should be used and good practice for employers. However, Mr Scully said the government will continue to work with Acas on this issue, and confirmed that "nothing is off the table".

Right to work checks

Temporary changes to right to work checks, which were brought in because of COVID, will now end on 31 August 2021, not 20 June 2021 as previously announced by the Home Office. This follows the government's announcement to extend the date for the easing of lockdown restrictions and social distancing beyond 21 June.

The temporary changes have allowed employers to carry out right to work checks over video calls and for job applicants and existing workers to send scanned documents or a photo of their documents to employers via email or a mobile app, rather than sending the originals.

From 1 September 2021, employers must once again either:

 

  • Check the applicant's original documents.
  • Check the applicant's right to work online, if they have provided the employer with their share code.

 

Employers will maintain a statutory defence against a civil penalty if the right to work check undertaken was carried out in the prescribed manner or as set out in the COVID-19 adjusted checks guidance. No further retrospective checks on employees who had a COVID-19 adjusted check will be required.

New online tool to check eligibility and pay under shared parental leave and pay scheme

The government has launched a new online tool to help check eligibility and pay entitlement under the shared parental leave and pay scheme. The tool may be helpful for expectant parents and their employers.

The government suggests that the tool is designed to help families make the most of shared parental leave. The intention is to make it easier for expectant parents to access and understand shared parental leave and pay. Working families can check their eligibility for the scheme, calculate their pay entitlement, as well as downloading all the documents they need to secure leave from their employer.

See new online tool to help working families make the most of shared parental leave - GOV.UK (www.gov.uk)

We’re here to help

If you need support with any employment-related issue, speak to a member of your local employment team.

Our employment team is ranked as a Leading Firm in the Legal 500 2021 edition.

Our updated guide to recovery and resilience covers everything you need to navigate your business out of lockdown, unlock your potential and make way for a brighter future. Further advice in relation to COVID-19 can be found on our dedicated coronavirus resource hub.  

From inspirational SHMA Talks to informative webinars, we also have lots of educational and entertaining content for life and business. Visit SHMA® ON DEMAND.

How can we help?

Our expert lawyers are ready to help you with a wide range of legal services, use the search below or call us on: 0330 024 0333

SHMA® ON DEMAND

Listen to our SHMA® ON DEMAND content covering a broad range of topics to help support you and your business.

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Negotiating settlement agreements: Top tips

Settlement agreements, when used appropriately, are an essential part of most organisations' HR strategy.

They offer a way for an employer and the employee to agree terms for the employee’s exit. In the first instance, there will normally be a background that prompts the decision to offer the agreement. This could either be as a result of a voluntary redundancy exercise, or due to concerns about the employee, that has led to the business looking at ways to agree the employee’s exit.

Either way, the employer should have a strategy in mind early on to try and achieve the desired outcome i.e. a mutually agreed exit, with the employee signing a settlement agreement and receiving a termination package that compensates them for their employment ending.

The main ‘bargain’ between the two sides is the waiver of the employee’s ability to bring claims against the employer, in return for the settlement payment from the employer. Settlement agreements are therefore particularly useful where the employee presents a clear risk of bringing a claim. Whether or not the mooted claim would be strong, often an employee will perceive a settlement agreement as the more practical solution, and one that allows for a relatively quick resolution.

The first part of the strategy for the employer will generally be the initial conversation (or the written communication in the case of voluntary redundancy situations). With the initial conversation, the employer should prepare a script that details the key points they want to get across. This should be tailored to the employee and will normally involve making the case for why a settlement agreement is best for both sides.

The employer should explain the offer (both the financial and non-financial aspects), the process moving forwards, and address any concerns the employee will inevitably have. If there is an active dispute (such as an ongoing contentious grievance against the employee), the communications can be labelled as ‘Without Prejudice’. In the absence of an ongoing dispute, the communications should be labelled as a ‘protected conversation’. Failing to attach the correct label to relevant communications, could risk the discussions being openly referred to within any subsequent tribunal proceedings.

Alternatively, the employer could hold off on making an offer and put the onus on the employee to make a first offer (after first making the case for a settlement agreement is best for both sides). Where the employer is open to a negotiation, this approach can sometimes be beneficial in showing early on whether or not the employee is genuinely interested in compromising.

As with any negotiation, the employer should decide at the outset what issues it is willing to compromise on, and what are its non-negotiables and priorities. For example, with someone who retains ties in the organisation (i.e. they have a family member who remains an employee), the employer will need to ensure that the agreement sufficiently protects the expectation of utmost confidentiality. For senior employees, the focus in drafting and negotiating the agreement will generally be on any post-termination restrictions, such as protecting the employer’s clients and staff from being poached.

