You’re paid how much?!

Anna Moyle

 

If you’re a woman reading this…

… could you use your time better if you stopped and instead flicked through the job vacancies at Channel 5, Unilever UK or Ocado?

Why do I ask this, and why them?

The answer is that they are 3 of the very few companies (just 14% of larger employers) that have a gender pay gap figure in favour of women.

April 2018 was the first time that large (250 employees or more) private and public sector employers were required to make public their gender pay gap figures.

By the time the deadline had passed at midnight on 4 April more than 10,000 employers had published this data.

Nobody was surprised to learn that men are paid more than women.  The figures show that 3/4 of large employers pay their male employees more.  There is not a single sector where women can expect to be paid more than (or even the same as) men.

We’ve known for a long time that what women get paid, or rather don’t get paid, is an issue.  The Equal Pay Act was introduced in 1970 so has a claim as the oldest employment related legislation on the books (now incorporated into the Equality Act 2010).

But be careful before jumping to conclusions.  The aim of Equal Pay legislation is to ensure women are paid the same as men if they are carrying out work of equal value.  However the gender pay gap data does not measure this.  Instead, it reveals the salary gap between men and women based on median pay.

In other words if the men and women working at Ryan Air (a company that reported one of the largest gender pay differences) stood in separate lines in order of salary, the woman in the middle of her line earns 71.8% less than the man in the middle of his.

So the gender pay gap data says more about the preponderance of women in part time work and of men in more senior positions than it does about whether employers are breaking the law on equal pay.

So before you resign and apply to work at Unilever UK you need to factor in that their figures reflect the number of men in lower paid manufacturing jobs.  Ryan Air’s gender pay gap (albeit high even for the aviation industry) is also evidence of the fact that only 8 of its 554 highly paid pilots are women compared to 2/3 of its cabin staff.

Employers will have to publish the same information this time next year (and every year thereafter) so we should be able to monitor their progress, or lack of it.

However, 10% of large employers have still not complied with their obligations to publish data.  Commentators are also concerned that the ECHR does not have sufficient resources or powers to force reluctant employers to publish or punish them if they refuse (although its first investigation is apparently due to start in June 2018).

The system may not be perfect and the figures only reveal part of a complex picture, but no other country has initiated such a comprehensive data collection exercise on this issue.

The CEO of the Fawcett Society (which describes itself as the UK’s leading charity campaigning for gender equality and women’s rights) sees gender pay gap reporting as a “game changer” no less because it forces employers to look at themselves and understand their organisations and it prompts employees to ask some hard questions”.

The Equality Act in 2010 made it difficult for employers to enforce the (once common) contractual provisions designed to prevent employees from discussing pay.  With gender pay gap data easily accessible and the higher media profile being given to such issues, employers need to be prepared to have far more conversations with their (usually female) employees questioning their pay when compared with colleagues of the opposite sex.

Those conversations may not be easy for the employer. Just ask the BBC.

In the meantime the rest of us will be watching Ryan Air…

“Faites vos jeux” and work those percentages!  

WynLewis

If I’d been given £1 each time a client had asked me “what are my chances?” in bringing or defending a claim or in adopting a particular strategy, I wouldn’t be writing this now; I would be rich enough to have retired.  But I wasn’t and I haven’t.

The reason is that most lawyers are programmed not to take chances and not to speculate, other than on the most unusual occasions (and then with a disclaimer, or even an indemnity).

Imagine my surprise, then, to have not one, but three recent developments where the employment tribunals have been referring to percentages and chances in their judgments!

Unfair Dismissal:  in Creditsights v. Dhunna the Court of Appeal took the broadest approach and decided that if someone (in this case a US citizen) who had been employed by a UK company but worked abroad (i.e. outside Great Britain) could establish “much stronger connections both with Great Britain and with British employment law than with any other system of law” then the chance of the UK employment tribunals having jurisdiction to deal with any dismissals was high.  So he could bring a claim.  This isn’t quite the same as adopting a 60/40% rule, but the principle isn’t far removed.

