Our weekly top five for employers: 18 January 2019

1. What is on the employment law horizon?

Please find attached our 'What is on the employment law agenda?', looking at key legislative and case law developments in the pipeline. If you would like any further information on any of these, please contact Kath Sadler-Smith or Catherine Shepherd (see below).

2. Non-disclosure clauses remain in the spotlight. Have you reviewed your settlement agreement wording?

Following on from the government's announcement that it will be consulting on legislation around the use of non-disclosure clauses in settlement agreements, the Law Society has now issued guidance for solicitors drafting and advising on settlement agreements and which will necessarily impact on employers seeking to agree terms of settlement. Essentially, the terms of a settlement agreement or COT3 should not affect an employee's right to raise a protected disclosure under the Employment Rights Act 1996 (i.e. a whistleblowing), reporting wrongdoing or malpractice to a regulator, or report a criminal offence (including to the police).

We shall be providing a further guidance note for our clients but it is important now to review your template agreement and ensure that the provisions do not impose any restrictions in terms of reporting wrongdoing or criminal activity. Indeed, guidance from the CIPD confirms HR's responsibility 'to ensure that the confidentiality clauses in settlement agreements are used ethnically and appropriately, and that employees are fully aware of the legal status of such an agreement, including their inability to bring a future claim... They should not be used to cover up cases of alleged discrimination and/or bullying, or to deter a person from reporting misconduct such as making a protected disclosure under the whistleblowing legislation'. Please speak to your usual OC Contact to ensure your agreements reflect current guidelines and practice.

3. Reminder to check restrictive covenants as Supreme Court considers non-competition provision

The Supreme Court is considering the validity of a non-compete clause this month. The Court of Appeal (overturning the previous High Court decision) held that the non-compete provision was impermissibly wide as the wording purported to prevent the employee from being 'interested in any business carried on in competition with the Company or any Group Company', thereby failing to exclude the employee from having minor shareholdings in a competing business and was therefore void. This was despite the fact that the former employee had no shareholding nor any evidence of wanting to acquire one. The Court of Appeal also rejected the attempt by the former employer to 'blue pencil' i.e. strike the offending words out.

The case is now being heard by the Supreme Court and whilst we shall need to wait for the decision to see if the Supreme Court agrees with the Court of Appeal, it is a helpful reminder of the importance in drafting restrictive covenants and keeping them under review to ensure they really do protect your business interests so far as possible. Business protection is a key issues employers must tackle and one we are looking at in our HR 'Looking Ahead' workshops in London (22 January), Bristol (24 January) and Reading (29 January). Please speak to your OC Contact for more details.

Tilman v Egon-Zehnder Ltd

4. Gender pay gap reporting: Government responds to BEIS Committee report on strengthening gender pay gap reporting

The government has now responded to the BEIS Committee report on strengthening gender pay gap reporting, confirming that it will not be making any immediate changes to the gender pay gap reporting regime:

• There will be no extension of the reporting obligations to companies with 50 or more employees. However, it will encourage smaller companies to look at their gender pay gaps and may consider revisiting this issue in the future.
• There will be no amendments requiring a more nuanced analysis of gender pay gap figures, for example, introducing a requirement to show part-time and full-time gender pay gap statistics separately.
• There will be no changes at present to the current guidance published by ACAS and the Government Equalities Office.

With the next reporting date falling due on 4 April, we shall be happy to guide you through the reporting process. Please contact your usual OC Contact to learn more about our Risk, Refine, Report solution to tackling the gender pay.

5. Discrimination arising from disability: Advantageous treatment was not unfavourable treatment

The Supreme Court has handed down a decision confirming that 'advantageous treatment', which could have been 'more advantageous', was not unfavourable treatment for the purposes of the a claim of discrimination arising from a disability under the Equality Act. Discrimination 'arising from a disability' occurs where 'A' treats 'B' unfavourably because of something arising in consequence of B's disability, unless A can show that the treatment is a proportionate means of achieving a legitimate aim.

Here, the employee took ill-health retirement at age 38 due to disability and became entitled to an enhanced pension. The pension was based on the salary he received while working part-time in the period leading up to retirement. His employer had reduced his hours as an adjustment to accommodate his disability. The employee argued that his pension should have been calculated on the basis of the full-time salary he had been receiving before switching to part-time hours. The Supreme Court held that the treatment in issue here was the award of an enhanced pension (separate from the calculation of it). However, there was nothing intrinsically 'unfavourable'or disadvantageous about that. He was entitled to the pension award by reason of his disabilities. However, had he been able to work full-time, he would have had no immediate right to pension at all. The award of the pension was therefore not in any sense 'unfavourable'. Indeed, the Supreme Court took the view that 'unfavourable' was broadly analogous with 'detriment' which involves consideration of whether a reasonable worker would or might take the view that they had been disadvantaged in the circumstances. The Supreme Court here took the view that a reasonable worker would not consider themselves disadvantaged.

The decision emphasises the importance of correctly identifying the alleged discriminatory treatment – here it was the award of the pension and not the calculation of that award.

(Williams v The Trustees of Swansea University Pension & Assurance Scheme and another (2018))