Monthly Highlights – UK Employment Law – August 2023 | Aurick, Herrington & Sutcliffe LLP

In this month’s installment, our team is highlighting key updates to ACAS guidance on employee leave entitlement and sick absence, and artificial intelligence in the workplace. We also explore a recent Employment Appeals Court case related to an employee’s termination date extension and the Session Court’s finding that the stock incentive plan transferred under TUPE.

1. ACAS Guidelines

The ACAS has published new and updated guidance for employers and employees on leave entitlement and sick absence.

Leave entitlement:

• Full-time employees are entitled to 5.6 weeks’ holiday pay, which may include bank holidays.
• If the employee works part-time, the entitlement to vacation pay is calculated in proportion to the hours worked.
• Shift, shift and zero hour workers are also entitled to 5.6 weeks holiday pay provided they have a continuing employment contract. The entitlement to vacation pay should not be affected by the number of weeks a worker works in a year. This is because the employment contract is valid for a full year.
• If the employee has a fixed-term contract, the entitlement to vacation pay is calculated in relation to the length of the employment contract rather than the hours worked.

Sick pay entitlement:

• It is important that the employment contract includes the following:
  • How much is sick pay?
  • How long will sick pay last?
  • Any rules your employer has for using sick pay.
• The employer must pay statutory sick pay to the eligible employee.
• Where an employer has a discretionary sick pay policy, this must be stated in the employee’s written statement or in the employment contract. If better pay is offered under a discretionary policy for some pathological conditions but not for others, it cannot be discriminatory in its application and must apply equally to part-time and full-time employees.
• Unless the employer’s sickness policy allows it, an employee will not be entitled to sick pay due to injury or neglect on the job, or a mental health condition caused by work stress.

Appropriate notes:

• An employee who is absent from work due to illness for seven calendar days or less can document their leave themselves, which means they do not have to provide medical evidence.
• If an employee is absent from work due to illness for more than seven calendar days, the employee must provide a sick note from a registered health care professional. The suitability note should be submitted to the employer on the seventh day of absence or as soon as possible thereafter.

The employer should ask for an appropriate note only on the seventh day of absence. If there is a delay, the employee should explain the reason and state when the employer should expect a warrant.

Medical reports from doctors:

• If the employer requests a medical report from the employee, the employer must ask for the employee’s permission and state:
  • Why is the employer asking for the report?
  • That the information will be limited as to what the business owner needs.
  • Who will have access to the report.
• Any information received must be treated as confidential and should only be made available to those who need access to it.
• If the employee refuses permission, the employer will have to make decisions based on anything the employee has told him in advance, any information provided in an appropriate note (on or after the seventh day of absence), and any occupational health report (if applicable). .

2. Artificial intelligence in the workplace

On 11 August 2023, the House of Commons published a research brief addressing how areas of employment law could restrict the use of AI in the workplace. The brief identifies the following legal areas that may affect the use of AI:

• The relationship between employee and employer is one of personal service. This requires a degree of mutual trust on both sides, including the ability to explain decisions. The employer’s ability to substitute its own judgment for decision-making using AI may be limited to avoid legally undermining the employment contract.
• Relying on artificial intelligence to make or influence decisions may be illegal under the Equality Act 2010, which prohibits discrimination by employers on the basis of any protected characteristic.
• Privacy laws restrict the use of monitoring tools to monitor workers.
• The use of AI tools in the classroom could present challenges in future employment law cases, especially when employers are required to explain or justify why they made certain decisions.

The government’s approach to regulation will be both legal and context-specific, as regulators can draw on sector-specific expertise in decision-making on regulation. Employers will need to prepare for this changing nature of work, and where generative AI is used in the workplace, employers must have a tailored policy addressing guidelines for use and the right to monitoring and training.