Discrimination and Unfair Dismissal:  in Fuller v. United Healthcare Services Inc.,the Employment Appeal Tribunal decided that someone (another US citizen) who had been employed by a US company but worked in the UK for about 49% of his time (i.e. a lot) hadn’t established enough of a connection with Great Britain.  So he couldn’t bring a claim.  This is an interesting example of when an actual percentage was used to justify a decision.

TUPE:  in Costain v. Armitage and ERH the Employment Appeal Tribunal decided that someone who spent 67% of his time working on a project that transferred under TUPE didn’t also transfer his employment from the outgoing employer to the incoming contractor, because the amount of time spent immediately before the transfer was just a snapshot and didn’t reflect the extent to which he was assigned to the activity overall; which, in turn, meant that someone who had spent much less of their time on the same contract might well have transferred their employment.

Confused?  I’m not surprised.  But don’t be – the fact of the matter is that there’s no rhyme or reason for the differences in approach where one of the roles of the courts and tribunals is to bring certainty to users of the court service.  Instead, just remember to take the maths as a starting point and look at the reality of a situation – there are, as you’ll know, lies, damned lies and statistics.

Don’t leave me this way… or it will cost you

CarolineLeaver

Whilst many of us were packing our bags for our summer holidays, the High Court was dealing with a particularly interesting and tricky issue – Sunrise Brokers LLP v Rodgers.

This case sets out the proposition that an employment contract still subsists even where the employee is refusing to work and is not receiving salary, and it reinforces the concept of ‘no work, no pay’. The case also clarifies that an injunction may be obtained requiring an employee to observe the terms of his/her contract without compelling the employee to do any work. 

Commentators were particularly ‘excited’ to see this case come to Court as it follows on from the Supreme Court’s decision in Societe Generale, London Branch v Geys. It was held in that case that if an employer committed a repudiatory breach of contract it did not automatically terminate the employment relationship until the wronged party – in that case, the employee – accepted it. The elective theory applies for the benefit of the wronged party, whether employee or employer.

After Geys, there was some speculation as to what an employer’s remedy would be if the ‘boot was on the other foot’ and it chose not to accept the employee’s resignation in breach of contract. It had long been held that the courts would not compel the parties to work together and this led to the question: might it be possible for the employer to seek a declaration that the contract still subsisted and apply for an injunction restraining the employee from working for another employer during the notice period?

Enter stage left Sunrise Brokers LLP v Rodgers

This case is quite complicated in terms of timings but in summary, in March 2014, Mr Rodgers left Sunrise with no notice, having accepted a position with a competitor commencing in January 2015. His contract was for a fixed term until September 2014 and then contained a 12 months’ notice provision and enforceable restrictive covenants (including a 6 month non-compete). The contract also provided for garden leave (at Sunrise’s discretion) for a period which would not normally exceed 6 months.

Sunrise refused to accept Mr Rodgers’ repudiatory breaches in purporting to terminate the contract without notice and elected to keep the contract alive. Sunrise had a good reason for affirming the contract, namely preventing Mr Rodgers from working for a competitor. He was not placed on garden leave which would have the effect of reducing the length of the restrictions whilst he sat in the garden. But Sunrise still wanted to agree a termination plan with Mr Rodgers and offered him 6 months’ notice to expire on 16 October 2014 at which time Mr Rodgers would then be bound by the 6 months’ non-compete restriction.

After his resignation, Mr Rodgers did not return to work and from April 2014 due to his unauthorised absence, Sunrise ceased to pay Mr Rodgers’ salary, but confirmed that payments would recommence on his return to work. Mr Rodgers claimed that non-payment of salary either amounted to accepting Mr Rodgers’ repudiatory breach of resigning with immediate effect or else was a repudiatary breach by Sunrise which Mr Rodgers accepted. Either way, his positon was that the contract had come to an end.

Sunrise sought a declaration and an injunction and were successful with both.

