REUTERS | Autumns colours are seen at a vineyard in Klosterneuburg, Austria, October 15, 2018. REUTERS/Heinz-Peter Bader - RC1580BF4F70
REUTERS | Autumns colours are seen at a vineyard in Klosterneuburg, Austria, October 15, 2018. REUTERS/Heinz-Peter Bader - RC1580BF4F70

The pandemic has resulted in an increasing number of respondents missing the 28-day deadline to provide a response to a claim presented in the Employment Tribunal (ET), as required by rule 16(1) of the Employment Tribunals Rules of Procedure 2013 (ET Rules).  

Delays in the postal service, the closure of some workplaces and a significant proportion of the workforce working from home has meant that a number of claims served in the post have been received too late in the day or missed entirely. Moreover, a rapidly increasing backlog of claims being presented to ETs has resulted in a failure to serve claims on respondents, or has led to an expectation that a claim is unlikely to be forthcoming and thus overlooked. This article examines steps that a respondent ought to take to participate substantively in proceedings when the deadline for the response has been missed.  

If an employer becomes aware of an undefended claim, it is imperative that an application for an extension of time for the response is made, pursuant to rule 20(1) of the ET Rules. This is because any response which is served late will be rejected by the ET, unless an application for extension of time has already been made or accompanies the response.  

Moreover, if no response has been validly presented, an Employment Judge is entitled to take a number of steps in respect of the claim, which include issuing default judgment for liability and even remedy, pursuant to rule 21(2). In such circumstances, while a respondent would be entitled to notice of any hearings and the ET’s decision, it will only be allowed to participate in any further hearing to the extent permitted by the Employment Judge, pursuant to rule 21(3). That said, respondents are usually allowed to make written or oral representations on remedy if a default judgment for liability has been issued; it will only be an exceptional case that would justify the exclusion of the respondent (see Office Equipment Systems Ltd v Hughes [2018] EWCA Civ 1842) 

An application for an extension of time must be in writing, copied to the claimant, set out the reason why the extension is sought and state whether a hearing is sought to determine the application. Assuming the deadline has passed, the application must be accompanied by a draft response or an explanation as to why it is not possible to attach a completed draft response. The claimant can submit written reasons to the ET explaining why the application is opposed, within seven days of receiving the application, pursuant to rule 20(2) 

In deciding the application, the ET will consider whether it is just and equitable to extend time for the presentation of the response (see Kwik Save Stores Ltd v Swain and others [1997] ICR 49, a case which concerned the 2004 ET Rules, but remains good law). The types of factors that the ET are likely to have regard to include:

  • The explanation supporting the application for an extension of time.
  • The merits of the defence.
  • The balance of prejudice.  

Under the just and equitable test, the ET will likely consider the promptness with which the respondent acted once it became aware of the undefended claim. This means that respondents ought to act quickly and proactively, even if their representatives have not yet had the opportunity to take detailed instructions from their client or are in possession of the barebone documents. In the light of the difficulties in making contact with ET staff, it could be unwise for respondents to wait for the ET to provide a copy of the claim and/or any correspondence, orders or judgments, in response to any such request. If necessary, a respondent should approach the claimant or their representative to request copies of the relevant documents.  

If the explanation for the application is not straightforward, or there is a significant delay in applying for an extension, a respondent should consider asking for the application to be determined at a hearing. A witness statement could then be provided from either the respondent or their representative, explaining the delay and attaching any supporting evidence.  

If a respondent has not provided a draft response with its application, it is suggested that the same should be provided as soon as possible or within 28 days of receiving notification of the undefended claim, or a copy of the claim, depending on the circumstances. An Employment Judge could then better understand the merits of the defence at any hearing to determine the application, if a substantive response has already been provided.   

Parties should be aware that, subject to confirmation in a practice direction, it may be possible for Employment Judges to delegate their function of deciding whether to grant an application for an extension of time under rule 20 to a legal officer, pursuant to regulation 10A(1) of the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2013, as amended (2013 Regulations). However, parties will be able to apply for any decision made by a legal officer to be considered afresh by an Employment Judge, provided that an application is made within 14 days of the ET sending the notice of the decision, pursuant to regulation 10A(2) of the 2013 Regulations 

If the decision is to allow an extension, any judgment issued under Rule 21 will be set aside, pursuant to rule 20(4). The respondent is then entitled to participate in the proceedings as if it had provided the response in time.  

REUTERS | Frost covers a fallen leaf in Pitlochry , Scotland, Britain November 8, 2017. REUTERS/Russell Cheyne - RC13AE791080

With around one in four pregnancies ending in miscarriage, it’s very likely that most of us will know someone who has been through this, and many of us, female or male, will have been affected ourselves. 

Common though it is, it is often a very distressing experience, both emotionally and physically, and often a lonely and confusing one, too. That’s why the Miscarriage Association offers a listening ear, support, information and guidance, responding to thousands of requests for help each year. 

Among the many questions people ask are those relating to work: “What should I tell them?”, “How much time can I take off?”, “Will I get paid?”, “Will it go on my record?”.

The results of our survey of over 600 people affected by miscarriage are pretty stark. Many employees don’t know their rights, managers aren’t sure of their responsibilities and employers rarely have policies in place to help either party. 

Almost half of women experiencing miscarriage were not told about or offered pregnancy-related leave, which is protected by law. As a result, many felt forced to return to work before they were ready. In some cases, it meant their sick record was wrongly impacted, with several later facing disciplinary actions. 

Sally told us: “I would drive to work and sit in the car sobbing because I couldn’t face going in. I eventually told my manager that I’d come back too soon and my mental health was suffering. 

“He stated that I had annual leave booked off soon for my wedding so couldn’t go off sick before then. Now I was back, it would count as two separate absences which ‘wouldn’t look good’.

“So I went in every day for three weeks and sat at my desk with physical shakes because my anxiety was so debilitating.”

Many others we surveyed told us they felt unable to talk to their managers about their loss; they were worried if their boss knew they were planning to start a family, they would not be considered for future opportunities or promotions. Some women even continued to work while physically losing their baby. 

An unsupportive environment affects organisations, too. More than a third of those we spoke to told us a lack of support on their return meant the standard of their work suffered, while one in ten ultimately ended up leaving their role. 

With no official guidance in place around miscarriage, even thoughtful and compassionate employers sometimes struggle to know how best to offer support. 

