Welcome to the next edition of Employment Law Matters, our quarterly update on key issues in employment law. Every three months, we will send you a selection of the most important developments for employers in case law and legislation, including practical takeaways for employers as well as things to look forward to in the coming months.
CM Murray LLP are leading specialist employment law advisers to multi-national companies and senior executives. If you have any topics you would like us to cover in our regular updates, please do get in touch.
Looking ahead: Political or Philosophical Belief cases
Although the big news in employment law is the upcoming Employment Rights Bill, other areas of the law will be shaped by landmark decisions in the Employment Appeals Tribunal and/or Court of Appeal.
For example, this year we expect the Court of Appeal’s decision in Higgs v Farmor’s School which the Court heard in October 2024. In an earlier edition of the Employment Law Matters, we noted that recent cases on philosophical beliefs have appeared to conflict with one another and leave employers uncertain. In particular, it is not entirely clear whether an employer can safely dismiss an employee for the manner in which they express or manifest their belief rather than for the belief itself. Part of the reason for the conflict is that there is a complex relationship between equality and human rights law and some confusion on which tests courts (and employers) should apply in determining whether an employer’s action can be justified or is proportionate. Hopefully, the Court of Appeal’s decision in Higgs will bring more clarity and guide employers dealing with opposing, but protected, views.
Higgs was an administrator at a secondary school. She shared a link on social media objecting to the government’s proposal to make relationships education mandatory in schools. In particular, she said this would result in schools teaching children that all relationships are normal, including LGBT relationships/same-sex marriage, and schools teaching children that sex is a choice, not biology. The school received a complaint from a parent that Higgs worked closely with children and had been posting what the parent described as ‘homophobic and prejudiced views against the LGBT community’. Following an investigation and disciplinary process, Higgs was dismissed for gross misconduct.
The original Employment Tribunal (ET) decision found that whilst Higgs’ views were protected under the Equality Act 2010, the school had not acted discriminatorily because she was dismissed because of the perception of her views, rather than the views themselves. The school had specifically noted that her posts included florid and provocative language.
The case eventually reached the Court of Appeal in October 2024 and the decision is hotly anticipated by practitioners and employers. This case and cases like it involve a complex relationship between Equality Act legislation and Human Rights legislation. The Equality and Human Rights Commission intervened in the appeal, providing expert evidence on Equality and Human Rights law and the relationship between the two. The EHRC stated:
We expect this landmark case will set a precedent for future cases concerning protected beliefs in the workplace, especially where those beliefs intersect with other protected characteristics.
This case is also significant because it will help establish how employers can respond – without discriminating – to what appears to be an increasingly common phenomenon: a third-party complaint where an employee has published their personal views on a social media platform.
Watch this space – we will report on the outcome when it has been published.
Addressing Workplace Harassment: Lessons from McDonald’s Section 23 Agreement
In February 2023, in response to staff concerns about the handling of sexual harassment complaints in McDonald’s restaurants in the United Kingdom, McDonald’s signed a legally binding and enforceable section 23 agreement with the Equality Human Rights Commission under the Equality Act 2006. Section 23 agreements are used when there is evidence that an organisation may have breached the Equality Act and by nature of entering into a section 23 agreement, McDonald’s are pledging to not breach equality legislation. The agreement will typically include an action plan to assist with addressing specific issues within an organisation which may have led to unlawful conduct occurring.
Subsequently, in July 2023, the BBC published its own investigation into working conditions at McDonald’s which unveiled a toxic culture and work environment with over 100 allegations from employees varying from sexual assault and sexual harassment to racism and homophobia. As a result of the BBC investigation, further allegations throughout 2023 and growing concerns surrounding the working environment in McDonald’s restaurants in the United Kingdom, Alistair Macrow (CEO of McDonald’s UK and Ireland) gave oral evidence before the Business and Trade Committee on 14 November 2023 where he told MPs that he was “determined to root out any of these behaviours, to identify individuals who are responsible for them and make sure they are eradicated from our business.”
However, the BBC recently revealed that further allegations of harassment have been made by workers at McDonald’s, resulting in Alastair Macrow being summoned to the Business and Trade Committee for a second time, on 7 January 2025, to face questions on the culture of McDonalds restaurants in the United Kingdom. Despite over 700 staff members bringing fresh claims of harassment against McDonald’s, Alastair Macrow has stated that he is confident that McDonald’s are taking significant and important steps to tackle unacceptable behaviours in their restaurants.
Employers should take the opportunity to learn from the apparent failings in stamping out harassment and misconduct in the workplace by considering preventative measures within their organisations. Ensuring that staff and management have undertaken detailed and robust training and that all staff are clear on the organisation’s processes and policies for reporting these types of behaviours is usually an effective starting point. In light of the mandatory duty on all employers to take reasonable steps to prevent sexual harassment which came into force in October 2024, this issue is more relevant than ever. The Employment Rights Bill (which is likely to come into force in 2026) increases the obligations on employers in this area and also introduces a standalone claim for staff who are harassed by third parties. Employers should be reviewing and renewing their policies sooner rather than later.