‘No work, No pay’

Willingness to work and wages are, in general, mutual obligations and the non-performance of one excuses the non-performance of the other. It does not mean that the contract automatically ceases, it means that the obligation to pay is suspended until the obligation to work is performed – ‘no work, no pay’.

‘Limited injunction’

The Court would not enforce the performance of the contract by injunction, but it did agree that Sunrise had good reason to keep the contract alive and granted an injunction requiring Mr Rodgers to observe the terms of his contract (although not perform any work) until 16 October 2014. During that time, he was not to work for a competitor and was not to contact Sunrise clients. The restrictions in the employment contract would be upheld until 26 January 2015, 10 months from the date of the last client contact.

Interestingly, Mr Rodgers was not planning on starting with the new employer until January 2015 which on the face it of it makes Mr Rodgers sound like the winner (particularly since the offer originally made by Sunrise would have meant that he could not have started employment until April 2015). However, Sunrise did not have to pay for the period Mr Rodgers was on notice and had won in the Courts, so Mr Rodgers was ordered to pay Sunrise’s costs (assessed at £168,000) as well, presumably, as his own: not such a winning position after all.

Important ‘takeaways’:

(1)  If an employee “walks”, their employer does not have to accept that as terminating the contract of employment (probably quite different from how it would be in the USA).

(2)  An employee cannot force an employer to place them on garden leave during which time they receive salary and require that if there are any post-termination restrictions they are reduced by that period of garden leave. Sunrise was prepared to have Mr Rodgers back to work despite the way he had behaved, which placed them in an excellent position. This is unusual and many employers would not want the employee back particularly if they have access to sensitive information and/or client contact.

(3)  If an employee refuses to work, he/she may not be entitled to be paid and the contract can be kept alive. It would be sensible to expressly state this in the contract.

(4)  The Court can enforce the notice period by way of restriction which (i) it may reduce to whatever it considers appropriate and (ii) it may in its discretion order that the restriction will not apply to non-competing work.

(5)  This case dispels the belief that injunctive relief would not be granted as such an order will force the employee to work for the employer or remain idle. Even if this is the true position, the Court has shown that any restraint can be modified to allow an employee to work in a non-competing area thereby avoiding the employee being ‘forced to work or starve’.

 

“Fat is a feminist issue”… or is it?

WynLewis

The proposition (in the eponymously titled book) that “fat is a feminist issue” apparently caused much debate, initially in the late 1970s and early 1980s, when its author, Susie Orbach, suggested (among other things) that women were fat (and what follows is a simplistic paraphrasing of her work) because of an unconscious desire to be fat in order to protect themselves against the oppression of being expected to be as thin as the supermodels of the day and to conform with various other gender-based contemporary expectations.

Oppression and discrimination are close bedfellows, but it took until 1993 (or thereabouts) before discrimination on the basis of someone’s weight was made unlawful in California (which is a frequent harbinger of principles that subsequently get rolled out in other jurisdictions).

But weightism (or weight bias, weight stigma, weight-based discrimination as it’s currently called) still isn’t a protected characteristic under the Equality Act 2010. Not yet. The rationale for this includes the assumption (and there are many shades of grey here) that you can stop eating (the wrong things) if you want to. So – drawing a parallel with alcoholism / smoking / having tattoos, each of which is specifically excluded from being an impairment under the Equality Act 2010 – being fat, some would say, is self induced or self perpetuated and so should also not be regarded as a disability.

It’s interesting to speculate on why being overweight is now creeping onto the radar of UK discrimination law. There could be many reasons for this (although none of them relate to aesthetics or beauty). They include the increasing cost of obesity-related healthcare issues; the difficulty in obtaining insurance; the obvious and public increase in obesity; or (somewhat, but not entirely tongue in cheek) the business costs of re-categorising and upsizing international clothing sizes from “small / medium / large” to something like “large / extra large / normal” respectively.