Faye told us: “I went into work having a miscarriage, because I thought that’s what you did. I went to see my manager and he said ‘I’m really impressed with how you’re dealing with it’ – but I wasnt dealing with it at all. When I returned to work I had to sign a sick form and it said I was off with a migraine, which really upset me.”

No doubt Faye’s manager was hoping to spare her further upset, but ultimately it caused the reverse. 

Over 75% of those we surveyed, including employers and managers, said they would welcome a specific miscarriage policy in the workplace. This is why the Miscarriage Association has launched a new campaign to encourage just that. 

Our new, free, Miscarriage and the Workplace resource hub offers: 

It also includes a policy template that can be quickly and easily adapted in line with other company policies. 

Supporting employees before, during and after pregnancy loss 

An unsupportive workplace can mean reduced productivity, lower standards of work, increased absence and even resignation. In contrast, thoughtful support and management could mean a quicker and more effective return to work, enhanced motivation and commitment to the company. 

Julia, who has experienced four miscarriages, told us: “Each time this happened to us my work asked me ‘how can we support you?’, and also made suggestions they thought might help, such as taking time off or seeking mental health support. 

“It wasn’t lip service – my manager would check in with me to see how I was doing and how I was coping being back. I was never made to feel as if taking time off was a problem, or that things should be back to normal straightaway. I feel very fortunate to work for a supportive company and especially under a manager I can talk to.”

Despite an estimated 250,000 pregnancies ending in miscarriage each year, we’re still not good at talking about it; even less so, it seems, in the workplace. 

Here are some tips on supporting employees before, during and after pregnancy loss: 

  • Create a supportive environment where employees can approach and speak to their line managers. 
  • Have a policy in place to help everyone. 
  • Be aware that time off for a miscarriage comes under pregnancy-protected leave. Make sure everyone knows this and it is applied. Taking time off for pregnancy loss must not affect someone’s sick record or be used against them for disciplinary or redundancy selection processes. 
  • Take your lead from the staff member; ask them what they need and really listen. Sometimes small things make the difference. 
  • Stay in touch but don’t pressure them to return to work. 
  • Send them a link to the Miscarriage Association’s workplace resource. 
  • Offer support to return to the workplace; again, ask what would help. Think about a phased return and any reasonable adjustments you might make. Do they do long shifts alone? Do they sit near a pregnant colleague? Might they like to change working patterns or sit elsewhere, if possible, for a while? 
  • You also might ask if the staff member would like their colleagues to know or not, and share this information if they would. 
  • Recognise that they may need ongoing medical appointments and make allowances. 

And finally, remember the Miscarriage Association is here to help, whatever your role at work. 

REUTERS |

In PJSC Tatneft v Bogolyubov and others [2020] EWHC 2437 (Comm), Moulder J confirmed that legal advice privilege covers communications with an in-house legal team, despite the fact that under Russian law in-house legal teams are not classified as advocates and therefore communication with in-house lawyers is not confidential. Where foreign lawyers are concerned, the courts will take a functional approach in determining whether communications attract legal advice privilege. The decision should provide reassurance to employers who rely on foreign legal teams for advice on employment matters.

Background

The second defendant applied for specific disclosure of correspondence between the claimant and its in-house legal team, which was based in Russia. The claimant resisted disclosure on the grounds that such communications were privileged.

The second defendant accepted that it is English law which is the lex fori as regards applications of privilege. However, they submitted that for legal advice privilege to apply to communications by a foreign adviser, that adviser must have an appropriate status as a matter of English law.

The second defendant argued that, as the jurisdiction in which the claimantʹs in-house legal team practised did not recognise their communications as privileged (the Russian concept of ʺadvocates secrecyʺ not extending to those not recognised as advocates), those lawyers did not have the appropriate status for their communications to be recognised as privileged as a matter of English law.

The decision

Moulder J reaffirmed that the policy underpinning legal advice privilege is that it is in the public interest that clients can obtain legal advice and that communications be kept confidential (paragraph 23). Legal advice privilege has therefore been extended to foreign lawyers, albeit without reference to the particular national standards, regulations, or rules relating to privilege which exist in the jurisdictions in which those foreign lawyers practise.

The second defendantʹs submission was found to have no basis in authority. The emphasis in previous decisions was that it is the function of the relationship and not the status of the lawyer which is relevant to determining whether their communications are capable of attracting privilege. This broad approach applied by English courts when extending privilege to foreign lawyers therefore did not require the court to consider them to be appropriately qualified. If it did, it would lead to uncertainty in the application of legal advice privilege and potentially raise issues of comity if the English courts were required to investigate and give a view on the nature of the qualifications and regulation of foreign lawyers.

There was thus no reason to depart from the ordinary English position that communications with in-house lawyers are equally capable of attracting privilege as those with independent solicitors and barristers. Moulder J held that ʺthe only requirement in order for legal advice privilege to attach is that they should be acting in the capacity or function of a lawyerʺ (paragraph 57). The communications in question were therefore privileged and the claimant succeeded in resisting their disclosure to the second defendant.

Functional approach reaffirmed

The roles of many employees, and the business of many employers who end up before the UK employment tribunals extend across multiple jurisdictions. Employees may liaise on a daily basis with colleagues from those other jurisdictions. It is a common occurrence for the employment tribunals to consider evidence compiled from work undertaken in those other jurisdictions as part of a claim concerning a UK-based employees role.

The decision in PJSC Tatneft v Bogolyubov could just as easily have arisen as a result of an attempt by a claimant to argue that their employerʹs communications with an in-house legal team in another jurisdiction were not capable of being privileged because of some particular feature of the way in which the legal profession in that jurisdiction is regulated. For example, an employee may be alleged to have committed misconduct on a trip to another country, and their employer might take advice from its in-house legal team in that country regarding the severity of that conduct according to the law of the place where it occurred. The defendantʹs argument in this case could have been made in exactly the same way.

Moulder J helpfully reaffirms that there is no additional threshold required for privilege to attach to such communications. If a foreign adviser is functioning as a lawyer, then privilege will attach to their communications even if that would not be the case in the jurisdiction in which the adviser is based. Employers should therefore be reassured that they can rely on a consistent application of privilege within litigation in the UK, no matter where their advisers are located. The functional approach emphasised by Moulder J means that, if the employer receives legal advice from those individuals, then it will be privileged.