The contents of a settlement agreement are mainly at the discretion of the parties, except for those clauses which relate to the statutory requirements. As alluded to above, in a normal case, the termination of employment will have occurred or be imminent. The agreement will usually provide for the employee to receive a termination payment in return for waiving certain claims. The extent to which there will be protracted negotiations will depend on factors such as:

 

  • The seniority and salary of the employee, together with the level and intricacy of the package on offer.
  • The validity and complexity of any claims.
  • Whether the employee is departing on acrimonious or more neutral terms.
  • The legal advice being received by the employee (employees need to receive legal advice on the settlement agreement, and it is standard for the employer to pay for this advice to an agreed level).

 

When negotiating an agreement, it is also worth understanding the alternative position, if negotiations break down. Ultimately then, if negotiations reach an impasse, the employer can then demonstrate it is prepared for the alternative approach.

Preparation is key, as is being flexible on issues where there is scope for some level of compromise. Settlement agreements used to be called ‘compromise agreements’ for a reason!

We’re here to help

If you need support with any employment-related issue, speak to a member of your local employment team.

Our employment team is ranked as a Leading Firm in the Legal 500 2021 edition.

Our updated guide to recovery and resilience covers everything you need to navigate your business out of lockdown, unlock your potential and make way for a brighter future. Further advice in relation to COVID-19 can be found on our dedicated coronavirus resource hub.  

From inspirational SHMA Talks to informative webinars, we also have lots of educational and entertaining content for life and business. Visit SHMA® ON DEMAND.

How can we help?

Our expert lawyers are ready to help you with a wide range of legal services, use the search below or call us on: 0330 024 0333

SHMA® ON DEMAND

Listen to our SHMA® ON DEMAND content covering a broad range of topics to help support you and your business.

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Legacy loop: summer edition 2021

Welcome to the summer edition of our Legacy Loop coverage

Clitheroe v Bond (2021) EWHC 1102 (Ch)

This recent decision is significant in reiterating that the correct test when determining mental capacity to make a will is still that set out in Banks v Goodfellow (1870) and not the Mental Capacity Act 2005.  

The 19th century case of Banks v Goodfellow provides the well-established common law test for determining mental capacity to make a will and is almost always referred to by legal advisors in cases where a lack of capacity is asserted.

Background to the case

In summary, the Banks v Goodfellow test sets out that a testator must:

  • Understand the nature of making a will and its effects.
  • Understand the extent of the property of which they are disposing.
  • Be able to comprehend and appreciate the claims to which they ought to give effect.
  • Have no disorder of the mind that perverts their sense of right or prevents the exercise of their natural faculties in disposing of their property by will.

The level of understanding required varies with the complexity of the will itself, the assets and any claims on the testator.

In the case of Clitheroe v Bond however, the court had the opportunity to re-consider arguments that the Mental Capacity Act 2005 should replace the Banks v Goodfellow test for determining capacity, as well as examining the current test for delusions (limb 4 of the Banks v Goodfellow test).

The case concerned a dispute between a brother and sister over the validity of two wills made by their late mother. The court was asked to decide whether the mother died intestate (effectively without a will) – meaning daughter, Susan Bond, and son, John Clitheroe, would receive an equal share of the £400,000 estate – or whether her wills were valid, meaning almost all of the residuary estate would go to the son.

In the original trial, it was held that both wills were invalid due to the mother not having sufficient mental capacity to make the wills. It was found that, at the times the wills were made, their mother was suffering with complex grief reaction, 'insane delusions' and persisting depression following the death of her eldest child from cancer.

What was the outcome?

However on appeal, it was argued that the judge had applied the test in Banks v Goodfellow incorrectly when determining the mother’s capacity. It was concluded that the correct test for determining capacity continues to be the Banks v Goodfellow test. It was also concluded that to establish delusional thoughts, the relevant false belief must be “irrational and fixed in nature”. The parties have been given a further three months to reconsider their positions in light of these decisions.

This case has provided contentious probate lawyers with welcome clarity on the ongoing effectiveness and use of the Banks v Goodfellow test.

A full copy of the judgment can be found here.

Miles & Shearer v Shearer (2021) EWHC 1000 (Ch)

A recent unsuccessful claim brought by two adult children under the Inheritance (Provision for Family and Dependants) Act 1975
Background to the case

This recent high-profile claim was brought by two adult daughters (Juliet and Lauretta) of a deceased father’s estate. Neither the daughters nor their children benefitted under their father’s will and Juliet and Lauretta therefore brought a claim under the Inheritance (Provision for Family and Dependants) Act 1975 for financial provision from the estate. The claim was defended by the deceased’s second wife, Pamela, who was the principal beneficiary of the estate.