Or could it be something to do with the fact that men (who make up the majority of the judiciary and the legislature) are now also expected – given the front page of every issue of Men’s Health – to keep looking good and be fit, thus causing fat be become a man-ist (not just a feminist) issue?

Whatever are the reasons, they raise public policy issues that result in the root cause being picked up by discrimination law. As part of this trend, two cases have addressed the issue recently.

Last year, in the case of Walker v. Sita Information Networking Computing (employee was disabled because of a number of mental and physical impairments that were caused by obesity – rather than simply being obese), one of the EAT judges said that “… though I do not accept that obesity renders a person disabled of itself, it may make it more likely that someone is disabled”. This is quite a step forward from the proposition that someone has made themselves fat and so should not be protected.

Last month, in the Danish case of Kaltoft v. Billund Kommune (employee in charge of children was dismissed for being so fat that he couldn’t tie a child’s shoelaces), the Advocate General of the ECJ issued an Opinion (much like a “hint” to the judges) saying that disability covers the situation when a physical or mental condition makes “carrying out of that job or participation in professional life objectively more difficult and demanding. Typical examples of this are handicaps severely affecting mobility or significantly impairing the senses such as eye-sight or hearing” … and that “…cases where the condition of obesity has reached a degree that it, in interaction with attitudinal and environmental barriers … plainly hinders full participation in professional life on an equal footing with other employees due to the physical and/or psychological limitations that it entails, then it can be considered to be a disability”. So, another step change.

But don’t jump to conclusions. The important messages to note from these developments (for the time being, at least) are:

(1) that obesity may (not will) result in statutory protection because of a disability. The newspapers’ notion that “obesity is the new disability” is wrong; and

(2) that the Government’s attempts to make its electorate more healthy (by being thinner) could be undermined by the cushion of the Government also providing statutory protection from being treated less favourably through being overweight, so why bother to change your eating habits? If so, then the unconscious desire to be fat (to avoid oppression) identified in “Fat Is A Feminist Issue” could become a conscious carelessness about being fat (to gain protection).

Perhaps the next book on this subject will be called “Fat Is A Judicial Issue”. Will it sell like hot (calorific) cakes?

 

Good Leavers, Bad Leavers & Guilty Employers

Anna Moyle

 

Employers, be careful. Do you treat your retiring employees as good leavers? If so, do you allow them to retain valuable accrued benefits linked to incentive schemes? If your answer is “yes” to both questions, you may be guilty of unlawful age discrimination against younger employees who choose to leave for reasons other than retirement. You might also need to widen your definition of who is a good leaver as a result.

Why is there a problem?

Employers often divide employees into two groups; “good leavers” and “bad leavers”. Employers often treat good leavers more generously than bad leavers, by allowing good leavers to retain the benefit of accrued entitlements under incentive schemes. These entitlements, typically bonus payments or share options. are often valuable to the employee. The employer can then use them as a pressure point in any termination negotiations. Employers also see this as a way of securing employee loyalty, if only by bribery (and with varying degrees of success).

Good leavers are usually employees whose employment ended to the benefit of their employer (for example redundancy) or who would not normally have chosen to leave and whose conduct is not open to criticism (for example genuine cases of ill health). Bad leavers are usually employees who leave to join a competitor, so not to the benefit of the employer, or whose employment is terminated because of misconduct, negligence or poor performance.

Traditionally employees were expected to retire when they reached a given age and so were regarded as employees who may not have chosen to leave, but whose conduct could not be criticised; in other words good leavers. However, since the abolition of the default retirement age in 2011 most employers no longer have a compulsory retirement age. This is because unless they are able to objectively justify having one, they will be guilty of unlawful age discrimination.

Some technicalities 

To put this in context, it’s helpful to remember how an employer can be found guilty of age discrimination and what they can do to defend themselves.

In summary, employers can only treat employees less favourably because of age (direct age discrimination) or impose a practice, criterion or provision (a “PCP”) which places employees of a certain age or age group at a disadvantage (indirect age discrimination) if they are able to show that their actions and/or the PCP are “a proportionate means” of achieving “a legitimate aim“. In other words, the employer must be able to “objectively justify” their conduct or practices.