REUTERS |

The fact that individuals from Black and Minority Ethnic (BME) backgrounds are less likely to be in work, and when in work, are less likely to be fulfilling their potential is wrong and must change.”

This is a powerful statement with which few would disagree. It is also consistent with other disadvantaged groups who, despite having protection against less favourable treatment, still find themselves facing more barriers than those with more privileged characteristics. 

It comes from the government in response to an independent review into issues affecting BME groups in the workplace. The tone of the response suggests commitment, determination and a call to action. We are, however, three years on from that review, carried out by Baroness McGregor-Smith in 2017 (the McGregor-Smith Review) and there have been remarkably few changes to the landscape.  

What is being done by government? 

Behind those strong words were a series of weak commitments. There was no green light to legislate on the mandatory publication of ethnicity data at work, simply the rather more passive proposition to work with businesses and support them to bring about change. 

There are organisations who have done a remarkable job in pressing the government to implement change, but progress, if allowed to develop without any real traction, is slow going. In the absence of government intervention, the emphasis is on businesses to make the difference that is needed.  

Barriers 

The barriers do not start in the workplace or even at entry level, but often appear with access to education, geographical location, community or family expectations and a lack of support networks. A person’s prospects can be shaped by cultural and social opportunities years before they enter the world of work, or even start school. 

Commercial benefits 

There are numerous benefits to increasing diversity in the workplace, including: 

  • Wider economics. Enabling BME individuals to fulfil their potential at work is estimated to be worth around £24 billion a year, while reducing the gender pay gap could increase GDP by around 5%.
  • Profits. A more diverse workforce is able to create more innovative products or services more productively than groups from similar demographics.
  • Attracting customers and employees. Increasing who you represent means expanding your reach and outlook and this can only be good for business.

Baroness McGregor-Smith is clear: There is no reason why every organisation in the UK should not have a workforce that proportionately reflects the diversity of the communities in which they operate, at every level.”

How can it be done? 

The mission statements from Stonewall and Disability Rights UK are united in their objectives: to create a more inclusive community in which to live and work. This can be achieved through making simple changes:  

  • Recognition. Accept that there is a reason for not attracting diverse candidates and recognise that change is necessary.
  • Talk about diversity at work. Keep it on the agenda at all times, from procurement and recruitment to board-level strategy. Challenge the board to ask themselves why they look and think alike and why this might be holding the company back.
  • Collect data. To benchmark against local and regional statistics to understand whether you are representative of your area. Publishing the data keeps the business accountable.
  • Training. People inherently recruit and promote through their own, biased perspective. Train people to recognise how they unconsciously favour traits and similarities.
  • Set diversity targets. A business should understand how representative they are of their local community. Aspirational targets will keep employees motivated.
  • Recruitment. Use a diverse panel of decision-makers and adopt name-blind or education-blind recruitment methods to neutralise inherent prejudice. Focus on what a person brings to a team that is different, rather than someone who conforms. If you aren‘t attracting a variety of candidates, change how you are recruiting.
  • Reverse mentoring schemes. This allows those who are not disadvantaged to understand the lived experience. It is crucial in changing attitudes and bias, both consciously and unconsciously.
  • Role models and promotion. Identify a trusted diversity champion at senior level, and establish an inclusive leadership programme to bring through talent, irrespective of backgrounds and characteristics.
  • Transparency. Making pay, reward and progression transparent in a business forces a scrutiny of values from within and will help set the tone of the culture of development and achievement based on objective measures.
  • Accountability. Ensure that at every level, leaders and managers in the business have diversity embedded into their objectives. Change typically happens faster if it is mandated.

These principles are not a solution in isolation. It is necessary to consider a variety of measures to continuously improve and challenge progress, but provided the executive decision-makers ensure diversity and inclusion is always a priority, progress is inevitable. 

The time is now 

Change takes time, so setting diversity targets years ahead is not a passive way of implementing cultural change. The sooner a commitment is made to change the working culture, the sooner both businesses and the community in which they operate will benefit. 

Although one year on, the Scorecard report highlighted no significant improvement in many of the McGregor-Smith Review recommendations, the summer of 2020 has ignited a sweeping desire for change on a global and unprecedented scale.  

The murder of George Floyd in particular has triggered an irreversible change in attitudes. It has opened eyes and brought about a deep-rooted desire for justice, for inclusion and for an absolute recognition of the benefits of equality 

This new momentum means that UK employers across all sectors have as good an opportunity as ever to bring about a more diverse and more inclusive society in which to thrive.  

REUTERS |

There was a time when someone minded to covertly record a colleague would have needed to hide a recording device in a pot plant or place a hidden camera in an office. Nowadays, this kind of activity is much easier as a result of advancements in digital technology. Video conference services, for instance, enable meetings and chats with colleagues wherever they are based, but these interactions can also be surreptitiously recorded or intercepted by employers, other employees or third parties. It is even possible to install hidden cameras and software that turns on the webcam or microphone in a laptop without the user knowing. For those lesstechy souls, the ubiquity of smartphones” means that virtually everyone has a user-friendly, high-quality recording device in their pocket. As more people work from home during the COVID-19 pandemic, there is greater opportunity for individuals to engage in covert recording now that all communication is online rather than in person. However, they need to think carefully before doing so. Two recent features in IDS Employment Law Brief map out the legal problems that can arise, including infringements of the laws governing data protection, privacy and confidentiality. 

The first article focuses on the reasons why employers should refrain from covert recording of staff. Given the potential for significant fines by the Information Commissioner’s Office (ICO), employers need to be particularly wary of breaching data protection laws. As the ICO’s Data Protection Employment Practices Code explains, covert monitoring should only be used in exceptional circumstances for the prevention or detection of criminal activity or equivalent malpractice, and should normally be authorised by senior management. Even then, before embarking on covert monitoring, an employer needs to consider if it could collect the required information in a different way. In short, covert recording is pretty much off limits. It follows that managers, for example, should not covertly record routine meetings such as catch-ups with staff, grievance hearings and end-of-year performance reviews, and it would be advisable for employers to make clear in a workplace policy that covert recording by staff is forbidden unless authorised in advance 

In addition to a fine by the ICO, an employer could be exposed to a civil claim for damages by the subject of the covert recording. In this regard, it should be borne in mind that others (be they colleagues or trade union representatives, for example) who are also recorded in the process, may have good cause for complaint if their rights have been infringed.  

