Employment in the news | October 2023

Contents

• Sexual harassment
• Holiday pay
• Bonus clawback not a restraint of trade
• ICO guidance on employee monitoring

Sexual harassment

The political compromise we reported last month held, allowing the Worker Protection (Amendment of Equality Act 2010) Act to complete its passage through Parliament. Once in force, it will require employers to take reasonable steps to prevent sexual harassment in the workplace. The meaning of “reasonable steps” will be fleshed out in an EHRC Code of Practice, which is likely to be based on its existing technical guidance on sexual harassment and harassment at work.

It remains to be seen whether the duty to take “reasonable steps” is significantly less onerous than the original proposal requiring employers to take “all reasonable steps” to prevent harassment.

Action points

• Review existing harassment policies to ensure they are up to date and reflect current guidance and the new duty.
• Consider refreshing training programmes to ensure they deal with sexual harassment specifically, to help show you have complied with the new duty once it is in force.

Holiday pay

The latest instalment of the holiday pay saga reached the Supreme Court in Chief Constable of the Police Service of Northern Ireland v Agnew. The issue was essentially whether workers could in principle claim underpaid holiday pay stretching back to 1998, or whether time limits on unlawful deductions claims prevented this.

Historically, the Police Service of Northern Ireland (PSNI) used basic salary to calculate holiday pay but did not include overtime. Staff brought claims under the Northern Irish Working Time Regulations and unauthorised deduction provisions to claim underpaid holiday pay, in some cases from the date that the Working Time Regulations came into force. (Northern Ireland does not have a two year backstop on unlawful deduction claims of the sort introduced in Great Britain in 2015.)

For our purposes, the key issue for the Court was when the series of deductions began. A worker must bring a claim within three months of the last in a series of deductions. The PSNI argued that gaps of more than three months between payments, or payments of the correct amount of holiday pay, break a series of deductions. This would limit the amount of holiday pay someone could claim: they would only be able to claim back pay for the most recent series of deductions.

The Supreme Court rejected the PSNI’s argument. The legislation’s purpose is to protect vulnerable workers and prevent exploitation. If a gap of three months between deductions inevitably extinguished the right to bring a claim in relation to events before that period, this would remove much of the protection that the series of deductions extension is designed to provide. Each payment of holiday pay was factually linked and constituted part of a series of deductions. Gaps of three months did not inevitably break the series and nor did correct and lawful payments of holiday pay.

Action points

For employers outside Northern Ireland, the decision’s implications are relatively limited.

• In Great Britain employees can only claim unlawful deductions for the two year period before bringing a claim.
• The decision makes it more difficult to argue that a series of deductions within that two year period has been broken but maximum liability remains capped at two years.
• However, the Court also found that there is no rule that an employee has to take their basic four week holiday entitlement before their additional holiday entitlement. This may complicate holiday pay calculations for employers that use different methods to calculate basic and additional holiday pay, although the implications of the decision will undoubtedly be tested in future cases.

Bonus clawback not a restraint of trade

The High Court found that a bonus repayment clause was not a restraint of trade in Steel v Spencer Road LLP.  The employer was able to enforce it.

Under the terms of his employment contract, an employee’s bonus was conditional on remaining in employment for three months from the date of payment and on not giving or being given notice during that period. When Mr Steel received a bonus in January and resigned in February, his employer asked him to repay his bonus. He argued that the clawback was an unreasonable restraint of trade and unenforceable.

The High Court had to decide whether a bonus clawback provision that was conditional on remaining in employment for a period but did not otherwise prevent an employee from competing with their employer post-termination was a restraint of trade. It found that it was not. A clause that removes a benefit from an employee if they compete after the end of their employment is an indirect restraint of trade, but it does not follow that the loss of a benefit on termination of employment is. Losing a benefit does not impact on an employee’s freedom to carry on their activities after the end of employment. The fact that a clawback provision acts as a disincentive to resign does not make it a restraint of trade.

Action points

• The decision makes it harder for employees to challenge provisions that require them to repay a bonus or other benefit if they do not remain in employment for a period after receipt.
• Employers should be aware that provisions removing a benefit employees would otherwise receive if they compete post-termination are still caught by the restraint of trade doctrine.
• Direct or indirect non-compete provisions will need to be reviewed If the government limits the duration of non-compete covenants to three months, as suggested earlier this year.

ICO guidance on employee monitoring

The ICO published guidance on employee monitoring. This stresses that monitoring employees lawfully involves balancing the business interests of the employer and the importance of its reasons for monitoring with worker entitlements under data protection law and their right to respect for private and family life. Privacy expectations are likely to be particularly high if an employee is working from home and employers should recognise this when deciding whether monitoring is proportionate.

The key points from the guidance remind employers of the need to identify a lawful basis for processing as well as a special category processing condition if monitoring may result in collecting special categories data. In the ICO’s view, monitoring the content of emails or messages is likely to involve processing special categories data, such as health data, even though this is not the purpose of the monitoring.

Transparency is particularly important to ensure that monitoring is fair, so workers should be informed about the collection and use of information in a way that is accessible and easy to understand. Employers should seek the views of workers or their representatives before introducing monitoring, unless there is a good reason not to.

In some cases it will be mandatory to carry out a data protection impact assessment before carrying out monitoring because the processing involved is high risk. This would include processing biometric data, keystroke monitoring, covert monitoring or monitoring the content of emails or messages. However, the ICO recommends carrying out an impact assessment even if this is not required. This is the best way to record the purpose of monitoring, assess risk, demonstrate accountability and consider whether there are less intrusive ways of achieving the same aims.

Action points

• Review the checklists in the ICO guidance to confirm you have considered the key issues surrounding employee monitoring.
• Ensure that workers are told about monitoring, including its nature, purpose and extent and the justification for it. Policies surrounding acceptable usage should be regularly brought to employees’ attention.
• Consider alternative approaches that can reduce the need for monitoring, such as system controls.

Back to contents

Authored by Jo Broadbent, Ed Bowyer and Stefan Martin.