What was the outcome?

The court dismissed the claim. It was held that the pair were able to meet their maintenance needs from other resources and their father had no obligation or responsibility towards them. They had also been well provided for during the parent's lifetime and the court therefore made no award for further provision from the estate.

What does this mean for charities?

Adult child claims are generally considered difficult to succeed in, particularly where the individuals bring the claim are financially stable. This case provides a further reminder the court is unlikely to make an award to an adult child in those circumstances, even where the estate is of considerable value. If charity beneficiaries are faced with a claim brought against the estate by an adult child claimant, it is important to seek legal advice early to establish the true merits of that claim and the strength of the position to take in defending the claim.

A full copy of the judgment can be found here.

Rittson-Thomas v Oxfordshire County Council, 2019 EWCA Civ 200

An interesting case where the court considered a donor’s intentions regarding a gift made for a specific purpose and how a change in circumstances reversed the gift back to the estate

This case concerned the redevelopment of a primary school in Nettlebed, Oxfordshire. The land upon which Nettlebed primary school originally stood had been gifted to the local authority for its use as a school by the estate of Robert Flemming in the early 20th century.

Anna Morris recently considered the outcome of this case in further detail in an article for Today’s Wills and Probate, a link to Anna’s article can be found here and a copy of the judgment in full can be found here.

We’re here to help

Many members of our team are trustees of charities themselves and have first-hand experience of the challenges facing charities today. We also know that legacy donations form an increasingly large part of a charity’s income. If you have a dispute around a legacy donation then we can help – contact Andrew Wilkinson or Debra Burton for support.

As well as having broad expertise in charity law, our dedicated charity team can support charities with issues such as employment law, funding and corporate advice, intellectual property considerations and real estate advice.

Our charities team is ranked as Top Tier firm in the Legal 500 2021 edition.

From inspirational SHMA Talks to informative webinars, we also have lots of educational and entertaining content for life and business. Visit SHMA® ON DEMAND. 

Our free legal helpline offers bespoke guidance on a range of subjects, from employment and general business matters through to funding and disputes. We also have a team of experts on hand for any queries on family and private matters too. Available from 10am-12pm Monday to Friday, call 0800 689 4064.

How can we help?

Our expert lawyers are ready to help you with a wide range of legal services, use the search below or call us on: 0330 024 0333

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Listen to our SHMA® ON DEMAND content covering a broad range of topics to help support you and your business.

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Technical

Evaluating Price in Tenders – new guidance on new practices

The detailed technical methodology of evaluating bids is one of this overlooked areas of procurement for procurement lawyers. The Public Contracts Regulations 2015 (“PCRs”) do not detail any specific methodologies and only provide that the contracting authority must ensure that the methodology and weightings must be fair and transparent. This means that the authority has a degree of flexibility in its price/quality evaluation model. The PCRs provide that the contract must be awarded on the basis of the most economically advantageous ender (the "MEAT"). The MEAT may be identified on the basis of:

1. price or cost alone, using a cost-effectiveness approach;

2. a price-quality ratio; or

3. fixed price or cost so that bidders compete on quality only.

In evaluating price, as part of assessing the MEAT, contracting authorities invariably use a relative price-scoring methodology. This common “cheapest bid/ other bid” methodology, as set out on the Crown Commercial Service’s Digital Marketplace. The lowest price gets the highest score, and each of the other prices are marked relative to the lowest priced bid as follows:

Fixed quotes

To score fixed price quotes, you must divide the cheapest quote by each supplier’s quote.

Example:

  • supplier A’s quote is £15,000
  • supplier B’s quote is £10,000
  • supplier C’s quote is £30,000

To calculate a score for supplier A, divide 10,000 by 15,000. Supplier A scores 0.667.

To calculate a score for supplier B, divide 10,000 by 10,000. Supplier B scores 1.

To calculate a score for supplier C, divide 10,000 by 30,000. Supplier A scores 0.333.”

The issue of relative price-scoring has been considered and subject to public debate in the procurement-nerd community for some time. But as long as this was normal market practice and was endorsed by the UK government guidance and approach, then it was probably fair to say that there was relatively little risk that this would be challenged - this was acceptable market practice and therefore, not unreasonable. In addition, the mathematics was pretty simple and, therefore an attractive solution for everyone involved, including, especially, the lawyers.

However, the UK Government published guidance last year which means that this approach is no longer acceptable. The guidance provides:

Relative price scoring should be treated with caution and not be used unless there is a specific business reason which has been approved by the commercial lead and the project SRO.” (para. 7.2.1)

The Government Commercial Function has proposed, instead, benchmark scoring and scoring on the basis of value for money ratios. Using ratios certainly makes sense from a regulatory compliance perspective: the PCRs refer to the pretty much overlooked “best quality-price ratio”, rather than, for instance, best quality-price score.