The article also explains how the very act of covertly recording an employee could itself be enough to found other claims, such as an action for the tort of misuse of private information or a claim of unfair constructive dismissal. As with data protection, covert recording will be inappropriate (and often unlawful) where the necessary information can be obtained by alternative means. In deciding whether to uphold an employee’s unfair constructive dismissal claim, an employment tribunal will pay particular attention to Article 8 of the European Convention on Human Rights, weighing up the employer’s reason for covert recording against the employee’s right to privacy; staff will often have a reasonable expectation of privacy, and even more so now that large numbers of people are working at home 

The second article considers the steps that an employer may need to take when it emerges that an employee has engaged in covert recording. It may surprise some that employers are not necessarily entitled to treat this kind of behaviour as gross misconduct justifying dismissal, as the appropriate response will depend on various factors, including the employee’s reasons for making the recording and whether the employer made clear in a policy its attitude towards covert recording. Furthermore, as the EAT intimated in Phoenix House Ltd v Stockman (No 2) [2019] IRLR 960, covert recording will not amount to misconduct at all where pressing circumstances completely justified” it. Although, somewhat frustratingly, the EAT did not elaborate on what it had in mind by pressing circumstances”. 

As well as dealing with the employee, the employer will have other concerns, in particular:  

  • Whether the recording reveals mistreatment or unlawful conduct that needs to be addressed. 
  • Whether it contains confidential information that needs to be protected. 
  • Whether the recording reveals a data protection or privacy breach and, if so, what action the employer should take to mitigate this.  

A particular worry for employers will be whether they could be held vicariously liable for the actions of an employee who engages in covert recording, even though it has no primary liability for the breach. This kind of liability could arise in respect of an employee who commits the tort of misuse of private information or who acts in breach of confidence as a result of carrying out covert recording. Employers also need to be aware of the possibility of vicarious liability for breaches of the data protection legislation, following the Supreme Court’s decision in Various claimants v WM Morrison Supermarkets plc [2020] ICR 874. There, the court confirmed that an employer can be so liable, giving the view that it makes no difference for the purposes of the doctrine of vicarious liability if an employee’s liability arises under statute instead of common law. However, it went on to hold that, on the facts, there was an insufficiently close connection between the breach and the employee’s employment. 

In the light of the decision in WM Morrison, it is feasible that an employer could be vicariously liable for data protection breaches if, for example, a line manager covertly recorded a meeting with an employee about performance issues. It is likely that a court would find that the line manager’s wrongdoing was so closely connected with the employment that it would be fair and just to hold the employer vicariously liable. Employers should therefore take steps to curb covert recording, particularly where highly sensitive and personal information is at stake.  

The article concludes by examining the use of covert recordings in litigation by employees and employers, in particular, the principles governing whether or not they are admissible as evidence. This issue has generated considerable case law over the years and, as the article explains, covert recordings may be admissible even though the courts and employment tribunals generally take a “dim view” of them. Needless to say, human rights considerations can affect the decision as to whether a party can rely on this kind of evidence in legal proceedings. 

REUTERS |

The furlough scheme 

The government introduced a number of schemes to protect individuals and businesses due to restrictions resulting from COVID-19. Various grants were made available for different types of business, including the self-employed. The most used and the most expensive scheme is the Coronavirus Job Retention Scheme (CJRS). This allows an employer to keep an employee on the payroll even if they have had no or, since 1 July, limited work to do because of COVID-19 (hence being on furlough”). The employer can then apply for a grant to cover part of the regular wages for any time spent on furlough. The rules are complicated and have changed a number of times since implementation on 1 March 2020. 

However, the government believes that as much as £3.5 billion has been paid out in wrong or fraudulent claims. Below we explore what happens if you wrongly claim under the CJRS. Given the significant investment by the government, we expect that HMRC, which is responsible for administering the grants, will be relentless in pursuing those who have taken unfair advantage of the governments generosity and will deploy new investigation and enforcement powers recently introduced under the Finance Act 2020 (enacted on 22 July 2020) to do so. 

While we only deal with the CJRS, the ramifications are the same for most of the other COVID-19 support schemes or grants.

What if you have inadvertently claimed under the CJRS and received a COVID-19 support payment which you were not entitled to? 

Mistakes happen and HMRC understands that. So, if you have made an error in your claim or you are not planning to use the money provided to pay wages, tax, national insurance or pension contributions then, to avoid a penalty, you must notify HMRC by the latest of the following (referred to as the notification period): 

  • 90 days after the date you received the grant. 
  • 90 days after your circumstances changed resulting in you no longer being entitled to keep the grant. 
  • 20 October 2020. 

The new provisions confirm that CJRS payments are revenue receipts chargeable to either income tax or corporation tax in the hands of the employer and so the overclaimed amount must be repaid within the relevant time period”. If you are a sole trader or a partner, this period ends on 31 January 2022. If you are a company, the relevant time period ends 12 months from the end of your accounting period. 

What if you do not repay it or fail to declare that you have been overpaid within the notification period? 

HMRC can recover in full the overclaimed amount by way of a tax assessment, which has to be repaid within 30 days (late payment penalties can be charged). HMRC may also charge you a penalty of up to 100% of the amount of the CJRS wrongly received as a punishment for not telling them about the overclaim within the notification period. Importantly, the law states that failure to tell HMRC of the overpayment within the notification period is deemed to be deliberate and concealed. This is the starting point when addressing the amount of the penalty.  

Note also that HMRC can seek repayment and penalties against individual partners of a partnership and company officers of insolvent companies.  

Criminal investigations 

HMRC has stated that its priority is to tackle deliberate non-compliance and criminal attacks on the system. In some cases, these acts will be considered too serious to just levy a penalty and only a criminal investigation will be appropriate (and indeed some arrests have already been carried out). 

What is furlough fraud? 

Examples of furlough fraud” can include: 

  • Where furloughed employees are asked to do “a little bit of work on the side” to help the company out (conduct that was strictly forbidden by the rules before 1 July), or helping out” with ancillary work to their mainstream role.  
  • Claims that have been made for individuals who no longer work for the company, or their return to work from maternity leave or sickness absence has been manipulated in a manner that is in breach of the applicable rules, specifically to benefit financially from the scheme.
  • Other red flags are where an employer has claimed furlough payments, without passing on all of the monies to the employee, or where an employer has claimed for furlough payments, but the employees concerned were not aware that the claims had been made and so continued to work as normal. 
  • Backdating claims. 