Retirement clearly affects older employees. As a result most HR professionals are generally alert to the threat of direct age discrimination claims when dealing with retirement. However, it can be easy to overlook the risks associated with retirement-related practices that we are all so familiar with that we do not question them. One of those practices is to allow an employee who chooses to retire to retain valuable benefits they might otherwise have lost out on. This (for laudable reasons) rewards past loyal service, but also financially rewards them for retiring. However offering financial rewards for employees who retire (i.e. older employees) will be indirect discrimination that will need to be objectively justified.

How can an employer explain and justify their actions?

Any employer who answered “yes” to the questions in the opening paragraph of this blog will therefore need to answer a third question: why allow retiring employees to retain valuable benefits, which other (usually younger) leavers may lose out on?

In order to avoid amounting to unlawful age discrimination, the employer’s answer will need to have two parts: first, the reason for retaining benefits must amount to a “legitimate aim“; and secondly, it must be a “proportionate means” of achieving that legitimate aim (i.e. there must be objective justification of the employer’s plans).

Two examples of possible legitimate aims are the wish to encourage loyalty by rewarding employees who choose to end their careers with the employer rather than go and work for a competitor, and the wish to maintain workforce morale by not having to resort to performance management and capability procedures if older employees choose to retire instead.

But whilst both of these reasons may amount to a legitimate aim, neither would necessarily be a proportionate means of achieving that aim. Consider this analysis instead:

–          encouraging loyalty is, ostensibly, a legitimate aim. But there is an obvious flaw in the method. It is not only those employees who leave by reason of retirement who will not be competing with the employer. Allowing retiring employees to access a financial reward that other leaving employees are deprived of, even when those other employees have no intention of competing against their former employer, could well be disproportionate. If loyalty is the legitimate aim relied upon, then employers who want to minimise the risk of age discrimination claims need to consider extending the definition of a good leaver so as to minimise the discriminatory impact on younger employees. Employers should think of allowing those employees, who leave of their own accord but who are not retiring, to also retain the right to access accrued benefits under any incentive schemes, so long as their intended activities pose no competitive threat to the employer.

–         performance management and capability procedures will not be seen to be intrinsically incompatible with maintaining workforce morale. The suggestion that older employees are not able to withstand, or need to be excused from the same robust performance criteria that younger employees are subjected to is also (uncomfortably) suggestive of stereotyping.

The point is this: employers will not be able to leap the objective justification hurdle if they can achieve their aim in a non- (or less) discriminatory manner, or if their chosen method does not achieve the stated aim or the discriminatory impact of the method outweighs the benefit.

An Employer’s next steps

So, if you treat retiring employees as good leavers and allow them to access accrued benefits as a result, you will need to begin by asking yourself why you do this and then consider whether that reason would be enough to objectively justify any discrimination.

Remember that whether or not your aims are legitimate and your methods are proportionate will always be looked at on a case by case basis by reference to each particular employer and their business circumstances. It is not practicable therefore to apply hard and fast rules.

As a result of your analysis you may decide to include as a good leaver those employees who choose to leave, but whose subsequent activities will not pose a threat to your organisation. But what happens if, contrary to expectations, an employee goes to work for a competitor, either immediately or after a break? How long must an employee remain out of the market to remain a good leaver? How will you retain the power to re-designate an employee as a bad leaver if this happens? Will you want to claw back (see our earlier blog here) any additional monies paid?

It would therefore be good practice to have a paper trail showing that you have given thought to any potential discrimination, the grounds upon which you think it may be justified and the rationale behind any steps you take to address it. This should also identify your willingness to retain discretion (and exercise it reasonably and consistently) to deal with particular cases.

And the lessons? Standard practices derived from seemingly the best of intentions may in fact get an employer into trouble. The possible cure will also throw up a number of issues in respect of which employers may well be advised to seek advice.