There is some quite interesting mathematics around using ratios, as against relative price scoring. Assuming the following five example bid scores, where the quality/cost weighting ratio is 50: 50:

Bidder Quality Cost

Using the relative price-scoring methodology, Bid C is the lowest price, as set out in the table below. Bid C scores 30% (i.e. 15 points) on quality and scores maximum of 50 points on price, and therefore wins (i.e. 50 points on price, 15 points on quality):

Bidder Ranking

By contrast, under a quality-price ratio model, Bid A wins. This is much more logical, based on the weightings, and intuitively correct. That is to say, that the quality is twice as good and the price is less than twice as much more than Bid C:

Bidder VfM ratio

In summary, since June 2020, at the latest, it is no longer acceptable market practice to apply relative-scoring as part of the price evaluation where you are awarding contracts on the basis of best “price-quality ratio”. In the light of that it is interesting to note that central government departments and agencies, including the OGC and MoD have, almost a year later still not changed their bid evaluation methodologies to reflect government guidance. You can find out more here.

Contact us

To discuss any of the above or to consider more general commercial assistance please contact Uddalak Datta or another member of the commercial team.

Our updated guide to recovery and resilience covers everything you need to navigate your business out of lockdown, unlock your potential and make way for a brighter future. Further advice in relation to COVID-19 can be found on our dedicated coronavirus resource hub.  

From inspirational SHMA Talks to informative webinars, we also have lots of educational and entertaining content for life and business. Visit SHMA® ON DEMAND.

How can we help?

Our expert lawyers are ready to help you with a wide range of legal services, use the search below or call us on: 0330 024 0333

SHMA® ON DEMAND

Listen to our SHMA® ON DEMAND content covering a broad range of topics to help support you and your business.

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Employment case law update | April 2021

Here we take a quick look at some key employment case law decisions from recent months.
Asda v Brierley - Equal pay

This case involved female store staff claiming that they should receive the same pay as their male colleagues who worked in the distribution warehouses. It has been long established that men and women should receive equal pay for equal work (originally a right granted under the Equal Pay Act 1970 and more recently under the Equality Act 2010). A claim for equal pay comes in three stages:

  1. Are the roles comparable?
  2. If so, are they of equal value?
  3. If they are of equal value, is there a reason why the terms and conditions should differ?

This case concerned the first stage, namely whether the store workers could compare their roles to those workers in the distribution warehouses. Asda argued that the roles were not comparable because there were no common terms between the roles, particularly given that the roles were at different establishments.

However, the store workers claimed that comparison was possible in any case where there was a "single source" for the terms of employment of a claimant and their comparator. The employment judge agreed and held that there were common terms generally between the claimants and the comparators and a significantly broad correlation or comparison between the terms in retail and distribution.

The judge also held that any differences were not so extensive as to undermine that comparison.

Asda appealed this decision all the way to the Supreme Court, which has recently upheld the original decision. While significant, this decision is not the end of this litigation. The case has now been remitted back to the tribunal to determine whether the work is of equal value. The outcome of this case will be carefully watched across the retail sector as it could have implications for thousands of workers.

Smith v Pimlico Plumbers – Holiday pay

This case has established that, whilst a worker has a right to carry over unused leave where an employer has refused to pay the worker for that leave, the same right does not apply where the worker has taken that leave, albeit unpaid.

Mr Smith is a plumbing and heating engineer who worked for Pimlico Plumbers between 2005 and 2011. Throughout the period, Pimlico maintained that Mr Smith was a self-employed contractor, which meant he had no entitlement to paid leave. Mr Smith issued a claim in 2011 for, amongst other things, unpaid holiday pay.

An employment tribunal dismissed Mr Smith’s claim on the basis that it was out of time. However, it also held that, given the fact that Mr Smith had taken periods of unpaid leave during his time with Pimlico, he was no longer entitled to carry this leave forward into another leave year, unlike workers who had not taken any leave at all because their employer refused to pay for the leave.

Mr Smith appealed to the EAT but this appeal was dismissed.

Mencap v Tomlinson Blake – Pay and National Minimum Wage

This case concerned the payment for so-called “sleep-in” shifts, which are prevalent in the care sector.  These typically involve a care worker sleeping overnight in a bedroom at a care home.  The worker is expected to sleep for the duration of the shift and won’t have to “work” unless there is an issue that requires their assistance.