Moreover, it is anticipated that as the CJRS winds down towards the end of October and since greater flexibility was introduced in July, there is greater scope for abuse” or erroneous use of the scheme. 

What are the criminal offences covering furlough fraud?  

There are a myriad of serious offences for which individuals could be investigated and prosecuted. These include: 

In addition, a corporate may be investigated for the strict liability offence of failing to prevent the facilitation of tax evasion. This is a relatively new offence introduced under the Criminal Finances Act 2017. Recent figures suggest a number of investigations, across various sectors, are underway.  

HMRC powers  

HMRC can use information and inspection powers to check a claim has not been overpaid and that a CJRS payment has been used to pay furloughed employee costs. 

It is also expecting to do spot checks on businesses and “whistleblowing” is encouraged. We know that HMRC has been inundated with reports of fraud in respect of this scheme so they are sitting on a lot of information. 

While HMRC can perform spot checks and compel the disclosure of information, they can also obtain account freezing orders while they carry out their investigations. 

They also have the power to arrest and interview individuals. 

What should employers be doing now? 

Whether erroneous claims were made as a result of a misunderstanding of the rules or deliberately, businesses currently have a narrow window to rectify matters, or risk facing serious consequences. It is undoubtedly time now to audit those furlough payments, and take advice where necessary, to minimise the farreaching consequences of any claims that with the benefit of hindsight should not have been made. Turning a blind eye or hoping HMRC will not find out is foolhardy and a stance which can lead to a criminal conviction, imprisonment and a damaged reputation. 

Nicola Finnerty is a partner in Kingsley Napley LLP’s Criminal Litigation team.  

REUTERS | Corbis

In his opinion in VL v Szpital Kliniczny im. dra J. Babińskiego, Samodzielny Publiczny Zakład Opieki Zdrowotnej w Krakowie (Case C-16/19) EU:C:2020:479, Advocate General Pitruzzella concludes that, where an employer treats two groups of disabled people differently on the basis of an apparently neutral criterion, there may be a breach of the principle of equal treatment. However, it is not clear that his approach (and in particular, his analysis of the case as indirect discrimination) stands up to scrutiny. The case provides a reminder of the care needed when dealing with comparators in discrimination claims. 

Facts

The Polish Labour Code creates an incentive to employ disabled people by imposing a levy on employers where disabled people make up less than 6% of their workforce. The closer the employer is to 6%, the lower the levy. Whether an employee counts as disabled is determined by whether they have provided a certificate attesting to their disability. 

VL was a psychologist employed by the Dr J Babiński Clinical Hospital. On 21 December 2011 she gave her employer a disability certificate. 

Following a staff meeting in late 2013, the hospital director decided to start paying an additional monthly allowance of around EUR60 to encourage staff to submit disability certificates. It was granted to disabled staff who handed in their certificate after the staff meeting. Disabled staff who had already provided a certificate, like VL, were not paid the allowance 

The national employment inspectorate found that the criterion for paying the allowance was discriminatory, but the district court in Krakow disagreed. On VLs appeal the regional court referred the question to the ECJ for a preliminary ruling. 

Law

Under Article 2 of the Equal Treatment Framework Directive (2000/78/EC), so far as relevant: 

  • Direct discrimination occurs where one person is treated less favourably than another person in a comparable situation on the grounds of disability. 
  • Indirect discrimination occurs when an apparently neutral provision, criterion or practice (PCP) would put persons having a particular disability … at a particular disadvantage compared with other persons unless the PCP is justified.  

The Polish Labour Code contains similar provisions. 

Under the Equality Act 2010 (EqA 2010), A directly discriminates against B if, because of a protected characteristic, A treats B less favourably than A treats or would treat others (section 13(1)). 

A indirectly discriminates against B, a person with a protected characteristic, if: 

  • A applies a PCP to B. 
  • A applies (or would apply) that PCP to persons who do not share Bs protected characteristic (section 19(2)(a)). 
  • The PCP puts, or would put, persons with whom B shares the characteristic at a particular disadvantage when compared with persons with whom B does not share it (section 19(2)(b)). 
  • It puts B at that disadvantage (section 19(2)(c)). 
  • A cannot show that the PCP is a proportionate means of achieving a legitimate aim (section 19 (2)(d)). 
Scope of protection

AG Pitruzzellas reasoning in VL is not easy to disentangle. His first step is to consider the scope of protection under the Directive. He notes that the grounds on which discrimination is prohibited are to be interpreted strictly (limited to the protected characteristics listed in Article 1 of the Directive), but suggests that provisions governing both the persons who are to be protected, and the proper comparators for the purposes of establishing discrimination, should be interpreted less strictly.  

Thus the ECJ has already broadened the scope of protection to include not just those who are themselves disabled, but those who are associated with a disabled person (Coleman v Attridge Law and another [2008] (C-303/06) ECLI:EU:C:2008:415). Similarly, he says, although the comparison is ordinarily made with someone who does not have the protected characteristic, it is possible for a prohibited difference in treatment to occur within a group of disabled people. He continues: 

Obviously, this does not mean that every difference in treatment between one disabled worker (or group of disabled workers) and another disabled worker (or group of disabled workers) should be treated as discrimination prohibited by the Directive … What is prohibited is the favourable treatment, on grounds of disability, of one group of disabled workers to the detriment of another group of disabled workers. (Paragraph 44.) 

That is clearly correct, and to illustrate the idea AG Pitruzzella imagines an employer who treats disabled workers differently from one another according to the type or degree of disability each person has. 

Under the EqA 2010, that is captured because section 6(3)(a) provides that a reference to a person who has a particular protected characteristic is a reference to a person who has a particular disability. If, for instance, an employer treats a worker less favourably because her disability involves a mental rather than a physical impairment, the appropriate comparator is someone with the same abilities as her but who does not have her impairment (section 23, EqA 2010) (see also paragraph 3.29 of the EHRC Employment Statutory Code of Practice). That comparator may, however, have a physical impairment.  

Direct discrimination?

In VLs case, AG Pitruzzella says, we therefore have to investigate whether the difference in the way she was treated was related to disability regardless of whether the comparison is made with individuals within the group having the protected characteristic or with individuals outside that group (paragraph 45). 

