Employment law

Employment Law Update │ March 2022

Employment Law Update │ March 2022

James Mallon, our HR Business Partner, provides an employment law update including cases around restrictive covenants, holiday pay and more.

1. Restrictive Covenants

The High Court case of Law By Design (LDB) Ltd v Ali saw a non-competition restrictive covenant in a service agreement enforced, and a solicitor prevented from working for a competitor.

The High Court ruled in LBD’s favour, saying the firm was “entitled to seek to protect the customer connections built up by LBD employees providing legal services to NHS clients”.

The non-competition covenant, which “allowed (and allows) Ms Ali to join a business anywhere in England and Wales that does not compete with LBD for NHS clients in the northwest or in the area covered by the Herts Valley CCG”, was no wider than is reasonably necessary to protect LBD’s interests.”

This is an interesting judgement and demonstrates the importance of having restrictive covenants drafted correctly to protect your business.

2. Restriction of Proceedings Order

The Employment Appeal Tribunal in HM Attorney-General v Taheri banned a litigant from ever bringing more Employment Tribunal claims, as he was bringing them baselessly and vexatiously.  He had brought over 40 employment tribunal claims in 10 years, against a range of prospective employers. When questioned by the Judge, he said that he “only” had three live claims at the moment, which is the Judge rightly considered to be far too many!

3. SSP Rebate Scheme Closes

The Statutory Sick Pay closed on 17‌‌‌ ‌March‌‌‌ ‌2022. Employers will no longer be able to claim back Statutory Sick Pay for their employees’ coronavirus-related absences or self-isolation that occur after ‌17‌‌‌ ‌March‌‌‌ ‌2022.

Employers had until 24‌‌‌ ‌March‌‌‌ ‌2022 to submit any new claims for absence periods up to 17‌‌‌ ‌March‌‌‌ ‌2022 or to amend claims they have already submitted.

After then, there is a return to the normal SSP rules, which means employers should revert to paying SSP from the fourth qualifying day their employee is off work regardless of the reason for their sickness absence.

4. Annual Increase in Compensation Limits

The Employment Rights (Increase of Limits) Order 2022 has been laid before parliament.

This year’s core compensation limit increases are:-

  • a week’s pay (basic award in Unfair Dismissal, or as a redundancy payment) increases to £571 (from £544).
  • maximum compensatory award for Unfair Dismissal increases to £93,878 (from £89,493).

The new limits will apply to dismissals occurring on or after 6th April 2022.

5. Holiday Pay

Pimlico Plumbers have lost their holiday pay case. This new Court of Appeal decision is the latest in the long-running case brought by Gary Smith, a plumbing and heating engineer, against Pimlico Plumbers. Gary Smith’s employer had regarded him as self-employed, but he went on to assert employment law rights as a worker.

The Court of Appeal has confirmed where a worker has taken annual leave, but it was unpaid, their holiday pay claim can carry over indefinitely and will not lapse at the end of the holiday year. This means where employers have incorrectly treated individuals as ‘self-employed’ contractors, who are in fact ‘workers’, there can be holiday pay claims that stretch back a considerable number of years.

Workers do not have access to the full suite of rights which apply to an employee. However, one of the key worker rights is to take a paid holiday – a statutory minimum of 5.6 weeks (or pro-rata) per annum.

The general principle with paid statutory leave entitlement is that a “use it or lose it” rule will apply and holiday pay rights do not carry over from year to year, except for in specific situations such as sickness absence or maternity leave. However, this principle was relaxed by the European Court of Justice, in King v Sash Window Workshop (“King”) which concerned a ‘self-employed’ salesman determined to have worker status and was therefore entitled to payment of accrued holiday.

In the court decision where a worker has been deterred from exercising their right to holiday pay over several years due to their employer failing to provide holiday pay, the worker is allowed to carry over their paid holiday rights until their contract terminates. On this basis, Mr King was due payment for untaken holiday for 13 years. The Pimlico Plumbers case has extended these rights further, so that even where an individual is able to take holiday, if it is unpaid, again their holiday pay claim can be carried over to stretch back over a number of years.

Employers can still say in their contracts that “untaken leave will be forfeited” so long as it has genuinely given their employees/workers the chance to take the leave. If it has not, it will have to backpay the holiday.  In this case, it cost the employer over £70,000! 

We are strongly advising clients to make sure their contracts and holiday policies protect them and to get in contact with our team if you require some further advice.

Our HR software, oneHR, can help you manage your leave requests in an open and transparent way and create that audit trail that you may need.  For further information please visit the oneHR website.

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