Historically, almost all care providers paid a fixed rate for sleep-in shifts, typically in the region of £30 to £50, rather than paying an hourly rate for the shift. In the early to mid-2010s a series of legal challenges were raised by employees arguing that the entirety of the sleep-in shift should count as “working time” for national minimum wage purposes and that the fixed rate approach, therefore, meant they were being paid below national minimum wage.

A number of these cases succeeded at tribunal and these decisions were mostly upheld by the Employment Appeal Tribunal.

Mencap were on the wrong end of one such decision and recently appealed to the Court of Appeal, which found in their favour.  The judges took the view that the employees were “available for work” rather than actually working.

The claimant, Mrs Tomlinson-Blake, was given leave to appeal to the Supreme Court. Her appeal was unsuccessful as the Supreme Court upheld the Court of Appeal’s decision and found in favour of Mencap.

This decision will come as a huge relief for care providers, many of which were facing huge back pay liabilities had the appeal succeeded.

Cox v Addecco - Litigants in person and strike out orders in employment tribunals

“You can’t decide whether a claim has reasonable prospects of success if you don’t know what it is” was the judge’s opening comment in the judgment of the recent case of Cox v Addecco.

In this case the Employment Appeal Tribunal (EAT) provided guidance on how employment tribunals should deal with litigants in person and strike out applications.

The claimant’s principal claim was that of whistleblowing. The respondent applied to have the claim struck out on the basis that there was no reasonable prospect of success and was successful in its application. The claimant appealed.

In determining the claimant’s appeal, the EAT noted that litigants in person should not be expected to explain their case and take the judge to the relevant materials. Rather, the onus is on the judge to consider the pleadings and other core documents that explain the case to ascertain the claims and the issues raised. Further, the tribunal must make a reasonable attempt at identifying the claims and issues before considering a strike out or making a deposit order.

The judge went on further to find that the issues were not sufficiently identified in this case, which was the backdrop to the errors of law the tribunal made in determining that the claim of protected disclosure detriment or dismissal had no reasonable prospects of success because the tribunal:

  1. failed to sufficiently analyse the information the claimant contended he had disclosed;
  2. failed to consider the context in which the disclosure was made;
  3. misdirected itself as to the test for whether protected disclosure were in the reasonable belief of the claimant made in the public interest; and
  4. failed to properly analyse to whom the disclosure was made, and whether it was arguable that any qualifying disclosure was protected.

This case demonstrates that employment tribunal judges are expected to assist litigants in person in identifying the issues in their claims.

Further, whilst it can be tempting for a respondent to make an application for strike out in cases where a claimant fails to properly set out their claim, doing so without taking appropriate steps to obtain additional information may have little chance of success and could ultimately result in unnecessary time and costs being incurred.

Elliott v Dorset County Council - Interpretation of disabilities

The Employment Appeal Tribunal (EAT) has made a significant decision on the interpretation of disabilities, in particular the test for whether a person is disabled for the purposes of the Equality Act 2010.

In the case of Elliot v Dorset County Council UKEAT/0197/20, the EAT was asked to consider the definition of a disability, and in particular the nuances of interpreting whether a particular condition is deemed as a disability based on the effects it has on the individual. The statutory definition of a disability is defined in s.6(1) Equality Act 2010.

"A person (P) has a disability if P has a physical or mental impairment, and the impairment has a substantial and long-term adverse effect on his ability to carry out normal day-to-day activities."

Deciding exactly what constitutes a “substantial and long-term adverse effect on [one’s] ability to carry out normal activity” will often depend on contextual information, so s.212 Equality Act 2010 describes it as applying when the adverse effect is “more than minor or trivial”. This supporting definition is therefore used by tribunals across the country to determine whether someone is disabled in cases where disability is an issue of fact.

However, The Equality Act 2010 also has detailed official guidance, published by the government, which can be used to analyse further the issue of whether a person is disabled. In the guidance, there is a section called “Guidance on matters to be taken into account in determining questions relating to the definition of disability”. This section advises considering factors like the time taken to complete tasks, the way in which an activity is carried out, the potential for cumulative effects of an impairment and others to assist in deciding whether the condition does indeed have a “substantial adverse effect”.

If the guidance does not provide a sufficient answer, for employers and employees, there is also the “Employment: Statutory Code of Practice”, which is effectively even more guidance that sets out a code of best practice for employment matters in particular.

In the case of Elliot v Dorset County Council, the EAT stated in their judgment, that the statutory definition in s.212 of the Act took precedence over the official guidance or the employment statutory code of practice. This means that if a person meets the s.212 test of the adverse effect being “more than minor or trivial”, this is sufficient.

The EAT made clear that further analysis based on the guidance or the statutory code would not undo the passing of the s.212 test, as the s.212 test takes precedence and “that would normally be the end of the matter”.