Thus far, the analysis appears to be in terms of direct discrimination, and the point is the one made by Lord Nicholls in Shamoon v Chief Constable of the Royal Ulster Constabulary [2003] UKHL 11; that sometimes it is necessary to start by identifying the reason why someone was treated as they were (paragraphs 8-12).  

In VLs case it might seem clear that the reason why was the date on her certificate. That reason is not her disability. AG Pitruzzella agrees that it cannot be direct discrimination because there is no direct connection between the employers measure and the protected characteristic (paragraph 77). 

Indirect discrimination?

AG Pitruzzella does not stop there. His second step is to argue that the criterion for the award of the allowance was in fact the receipt of a new disability certificate such as would increase the number of disabled persons employed (paragraph 64); that is to say, beyond the number employed at the date of the staff meeting. Because disability is the necessary prerequisite for an employee to be able to obtain a disability certificate, he says, the submission of such a certificate and the date on which it is submitted are inextricably linked to the protected characteristic (paragraph 78). Having already determined that it is not direct discrimination, he concludes that it is indirect discrimination. 

At least under the EqA 2010, however, indirect discrimination requires that people who share the claimants protected characteristic are put at a particular disadvantage when compared with people who do not share it. That means VL would have to compare herself with people who are not disabled; and in that case, there would be no disadvantage, because non-disabled people do not receive the allowance.  

In fact, there is a problem with AG Pitruzzellas characterisation of the criterion. It may be true that the provision of a certificate is inextricably linked to disability, but the date on which it is provided is not, and it is the date (and only the date) which is the criterion.  

It is therefore not correct to say, as he does, that the criterion places at a particular disadvantage … persons having a particular disability in comparison with other persons (paragraph 80). At VLs hospital, persons having a particular disability, or any disability, may be equally distributed either side of the cut-off date and there is no particular disadvantage when they are compared with each other.  

The case is different from AG Pitruzzellas illustration, above, which was his reason for seeking to extend the comparators permitted under the Directive. That involved comparisons between people who were all disabled but who differed with respect to the type or degree of their disability, and were treated differently as a result. 

In UK law, of course, there is another option. VLs case might be analysed as discrimination arising in consequence of disability under section 15 of the EqA 2010. That involves unfavourable treatment, rather than less favourable treatment, and so does not require a comparator. However, following Williams v Trustees of Swansea University Pension and Assurance Scheme [2018] UKSC 65, great care would need to be taken in characterising the treatment so as to identify whether it really does amount to unfavourable treatment. 

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The 2019 novel coronavirus disease (COVID-19) pandemic has been punctuated by one colossal movement around the world: Black Lives Matter. Naturally this has catapulted the issue of diversity to the front of mind of many employers. But just where does the line between legal obligation and discretion lie with employers on the issue of diversity? And how can employers legally go about making impactful changes to their diversity and inclusion practices? This article looks at the legal distinction between positive action (permitted under the Equality Act 2010 (EqA 2010)), and positive discrimination (which is unlawful).  

The potential benefits of positive action to employers are huge, including a dynamic and challenging workforce able to respond to changes, a better understanding of foreign and global markets, and a better understanding of the needs of a more diverse range of customers and clients both nationally and internationally.  

Positive action  

Positive action under the EqA 2010 enables employers to discriminate lawfully. There are two types: general positive action (section 158) and positive action in recruitment and promotion (section 159). Where persons with a protected characteristic suffer a disadvantage, have particular needs or are disproportionately under-represented, general positive action provisions under section 158 allow employers to take certain actions to enable or encourage those with the protected characteristic to overcome or minimise the disadvantage, meet their particular needs or encourage greater participation. Action taken by the employer must be proportionate to achieving the stated aims. Employers are not obliged to take positive action but can do so if the prescribed requirements are met. There are two qualifications to this:  

Positive action in recruitment and promotion under section 159 is allowed where all of the following are satisfied 

  • A is as qualified as B to be recruited or promoted. 
  • The employer does not have a policy of treating persons who share the protected characteristic more favourably in connection with recruitment or promotion than persons who do not share it. 
  • Taking the action is a proportionate means of achieving a legitimate aim. 

In other words, it allows positive action in relation to a “tie-breaker”, where an employer faced with two or more candidates of equal merit, to consider whether one is from a group that is disproportionately under-represented or otherwise disadvantaged within the workforce.  

When does it become unlawful positive discrimination?  

The “tie-breaker” element is crucial in making sure that employers are lawfully implementing positive action, as shown in Furlong v Chief Constable of Cheshire Police ET/2405577/18. Here, the employer unsuccessfully relied on positive action by giving preference to candidates with under-represented protected characteristics (such as candidates who identified as LGBT, those from BME backgrounds and women) when interview scores indicated Mr Furlong, a heterosexual white male, to have done far better than candidates from the under-represented community. The tribunal held that if the candidates were recruited solely on the basis of scores given to them, then Mr Furlong would have been recruited. 

As an example, the following positive action taken by an employer would be lawful 

Due to people from BME backgrounds being under-represented in a company, the employer decides to use the positive action provisions to advance a candidate from a BME background to the next round of recruitment where there were multiple people of equal merit. This is lawful under the EqA 2010 and acts as a defence to a discrimination claim by those from non-BME backgrounds for not being on the short-list. 

However, where there is a candidate with better qualifications than the person with a protected characteristic, or an employer has a policy of favouring groups with certain protected characteristics, actions taken to “level the playing field” would be unlawful positive discrimination:  

  • An employer offers a job to a woman as women are under-represented in the company’s workforce when there was a male candidate who was more qualified. This would be positive discrimination and is unlawful.  
  • A large employer, having found that overwhelming majority of its workforce are under the age of 35, sets a quota of 50% of new recruits to be over the age of 35 regardless of whether they are of equal merit to other applicants under the age of 35. This would be positive discrimination and would therefore be unlawful.  
What evidence do employers need to support positive action?  

For positive action to be lawful, employers must reasonably think that one of the statutory conditions is met, such as disadvantage, needs or low participation. How can employers illustrate this? According to the EHRC Employment Statutory Code of Practice (EHRC Code), “some indication or evidence will be required” but “it does not, however, need to be sophisticated statistical data or research”. It may simply involve reviewing the profiles of their workforce or making enquiries with other comparable employers in the local area or sector. It may even be a decision based on qualitative evidence such as consultation with workers and trade unions. 