3. The Labor Court of Appeal held that the multiple extensions of the employee’s termination date did not amount to unfair dismissal

facts:

• Mr. Garsha Singh He worked for British Airways as a cabin crew member. He went on sick leave in August 2016. Over a year later, PA served notice that his employment would end on January 5, 2018, on the grounds of incapacity. However, he was told that the date was “not fixed” and that it was “the date by which he should aim to return to work”.
• In July 2018, Mr Garsha Singh raised what he described as a “formal grievance” over the decision to extend the date of his termination until 31 July 2018. BA treated this as an appeal against the decision to terminate his employment, which was dismissed on 24 October 2018.
• The termination date was extended seven times, to give him enough time to return to work. The last termination date was December 21, 2018, when he was fired.
• BA’s absence policy was contractual and outlined ill-health capacity procedures. It includes the right to appeal the decision to terminate employment. He did not mention the possibility of postponing termination dates.
• Mr. Garsha Singh had filed claims for unfair and unfair dismissal and discrimination on the basis of race and disability, but these were dismissed by the Employment Court. Mr. Garsha Singh has appealed to the Employment Appeal Tribunal in relation to the unfair dismissal allegation he has made only.

Labor Court of Appeal findings:

Mr Garsha Singh said the extension of his termination date was a breach of BA’s absence policy and therefore a breach of contract. The Employment Appeal Court rejected the appeal, concluding that the extension of the termination date did not constitute a breach of the employment contract. The Employment Appeals Tribunal found that the absence policy was not designed to cover all possibilities and therefore did not prevent the manager from postponing the termination date. It also found that BA followed a procedure within the scope of reasonable responses and that it was clear that there had been no material injustice towards Garsha Singh. Instead, both extensions were in his favour.

Mr Garsha Singh said he should have been given the right to appeal BA’s decision not to extend the termination date any further. However, the Employment Appeal Court refused to assert that this amounted to a breach of contract. Indeed, the absence policy allowed Mr Garsha Singh to appeal his “dismissal decision”, which he did in July 2018.

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This case is a useful reminder that policies should be referred to as non-contractual when incorporated into employment contracts. This will help prevent any unwanted claims of breach of contract if the policy is not followed. Furthermore, employers should note that this case deals with unique circumstances and it is not uncommon for an absence policy to allow for numerous deferrals until the employment termination date. In this case, the dismissal was found to be fair and within the range of reasonable responses available to the employer given that the termination date was extended to give the plaintiff time to return to work and was therefore in his interest.

4. The Equity Incentive Scheme has been moved under TUPE

In the case of Ponticelli Ltd v Gallagher, the Court of Session of Scotland focused on the share incentive scheme transferred under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE). Although the employee’s right to participate in an equity incentive plan was not included in his employment contract, it arose “in connection with” his employment contract and, therefore, the court held that the transferee was required to provide a similar plan.

the facts:

• Mr Gallagher was employed by Total Exploration and Production Ltd, joined a related equity incentive scheme and entered into a three-way contractual agreement with his employer and the scheme trustees. Participation in the stock incentive plan was voluntary and there was no reference to it in Gallagher’s employment contract.
• When his business passed to Ponticelli under TUPE, Ponticelli stated that it would not offer a share incentive scheme and instead offered a one-off compensation payment of £1,800.
• Mr. Gallagher refused to pay. He argued that his right to participate in the stock incentive plan was transferred pursuant to Regulation 4(2)(a) of TUPE whereby all rights, powers, duties and obligations of the transferor under or in connection with the transferee employee’s contract of employment pass by. To the transferee on the relevant transfer, therefore, Ponticelli had to present a scheme of substantial equivalence.
• The Labor Court and the Employment Appeal Court upheld the claim. Ponticelli appealed to the Court of Session, arguing that Regulation 4(2)(a) of TUPE did not apply since Gallagher’s entitlement arose from a contract separate from his employment contract and, therefore, the rights and obligations also did not arise “under” or “in connection with” his employment contract .

the findings:

• The Court of Session dismissed the appeal, concluding that the Employment Tribunal and Employment Appeals Tribunal had the right to conclude that Regulation 4(2)(a) of TUPE applies in this case.
• Ponticelli’s argument was based on the decision in Chapman v. CPS Computer GroupThe Court of Appeal found that the stock plan had not been transferred because it was separate and separate from the employment contract. However, the Court of Appeal only considered the interpretation of a specific rule in the stock system; It did not take into account whether the rights under the share scheme contract were “attached” to the employment contract and therefore transferable. As such, the Court held that this decision was not beneficial to the issues arising in Gallagher’s claim.

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Although the court’s decision is not binding, it serves as a useful reminder that TUPE can cover the benefits of a share scheme even when the contractual documents containing the right to share are separate from the employment contract. As such, employers must ensure that, when conducting due diligence in transactions, they specify the rights and obligations that can be transferred, including those not provided for in the employment contract.