The EAT nonetheless emphasised that the tribunal can and should take into account the guidance or the code when relevant, which is likely to be where the s.212 test does not immediately provide a clear answer. They also pointed out that the statutory tests in the Equality Act should always be read in the context of the Act as a whole, so that the tests can be properly applied to the circumstances of each individual case before them.

The judgment was handed down on 9 April 2021, with the EAT ordering the case to go before a fresh tribunal to re-consider whether the claimant was disabled based on the clarified precedence of the statutory test of “substantial adverse effect”.

Contact us

If you have any queries about how the above case law may affect your business, contact a member of your local employment team.

Our employment team is ranked as a Leading Firm in the Legal 500 2021 edition.

Our updated guide to recovery and resilience covers everything you need to navigate your business out of lockdown, unlock your potential and make way for a brighter future. Further advice in relation to COVID-19 can be found on our dedicated coronavirus resource hub.

From inspirational SHMA Talks to informative webinars, we also have lots of educational and entertaining content for life and business. Visit SHMA® ON DEMAND.

How can we help?

Our expert lawyers are ready to help you with a wide range of legal services, use the search below or call us on: 0330 024 0333

SHMA® ON DEMAND

Listen to our SHMA® ON DEMAND content covering a broad range of topics to help support you and your business.

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Industrial action participation – protection from detriment cannot be read into TULR(C)A

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Technical

Employment spring update: News in brief

A quick round-up of the key employment law developments to watch out for.
Gender pay gap reporting

Due to the effects of the pandemic, the Equality and Human Rights Commission has postponed the deadline for organisations to publish their gender pay gap report by six months. This means that employers now have until 5 October 2021 before any legal action can be taken.

National Minimum Wage record keeping

With effect from 1 April 2021, the period for which an employer must keep records sufficient to establish that it is paying a worker the applicable minimum wage rate was extended from three years to six years.

Read about five further changes to employment law from April 2021

Cap on public sector exit payments

The Restriction of Public Sector Exit Payments Regulations 2020, which came into force on 4 November 2020, are being revoked. The revocation follows various legal challenges to the regulations from local government organisations and trade unions, one of which was due to be heard in March 2021.

New tribunal awards limits

The Employment Rights (Increase of Limits) Order 2021 has revised compensation limits for certain tribunal awards and other statutory payments from 6 April 2021. The Order includes the following new limits:

  • The limit on a week's pay increases from £538 to £544.
  • The maximum compensatory award for unfair dismissal increases from £88,519 to £89,493.
  • The minimum basic award for certain unfair dismissals (including health and safety dismissals) increases from £6,562 to £6,634.
Key cases to follow in 2021

There are several upcoming decisions to keep an eye out for during 2021:

Kostal UK v Dunkley - On 18 May 2021 the Supreme Court will hear an appeal against the Court of Appeal’s decision that a one-off direct offer to employees concerning pay, which bypassed stalled collective bargaining, did not constitute an unlawful inducement under the Trade Union and Labour Relations (Consolidation) Act 1992.

Flowers and others v East of England Ambulance - On the 21 June 2021 the Supreme Court will determine if holiday pay, under the Working Time Directive 1998, should take into account regular, voluntary overtime.

Chief Constable of the Police Service of Northern Ireland and another v Agnew and others - Between 23 – 24 June 2021 the Supreme Court will hear an appeal from the Northern Ireland Court of Appeal (NICoA), where it was held that gaps of more than three months would not be deemed to interrupt a series of unlawful deductions from holiday pay. While the NICoA’s decision only had persuasive effect on the courts in Great Britain, the Supreme Court’s decision will be binding across the UK.

Harpur Trust v Brazel - On 9 November 2021, the Supreme Court will determine if the employment tribunal was wrong to determine that "part-year workers" should have their annual leave entitlement capped at 12.07% of annualised hours. 

We’re here to help

If you need support with any employment-related issue, speak to a member of your local employment team.

Our employment team is ranked as a Leading Firm in the Legal 500 2021 edition.

Our updated guide to recovery and resilience covers everything you need to navigate your business out of lockdown, unlock your potential and make way for a brighter future. Further advice in relation to COVID-19 can be found on our dedicated coronavirus resource hub.  

From inspirational SHMA Talks to informative webinars, we also have lots of educational and entertaining content for life and business. Visit SHMA® ON DEMAND.

How can we help?

Our expert lawyers are ready to help you with a wide range of legal services, use the search below or call us on: 0330 024 0333

SHMA® ON DEMAND

Listen to our SHMA® ON DEMAND content covering a broad range of topics to help support you and your business.