Although “disadvantage” is not defined in the EqA 2010 the EHRC Code states it could include “exclusion, rejection, lack of opportunity, lack of choice and barriers to accessing employment opportunities”. In terms of “needs”, they are not required to be unique to those with that characteristic but may be different “because, disproportionately, compared to the needs of other groups, they are not being met or the need is of particular importance to that group”. Low participation may or may not be disproportionate. According to the EHRC Code, “the employer will need to have some reliable indication or evidence that participation is low compared with that of other groups or compared with the level of participation that could reasonably be expected for people from that protected group”.  

New diverse working culture post-COVID-19 

For businesses to stand out and gain competitive advantage over the competition in the aftermath of COVID-19, diversity will become an even more important tool and positive action can help employers achieve the desired level of diversity. To avoid falling into the trap of unlawful positive discrimination, employers will need to consider the appropriate provisions of the EqA 2010 (whether under section 159 for recruitment and promotion, or otherwise under section 158), make sure the requirements are met in terms of identifiable evidence, and properly maintain records after the event so that decisions taken can be explained with appropriate evidence. There is another angle to the diversity debate in the form of mandatory ethnicity pay gap reporting that is currently being debated in Parliament after a petition calling for its introduction passed 100,000 signatures. If enacted, it will further focus the minds of employers on the issue of diversity.  

REUTERS | Businessmen walk through a business complex in Tokyo January 11, 2011. Japan's index of coincident economic indicators rose a preliminary 1.4 points in November from the previous month, the Cabinet Office said on Tuesday, up for the first time in three months. REUTERS/Yuriko Nakao (JAPAN - Tags: EMPLOYMENT BUSINESS POLITICS IMAGES OF THE DAY)

The Treasury has reported that more than eight million UK workers have been furloughed since the Coronavirus Job Retention Scheme (CJRS) was introduced in mid-March 2020. The self-employed equivalent scheme has seen more than two million applications for grants so far, which could mean a total of approximately one-third of the working population of the UK are currently, or have been, furloughed. 

Although there will inevitably be high numbers of redundancies brought about by insolvent businesses and reduced work in the ensuing economic recession, most workers will return to their previous roles over the next four or five months. One of the main challenges for employers is how they can resume operations safely to avoid the spread of infection and the heightened risk that the 2019 novel coronavirus disease (COVID-19) poses. It is also crucial because failing to provide a safe and suitable working environment is unlawful, giving rise to criminal and civil liability. 

The measures that are necessary to protect workers are specific to each workplace and although the government has provided sector-specific guidance, the obligation is on every employer to assess and minimise the risk for their particular environment. There will be changes common across most businesses, including increased hand-washing and cleaning facilities to ensure good hygiene practices and separating or distancing workers to promote safe working. 

Risk assess 

All employers have a duty to protect their workers from harm. This involves assessing any risk to which workers are exposed and taking all reasonable steps to remove or minimise those risks. The Management of Heath and Safety at Work Regulations 1999 (SI 1999/3242) makes such a risk assessment mandatory.  

During the pandemic and for as long as COVID-19 continues to pose a threat to illness, injury or life, special consideration will have to be made for the risk it poses. This includes thinking about which workers, customers, service users, suppliers and members of the public might be at risk, deciding how severe that risk is and determining the action that can be taken to remove or at least control the risk(s) 

There is an expectation from the government that employers with more than 50 employees publish their risk assessments online and a legal requirement to write down a risk assessment where five or more employees are employed. 

This duty on employers is a first step, but it is necessary to consult with workers when implementing the risk avoidance measures. What is conflicting between the various guidance and the legislation is whether employers are obliged to consult with workers collectively through representatives, or directly. 

Consultation: the guidance 

The Working safely during coronavirus (COVID-19) guidance published by the Department for Business, Energy and Industrial Strategy on 11 May 2020 states: 

You must consult with the health and safety representative selected by a recognised trade union or, if there isn’t one, a representative chosen by workers. As an employer, you cannot decide who the representative will be” (emphasis added) 

The ACAS guidance, which used to say when planning to return to the workplace, employers must consult with staff and employee representatives” now says “Employers should consult’ with staff (ask for and consider their views to try and reach an agreement) about returning to work” (emphasis added).  

The Health and Safety Executive (HSE) guidance, Talking with your workers about working safely during the COVID-19 outbreak, states: 

In a small business, you might choose to consult your workers directly. Larger businesses may consult through a health and safety representative, chosen by your workers or selected by a trade union (emphasis added) 

Consultation: the legislation 

Regulation 4 of the Health and Safety (Consultation with Employees) Regulations 1996 (HS(CE)R 1996) applies where the employer does not recognise a trade union. It states that employers can choose to consult with their employees directly or with elected representatives. There is no absolute requirement to consult “representatives of employee safety”. 

There is clearly a desire from the government to encourage meaningful consultation and this is probably driven by two main issues. The first is that this is an issue facing the entirety of the UK; every sector, every business, every worker. The second is the statutory protections afforded to workers who are fearful of a return to work, or are otherwise unable or unwilling to return to work without reasonable assurances around their safety. We are likely to see employment-related litigation on health and safety related dismissals and detriments in unprecedented volume. 

Unlike the provisions governing collective consultation in the context of a proposed redundancy or TUPE transfer, where consultation is required to take place with recognised or elected representatives, this is not the case with health and safety consultation legislation (despite the wording of the guidance and recommendations of the government and other relevant bodies) 

Why does it matter?  

As a general principle, for consultation to be meaningful, the parties have to engage. It is far more challenging to engage a workforce of hundreds or thousands than it is to engage with a handful of representatives. Consulting directly with many employees has logistical challenges and so it risks becoming a tick-box exercise rather than a two-way discussion. The danger is that consulting directly with employees is more reactive than proactive, inviting comments perhaps over email rather than explaining and challenging a particular measure or safety concern. Consultation is therefore much more likely to be diluted, perhaps ignored by many who see it as not something with which they should proactively engage. 

Representatives often feel more empowered to speak up and are able to provide objectivity to another worker’s concern, without being distracted or dissuaded by emotion or fear. Similarly, opening up about concerns to a representative who is fighting your corner is far easier than challenging your employer directly about your concerns. 

The primary aim of collective consultation is to try to arrive at an agreement. Consultation with individuals is practically less likely to enable a consensus decision. In real terms, consultation with the workforce as a group of individuals typically means informing them of the measures that are proposed to be implemented and inviting comment. A reactive form of consultation. This could make for a higher risk workplace with a confused, fearful group of workers who may in practice be less able to express their concerns. 

