Contents

• One in, one out

• Employer not allowed to dismiss pay-protected employees

• Indirect associative discrimination in the spotlight

• Employer could have delayed dismissal pending a reorganisation

One in, one out

The Workers (Predictable Terms and Conditions) Act 2023 was expected to come into force in October 2024. This would have given some workers the right to ask for more predictable working arrangements. In early September, the government confirmed that it would not bring the Act into force. Instead, the Employment Rights Bill will introduce a new right for zero hour workers to request a contract that reflects their normal hours over a reference period. How significant this is will depend on when employers will be able to refuse requests.

The Tipping Act (or the Employment (Allocation of Tips) Act 2023 to give it its full name) won’t be relevant for most clients, but the government has confirmed that it will come into force on 1 October, along with the ACAS Code of Practice on fair and transparent distribution of tips. The Act requires employers to distribute tips, gratuities and service charges to workers in full and in a fair and transparent way. It will be unlawful to make deductions from qualifying tips unless they are authorised by statute – such as tax deductions. Employers must have a written policy on dealing with tips that is available to workers and keep records of tip allocations for three years.

Next steps

• Watch for publication of the Employment Rights Bill – although this is not likely to be before Parliament’s return from recess in early October.
• Employers in the hospitality sector should fine-tune their approach to tips to reflect the finalised Code of Practice and make sure that they are keeping adequate records.

Employer not allowed to dismiss pay-protected employees

The Supreme Court judgment in Tesco Stores Ltd v USDAW reinstated an earlier injunction stopping Tesco from dismissing employees who were entitled to “permanent” pay protection.

During a 2007 reorganisation, Tesco and USDAW agreed that employees who moved to new sites instead of taking redundancy would receive pay protection. The agreement said that the retained pay (which had also been described as “permanent” and “for life”) could only be changed by mutual consent or if the employee was promoted to a new role. In 2021 Tesco wanted to remove the retained pay, saying that if employees did not agree to the change they would be dismissed and re-engaged on new terms. USDAW applied for an injunction to prevent the dismissals and the case eventually went to the Supreme Court.

The Supreme Court rejected Tesco’s argument that the retained pay was only guaranteed to last while the employee remained employed under their existing contract and was subject to Tesco’s express right to terminate the employment contracts on notice. Promising “permanent” pay protection was meaningless if Tesco could withdraw it unilaterally by dismissing the employee on notice. The Court implied a term into the contract preventing Tesco from dismissing the employees to deprive them of their right to retained pay. You can read more about the judgment here.

Next steps

• If you are considering dismissing and re-engaging employees on new terms, check for any earlier promises that the terms being changed would be honoured indefinitely or for a specific period.
• Regardless of any earlier promises, it is likely to be more difficult in future to dismiss and re-engage employees because of the government’s promise to end the “scourge” of fire and re-hire.
• Monitor for further detail in the Employment Rights Bill.

Indirect associative discrimination in the spotlight

In January, the previous government amended the Equality Act to allow someone to bring an indirect discrimination claim even if they did not share the protected characteristic of the disadvantaged group. The relevant provision, criterion or practice only needed to put them at the same disadvantage as the protected group.

The EAT’s decision in British Airways PLC v Rollett illustrates how this may affect employers. The claimants alleged that rostering arrangements introduced in 2020 amounted to indirect race and/or sex discrimination. They were a provision, criterion or practice that put cabin crew who commuted to Heathrow from abroad (predominantly non-British nationals) and those with caring responsibilities (predominantly women) at a particular disadvantage.

The EAT found that individuals who did not share the protected characteristic but who suffered the disadvantage (British nationals who commuted from abroad and men with caring responsibilities) could proceed with their indirect discrimination claims. Although the law in 2020 required the claimant to have the relevant protected characteristic, that was inconsistent with EU law, notably a pre-Brexit decision referred to as CHEZ. The EAT interpreted the Equality Act to reflect the European requirements.

Next steps

• The decision is important for two reasons.

• It illustrates the risk of “piggy back” claims if an employer adopts a provision, criterion or practice that puts a group sharing a protected characteristic at a particular disadvantage. It is sufficient for a claimant to suffer the disadvantage; they no longer have to share the characteristic.

• If the decision had gone the other way, the Equality Act amendment would have been unlawful and the government would have needed to take further action to enshrine the CHEZ principle in law.

Employer could have delayed dismissal pending a reorganisation

In Cairns v The Royal Mail Group Ltd the EAT queried whether dismissing a disabled employee on capability grounds was justified. If the employer had waited for a forthcoming reorganisation, it might have been able to find the employee a new role, even if it had to continue to employ him in a supernumerary role for a further short period. Not doing so meant that the dismissal was not necessarily a proportionate means of achieving a legitimate aim.

Employers do not normally have to create an entirely new role for an employee who can no longer perform their existing role because of a disability. However, the case shows that it may be reasonable to delay an employee’s dismissal if a pending reorganisation might result in a new role for them. You can read further detail here.

Next steps

• The decision is a reminder to consider suitable alternative employment carefully before dismissing an employee with a disability.

• That duty applies both at the point of dismissal and on appeal.

• The reorganisation was imminent when the employer heard the appeal. While it might not have been reasonable to continue to employ the employee indefinitely, by the time of the appeal, only a short period of further employment would have been required.

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Authored by Jo Broadbent, Ed Bowyer and Stefan Martin.