Agriculture: diversifying or leasing your land to create habitat banks

6 Jul

Peter Snodgrass, Partner & Head of Agriculture
Agriculture: diversifying or leasing your land to create habitat banks

We know that biodiversity net gains provide a significant opportunity for landowners to diversify […]

Teachers’ Pension Scheme – strategic issues independent schools need to think about

20 Jul

Esther Maxwell, Legal Director | Emma Glazzard, Solicitor
Teachers’ Pension Scheme – strategic issues independent schools need to think about

Webinar Teachers’ Pension Scheme – strategic issues independent schools need to think about In […]

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8 Sep

Michael Hibbs, Partner
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Jody Webb, Partner
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Insight

Legacy loop: spring edition 2021

Welcome to the spring edition of our Legacy Loop

Recent case update | Charities
Knipe v The British Racing Drivers’ Motor Sport Charity and Ors (2020) EWHC 3295 (Ch)
Background to the case

The recent case of Knipe involves two charities that were named in the testator’s will (‘the British Drivers Club Benevolent Fund’ and ‘the Cancer Research fund’) - neither of which actually existed at the time of his death.

Ordinarily, when trying to work out who should benefit from a will, the will file and evidence from the solicitors who prepared the will can provide useful guidance.  Unfortunately, in Knipe, the executor was unable to get any clarification on what the testator had intended from the firm who had made the will as the will file had been destroyed.

An application was then made to the court for determination as to the correct construction of the will in relation to these two charitable gifts.

The court considered the testator’s professional background and his previous longstanding involvement with and membership with the British Racing Drivers’ Motor Sports Charity, it was concluded that the testator must have intended them to benefit, as they are the only named registered charity with a similar name and which has a benevolent fund administered by the British Racing Drivers’ Club (a non-charitable unincorporated association).

What was the outcome?

The court was unable to establish a link between the testator and any particular cancer research charity, and it was considered that the testator did not have any strong connections to a particular cancer charity. It was therefore interpreted that the testator generally intended to benefit any general cancer research charity and the court authorised the executor to pay the legacy to a cancer research charity of his choice.

What does the outcome of this case mean for charities?

Whilst it is possible for the court to interpret and determine a testator’s intentions following death, it is both quicker and significantly less costly to ensure that all beneficiaries are accurately identified and named at the time of making the will.

Particularly in the case of charity beneficiaries, inclusion of the charity’s full registered name, address and company/charity number in the will itself means that the right beneficiaries can be easily identified when it comes to administering an estate, especially if the charity then merges or its assets passed to another charity.

The full version of the judgment, in this case, can be found here.

The future of will-making and legacy donations and the implications for charity fundraisers and managers

Legacy Foresight’s recent Charitable Wills in the 21st Century project looked at will-making and charitable legacies, both now and into the future, considering the implications for both legacy fundraisers and managers.

The report recognises that people’s circumstances, relationships and wishes change over time, and this often elicits a person to change a will that they may have done some years earlier later in life. This may therefore play a part in influencing where the focus should be in terms of stewardship and awareness-raising from legacy teams.

Online wills

Whilst we are seeing a significant shift in law firms moving further to remote working and provision of services, and introduction of video witnessing of wills, it is not considered likely that there will be a huge overhaul of the current legislation governing will making.  Wills are important documents that determine who benefits from your estate following your death, it is therefore essential that proper advice is sought and consideration is given to the content and execution of that document (as would be the case with giving away money and assets during lifetime).

Read our recent article on the video witnessing of wills and the possible impact of the potential introduction of dispensing powers (upholding testamentary wishes made do not comply with the formal requirements of a will).

The Legacy Foresight report suggests that rather than a “revolution” in the way wills are made, there is more likely to be an “evolution” by way of voluntary codes of conduct and more explicit standards brought in. Therefore, whilst online wills may provide a more accessible route to making a will, there is a danger that we could see a knock on effect later, perhaps due to fewer safeguards in place to ensure those wills are validly made and executed.

Our recent webinar, hosted by STEP East Midlands, considered the common problems of ‘DIY wills’, as well as taking a look at digital assets. View a recording of the webinar.

Free wills

Charity schemes and free wills services are found to be a significant source of business within the will-making sector, and search and comparison providers such as Money Saving Expert, Which and Citizens Advice (and even social media) are likely to be important in influencing the schemes potential donors are exposed to.

Whereas charitable wills among the ‘war babies’ and ‘baby boomers’ are perhaps more prevalent than among millennials, free wills schemes are appearing to appeal to young people where the cost of making a will may be a significant factor. The report highlights therefore that, as the payback of those schemes is generally far off in relation to young people, stewardship and maintaining relations with those donors is vital in retaining their support.

How will charities be affected?