Does that mean businesses will avoid collective consultation? 

Collective consultation is often practically far easier for employers. It is a criminal offence not to consult over health and safety and so they can more easily demonstrate compliance through collective consultation, as opposed to making contact with each individual worker (some of whom may be working remotely or at home or on furlough) 

Collective consultation is also favoured by unions and so it is likely that larger businesses particularly will consult collectively through representatives, rather than directly with employees. It is also why the advice from the government, ACAS and the HSE steers employers to consult collectively because it is objectively preferable. 

However, as well-intentioned and persuasive as the guidance may be to encourage consultation through representatives, it is not determinative in legal action seeking to enforce workers’ rights. It may mean that where collective consultation is not delivering the agreement sought by an employer, they may choose to stop consulting collectively and do so directly with employees instead. The only limitation on a business seeking to do so is that they must inform the representatives that this is what they are doing (regulation 4(4), HS(CE)R 1996).  

Summary 

A safe return to work has never been so important to get right. Further restrictions imposed by the government could be catastrophic for a business and for the national economy. The CJRS enables businesses to take their time to properly assess the risks, consult with their employees and unions, and implement the appropriate measures. This may be by having test runs with small numbers of workers.  

The risk to businesses of rushing their staff back to work without the right safeguarding could have fatal consequences for both the financial health of the business and, more importantly, the physical and mental health of their workers. For these reasons alone, it is vitally important for employers to engage their workforces in planning and implementing the changes necessary to keep them safe. Collective compliance is critical, even if collective consultation is not. 

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It seems that every week since the end of March has been marked by a further update to the government’s guidance regarding the Coronavirus Job Retention Scheme (CJRS). The scheme was announced on 20 March 2020 and the first guidance as to how it would operate published on 26 March 2020.

Yet it was a further two and a half weeks later, on 15 April 2020, that the CJRS was placed on a legislative footing, when the Chancellor issued the Coronavirus Act 2020 Functions of Her Majesty’s Revenue and Customs (Coronavirus Job Retention Scheme) Direction (Treasury Direction).

Guidance before legislation

Employers acting before 15 April 2020 (as many were required to do) had to decide what to do on the basis of the government guidance, rather than the legislation itself. They were not alone. In both Re Carluccio’s Ltd (in administration) [2020] EWHC 886 (Ch) and Debenhams Retail Ltd (in administration) [2020] EWHC 921 (Ch), the High Court was asked to determine the effect of administrators’ actions taken under the scheme before the Treasury Direction came into force.

The government has continued with its initial approach of issuing guidance before legislation. Although a further Treasury Direction was issued on 20 May 2020, modifying the CJRS to reflect some of the changes announced before that date, it did not incorporate some of the most fundamental changes to the scheme which had already been announced. The second Treasury Direction, for example, only extended the CJRS to 30 June 2020, despite the Chancellor having announced on 12 May 2020 that the CJRS would remain open until the end of October. Employers therefore must continue to make decisions and plan for the future on the basis of the government’s guidance alone, without knowing how new policies will be captured in statute.

Those advising employers may find themselves caught between the ever-changing guidance and apparently inconsistent wording in the Treasury Directions. How might the courts, if called on to determine that dilemma, resolve this conflict?

Status of the guidance

The starting point is, as many commentators have noted, the Treasury Directions are the delegated legislation which form the legal basis of the CJRS. The Treasury Directions themselves constitute the legal basis of the CJRS. However, that does not mean that the guidance is of no legal effect. It is likely to have some effect in the way that the Treasury Directions are interpreted.

Ordinarily, guidance issued by government departments as to the operation of legislation which falls under their purview is given little notice by the courts. The courts are clear that their role is to apply legislation, not the executive’s interpretation of that legislation.

Guidance as an aid to statutory interpretation

However, guidance published by government departments is admissible as an aid to that interpretative exercise. In Ellis v Bristol City Council [2007] 1 WLR 1407, at paragraph 27, Lloyd Jones J (as he then was) stated the general rule as follows:

“It is, of course, for the courts and not the executive to interpret legislation. However, in general, official statements by government departments administering an Act, or by any other authority concerned with an Act, may be taken into account as persuasive authority on the legal meaning of its provisions.”

Even if admitted as an external aid to interpretation, government guidance is unlikely to be given any more weight than any other text. It has no special status. The court will respect the view of a government department tasked with implementing legislation, but only insofar as the cogency of the material requires. If the guidance is wrong, the court will not shy from saying so.

Guidance on the CJRS, however, has not been given in normal circumstances. It was published well in advance of the first Treasury Direction, with the clear intention that employers act on the basis of the guidance by placing employees on furlough.

It may be, therefore, that the government guidance is given much greater weight than normal in interpreting the Treasury Directions. Given the exceptional nature of the CJRS, the crisis which it was created to address and the fact that the guidance was published before the first Treasury Direction, it may be better viewed as part of the enacting history of the scheme, as opposed to departmental guidance interpreting existing legislation.

Material which forms part of the enacting history of legislation can, for example, be admitted as evidence of the mischief at which legislation was aimed. In Fothergill v Monarch Airlines Ltd [1981] AC 251, Lord Diplock noted that a report of “some official commission or committee … may be looked at by the court for the limited purpose of identifying the ‘mischief’ that the Act was intended to remedy, and for such assistance as is derivable from this knowledge in giving the right purposive construction to the Act.”

In these circumstances, the courts take notice of the material as evidence of the “mischief” that the legislation aims to address, which the courts then apply in the course of an ordinary, purposive construction of the statute in question.

Such an approach may be attractive given the exceptional purpose of the CJRS. The mischief at which the legislation is aimed is complex and may be difficult to discern from the Treasury Directions themselves, and the scheme is therefore potentially open to abuse. This is reflected in the Treasury Directions, which contains a general prohibition against claims which are “abusive or … otherwise contrary to the exceptional purpose of CJRS” (paragraph 2.5).

As the CJRS is again extended until the end of October, there are likely to be fundamental changes to the operation of the scheme to allow furloughed employees to return to work part-time. Further complications, and the rapid timescale in which they must be implemented, may give rise to more instances of divergence between the guidance and the Treasury Directions. However, where the language of these documents varies, we may see the courts go to great lengths to find an interpretation which brings the two together.