Employment Rights Bill: Overview of proposed changes
On 10 October 2024, the Employment Rights Bill was published which introduces significant changes to the legislation governing employment law in the United Kingdom. Further to this, on 27 November 2024, the Employment Rights Bill (Amendment Paper) was published which clarified and amended specific sections of the initially proposed legislation.
There are a vast number of proposed changes included within the framework, so this list is not exhaustive, but we have outlined some of the key changes below:
- An Initial Period of Employment between 3 and 9 months is set to be introduced, during which an employee qualifies for the right to a lighter touch dismissal process, of which failure by an employer to comply with the process can give rise to an unfair dismissal claim.
- The employer’s duty to take “reasonable steps” to prevent sexual harassment has been amended to a duty to take “all reasonable steps” to prevent sexual harassment.
- The standalone claim against employers in respect of third-party harassment, previously removed from the Employment Protection Act, will be introduced.
- The day 1 right for employees to request flexible working is being extended to impose more obligations on employers to consider as to what constitutes ‘reasonableness’.
- The Government has outlined its intention to extend the limitation period for most Employment Tribunal claims from 3 to 6 months.
It is important to note that these are not imminent changes as the majority of the consultations are anticipated to begin in 2025 and the legislation itself is unlikely to be implemented until 2026, meaning that employers will have a significant amount of time to give their views in the consultation process and ensure that they have adequately prepared for the legislation by delivering training and updating internal policies.
Navigating Pre-Termination Negotiations – Case Update: Gallagher v McKinnon’s Auto and Tyres Ltd
Employers will often want to negotiate exit terms with their employees without those discussions being referred to in any subsequent legal proceedings if no settlement is reached. Although it is possible to make and discuss a settlement offer on a “without prejudice” basis so as to prevent it from being used in evidence against the employer, the limitations of the without prejudice rule mean that there is a risk of the offer and the discussions around it being admissible if the employee pursues an Employment Tribunal claim.
To address this problem and reduce the risk for employers who want to initiate settlement discussions, section 111A Employment Rights Act 1996 provides a statutory framework for confidential pre-termination negotiations to operate alongside the without prejudice principle. However it has limited scope, and while it can apply to claims for unfair dismissal, it does not cover claims that relate to an automatically unfair reason for dismissal or claims made on grounds other than unfair dismissal (such as discrimination or breach of contract).
The ACAS Code of Practice on Settlement Agreements sets out guidance on conducting pre-termination negotiations which Employment Tribunals will take into account in relevant cases. As the ACAS Code explains, the protection given by s111A will not apply if there is some improper behaviour in relation to the settlement agreement discussions or offer, and in such situations evidence of the negotiations can be given in unfair dismissal claims.
In the recent case of Gallagher v McKinnon’s Auto and Tyres Ltd, the claimant appealed against an Employment Tribunal’s decision that evidence of pre-termination negotiations was inadmissible in his unfair dismissal claim. The case is a useful reminder for employers of the nature and scope of “protected conversations” under s111A Employment Rights Act 1996.
The company had made a redundancy settlement offer verbally in a meeting which was intended to discuss the claimant’s return to work. It gave the claimant only 48 hours to consider the offer, whereas the ACAS Code suggests, as a general rule, that a minimum period of 10 calendar days should be allowed to consider the proposed formal written terms of a settlement agreement and to receive independent advice, unless the parties agree otherwise. The claimant also said the company had told him he would be dismissed if he did not accept the offer. The claimant therefore argued that the company’s behaviour was improper and that it had put him under “undue pressure” to accept the offer, such that the confidentiality of the pre-termination negotiations was extinguished.
The Employment Appeals Tribunal (EAT) dismissed the appeal. It found that the 48-hour deadline given to the claimant to consider the offer did not constitute improper behaviour, as the offer was verbal only and the time period for consideration of a verbal offer and a formalised written settlement agreement should be distinguished. The EAT also commented on the difference between redundancy processes and disciplinary processes, noting that undue pressure is more likely to be present in the latter. The EAT pointed out that, in redundancy cases, confirmation that a role is redundant does not inevitably mean the employee will be dismissed, and a structured redundancy process should follow if a settlement proposal is not accepted. As such, the EAT concluded there was no impropriety or undue pressure by the company that would displace the general rule making such negotiations inadmissible.
If you would like to discuss any of the topics covered in this update in more detail, please contact Partners Beth Hale or David Fisher, both of whom specialise in employment and partnership law issues for multinational employers, senior executives, partnerships, LLPs, partners and LLP members.
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