The project suggests that it remains uncertain exactly what the effect on charitable giving will be following the coronavirus pandemic, and whether there will be any notable changes to the will-making industry or donors’ needs. The report suggests that a further phase is intended to be carried out in the wake of the coronavirus crisis to explore these questions in more detail.

We’re here to help

Read our full spring legacy loop email here.

Many members of our team are trustees of charities themselves and have first-hand experience of the challenges facing charities today. We also know that legacy donations form an increasingly large part of a charity’s income. If you have a dispute around a legacy donation then we can help – contact Andrew Wilkinson or Debra Burton for support.

As well as having broad expertise in charity law, our dedicated charity team can support charities with issues such as employment law, funding and corporate advice, intellectual property considerations and real estate advice.

Our charities team is ranked as Top Tier firm in the Legal 500 2021 edition.

From inspirational SHMA Talks to informative webinars, we also have lots of educational and entertaining content for life and business. Visit SHMA® ON DEMAND. 

Our free legal helpline offers bespoke guidance on a range of subjects, from employment and general business matters through to funding and disputes. We also have a team of experts on hand for any queries on family and private matters too. Available from 10am-12pm Monday to Friday, call 0800 689 4064.

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Technical

What does the new Brexit trade deal mean for the energy sector?

On the 24 December 2020, the United Kingdom, the European Union (“EU”) and the European Atomic Energy Community (“Euratom”) negotiating teams reached agreement in principle on the basis of the future relationship between the UK and the EU.

The agreed principles are set out in three draft agreements. Two of the agreements in the Brexit deal impact the energy sector:

The third agreement covers the exchange and protection of classified information. Each of the agreements applies provisionally until 28 February 2021, to give the EU and UK Parliaments time to analyse and ratify them. Approval by the UK Parliament has already been achieved, although ratification by the European Parliament and the Council of the European Union may require more time.

Brexit concerns: The Brexit deal and the energy sector

During the extended Brexit negotiations concerns were expressed over a number of areas in which the GB energy market might lose out. These included loss of access to the EU’s Internal Energy Market (IEM), including day-ahead market coupling, cross-border balancing and capacity market integration; loss of influence over EU policy resulting from membership of ENTSOe, ENTSOg and ACER terminating; adverse impact on UK renewables and carbon emissions policies; and disruption of nuclear operations.

The TCA and NCA address these issues through the various high-level principles they enshrine. However, they essentially provide a framework for the development of detailed arrangements for the future relationship in the energy sector. A range of committees will oversee the development of detailed measures and these include specialised committees addressing the maintenance of a level playing field for open and fair competition and another, addressing technical barriers to trade which will address cooperation on energy standards.  A Specialised Committee on Energy will address other issues including the efficient use of interconnectors.

Much attention during the Brexit negotiations was focused on the future arrangements for Northern Ireland. These were largely settled in the Ireland/Northern Ireland Protocol agreed as part of the Withdrawal Agreement. In the case of the energy sector, it was agreed that the all-island electricity market, the i-SEM, would continue post-transition period and, to facilitate this, the UK government agreed under the Protocol to apply EU law in Northern Ireland in respect of the i-SEM.

Access to the Internal Energy Market (IEM)

One of the key areas of concern from a GB perspective pre-Brexit was the degree of access that would be retained to lower-priced power in the IEM. In particular, would the GB interconnectors be able to continue their participation in the single day-ahead price-coupling process?

Whilst it is now established that the UK is a third country outside the IEM and interconnector trading has reverted to explicit auctions, new coupling arrangements are envisaged by the TCA for the day-ahead timeframe as outlined in Annex ENER-4.  The TCA provides for an alternative mechanism to be developed, based on the concept of multi-region loose volume coupling under a process to be overseen by the Specialised Committee on Energy. The new coupling arrangements are to be implemented by early 2022 and, whilst likely to be less efficient than single day-ahead price-coupling, should enable the GB market to regain at least part of the ‘social benefits’ of coupling. In the interim, the GB interconnectors can be used to access the EU markets but only through the less efficient mechanism of explicit auctions.

There are no similar provisions in the TCA to facilitate access to the IEM in other timeframes, including intraday and balancing. However, the Parties are required under Article ENER.13 to develop “arrangements to deliver robust and efficient outcomes for all relevant timeframes, being forward, day-ahead, intraday and balancing” and this is reiterated by Article ENER.14.

Access to EU Institutions

Having been at the forefront of liberalisation of the EU energy sector and the development of cross-border trade, the UK risks losing its influence post-Brexit. This would have been a major concern if the UK had retained its participation in the IEM but remains an issue even with the reduced level of integration provided for in the TCA. Whilst the new arrangements leave the GB energy market outside the IEM and the key institutions, ENTSOe, ENTSOg and ACER, the TCA does inc