Employment legal update #43 | March 2021
In this month's legal update, our Employment & HR team cover:
Employment law news including the measures to support gig economy workers; increases of statutory payments; BEIS consultations on exclusivity clauses and on reforms of post-termination non-compete clauses; judicial review of regulations restricting public sector exit payments; a "Services Mobility Agreement" between the UK and Switzerland; the Restriction of Public Sector Exit Payments Regulations being revoked; and the ICO's data sharing code of practice.
Commentary on recent employment law tribunal cases, including agency workers' rights against permanent employees; and restrictive covenants held to be unlawful restraint of trade.
Food delivery giant to roll out support for its gig workers
Following a spate of cases concerning the employment status of gig economy workers, Just Eat has announced that it will be introducing a range of measures designed to support its couriers and ensure that they receive the national minimum wage. The company is planning a nationwide rollout in 2021, paying couriers by the hour not the job. It will also pay pension contributions, holiday, sick, and maternity and paternity pay. Their intention is to create a thousand jobs including full-time, part-time and zero-hour work, and couriers can opt-in or out of the scheme.
Take note: increases in statutory payments
The following statutory payments are increasing as follows from April 2021:
- SSP goes up to £96.35 (from £95.85)
- SMP, SSP, ShPP, SAP and maternity allowance all go up to £151.97 (up from £151.20).
BEIS consults on exclusivity clauses
BEIS has commenced consultation on extending the ban on exclusivity clauses in employment contracts to cover those earning under the Lower Earnings Limit, currently £120 a week. This would prevent employers from contractually restricting low earning employees from working for other employers. Previous consultation on this proposal resulted in a ban on exclusivity clauses in zero hours contracts in 2015, but this measure is being revisited now because of the concern that low earners are adversely affected by the pandemic and many employers are unable to offer sufficient hours for them to earn a living. The consultation closes on 26 February 2021.
Judicial review of regulations restricting public sector exit payments on the cards
The public sector union the FDA has announced that it is seeking judicial review of the Government's regulations which restrict public sector exit payments to £95,000. Its concern is that this cap is arbitrary and could affect many public servants with no equality impact assessment having been undertaken; also that the Government is refusing to index link the cap, so that the value in real terms will reduce as the years go by.
BEIS starts consultation on post-termination non-compete clauses
BEIS has commenced consultation on reform of post-termination non-compete clauses in employment contracts. The consultation seeks views on the following proposals:
- requiring employers to continue paying compensation to employees for the duration of a post-termination non-compete clause (as often happens in contracts based in Europe)
- requiring employers to confirm in writing to employees the exact terms of a non-compete clause before their employment commences
- introducing a statutory limit on the length of non-compete clauses
- banning the use of post-termination non-compete clauses altogether.
In 2016 there was a call for evidence on the use of non-compete clauses which established that they worked well and were a valuable and necessary tool for employers in protecting their business interests. The consultation closes on 26 February 2021.
The UK and Switzerland strike a Services Mobility Agreement
The UK Department for International Trade (DIT) and the Swiss government have announced that the UK and Switzerland have agreed a "Services Mobility Agreement" (SMA) to support "vital industries of the UK economy, including finance, consultancy, legal services, the tech sector and the creative industries". The SMA is expected to be applied provisionally from 1 January 2021 for two years, but may be extended by agreement. The key provisions are as follows:
- UK services providers will be permitted to travel to Switzerland and work visa-free for up to 90 days a year, with only a notification process required. While this will provide partial continuity for services providers, it is nonetheless a reduced level of access compared with previous arrangements.
- Swiss services providers will be permitted to stay in the UK for up to 12 months in any two-year period.
- The UK and Switzerland have also committed to work together on the mutual recognition of professional qualifications.
The SMA builds upon a continuity trade agreement between the UK and Switzerland which primarily addresses trade in goods, as well as several other agreements seeking to provide continuity in respect of different types of trade in services, including road transport, air services, and direct insurance.
ICO's new data sharing code of practice
The Information Commissioner's office has published a data sharing code of practice to replace the one issued in 2011. It addresses the issues raised by GDPR and the Data Protection Act 2018. It has also launched a data sharing Information hub where organisations can find checklists, FAQs, and other useful information and support.
The Restriction of Public Sector Exit Payments Regulations revoked
The Restriction of Public Sector Exit Payments Regulations, which came into force in November 2020, and which crucially implemented a limit of £95,000 on any exit payments made to public sector employees, are being revoked. After extensive research the government has concluded that the regulations may have unintended consequences. Anyone who has been affected by these regulations prior to their revocation should contact their employer directly requesting the difference to be paid between the amount they would have received and the amount they did receive under the regulations while they were in force. A HM Treasury direction has been published disapplying the cap until the regulations are formally revoked.
Agency workers' rights against permanent employees
In Angard Staffing Solutions Ltd and another v Kocur and another the EAT has come to a number of decisions involving the Agency Workers Regulations and the extent of rights under them for agency workers.
In particular, it has concluded that agency workers’ right to be informed by the organisation for which they are working of any appropriate vacancies does not extend to being entitled to apply, and be considered, for these vacancies on the same terms as directly recruited employees.
In relation to the right of agency workers to the same basic working and employment conditions as directly recruited employees, the EAT also held that there was no breach of the principle of equal treatment if agency workers' shift lengths were 12 minutes longer than those of direct recruits; neither was it a breach if direct recruits were given first refusal on any available overtime. The rationale for this was the identified difference in relationship between hirers and agency workers from the relationship which hirers have with their direct recruits, key to this being the flexibility endemic in the agency worker/hirer relationship and the main purpose of agency workers being to be able to respond to fluctuating demands in a way that a directly recruited workforce may not be able to.
This should not be taken by employers engaging agency workers as carte blanche to treat them less favourably, but minor differences in the operation of terms and conditions revolving around the need for flexibility will probably not be deemed a breach of the Agency Workers Relations. However, this is likely to be considered very much on a case-by-case basis.
Restrictive covenants held to be unlawful restraint of trade
In Quilter Private Client Advisers Ltd v Falconer and another the High Court has upheld allegations against an individual of misuse of confidential information, but dismissed the application of the claimants that the restrictive covenants were enforceable. This is a classic case of appropriate applicability of restrictive covenants referable to the circumstances of the individual concerned.
The defendant left the claimant after only six months. She took with her confidential information containing details of clients, all of which she had been introduced to when she joined the claimant and whom she sought to solicit with her new engagement. An interim injunction was granted to enforce the covenants and restrain the use of confidential information any further.
At the full trial the misuse of confidential information allegation was upheld but the restrictive covenants were held to be void and unenforceable. The non-competition clause was 9 months, and the non-solicitation and non-dealing clauses were for 12 months, covering all those who had been clients in the 18 month period prior to termination, and not only those who were existing clients but also those who had subsequently left and take their business elsewhere, whether or not the defendant had ever had any dealings with them.
The High Court held that, having only been employed for 6 months, the defendant could not have built up sufficient client relationships to do serious damage to the claimant in this regard; that the non-compete was not industry-standard, and that the claimant had not offered any evidence as to why a non-dealing clause was not sufficient to protect its’ business interests.
The key point about the covenants not being enforceable was the short period of time for which the individual had been employed, meaning she did not have sufficient time to build up meaningful relationships to encourage clients to leave the claimant and damage its’ business. That notwithstanding, however, the definition of “clients” would in any event probably have been considered to be far too wide however long the individual had been employed. However, the confidential information misuse was upheld, and it is often in the context of confidential information that claimants may have their best chance of success rather than trying to uphold covenants.