UK: A Month In UK Employment Law - November 2016


Taxation of termination payments draft legislation published

At present, in certain circumstances the first £30,000 of a termination payment is exempt from income tax and national insurance ("NIC"). However, there have been concerns for many years about a lack of certainty as to the circumstances when this exemption applies. One key area of confusion is the circumstances under which any part of termination payments relating to notice periods attract the tax exemption. There have been various calls to simplify the rules, and the Government's response to their 2015 consultation on this topic has now been published, including proposed draft legislation.

The key changes the Government plans to make include:

  • Align the rules for income tax and employer NICs on compensatory payments so that employer NICs will now be payable on the excess of any compensatory payment above £30,000 (in contrast to the current position where the full amount of a compensatory payment is not subject to any employer NICs). This will increase the overall cost of termination payments.
  • Tax and make subject to NICs any payment that the employee would have received if he or she had worked his or her notice period (creating certainty in relation to the tax treatment of payment referable to notice periods but also removing any scope for such payments to attract the tax exemption).

However, despite the fact that the £30,000 limit has been in place since 1988, the Government has rejected calls to increase it.

The Government has proposed that the changes come into place in April 2018.

Privacy shield now in force

The long-awaited EU-US Privacy Shield came into force on 1 August 2016. The UK Data Protection Authority (the "ICO") has published a blogpost on the position in relation to EU-US data transfers. Importantly, the ICO warns against relying on the Safe Harbor Framework to ensure the lawful transfer of personal data from the UK to the U.S. Rather, in order to lawfully transfer personal data to the U.S., it advises businesses either to:

  1. use data transfer agreements based on standard contractual clauses;
  2. use binding corporate rules; or
  3. participate in the Privacy Shield.

However, the ICO has caveated this advice by referring to pending ECJ decisions which may impact the validity of standard contractual clauses and binding corporate rules, stating that there is still uncertainty about the Privacy Shield in light of the Article 29 Working Party's various concerns (the Article 29 group contains representatives from each of the EU member states' data protection authorities). While this uncertainty remains, there is still no "risk-free" method for data transfers to the U.S.

The Privacy Shield will be reviewed in May 2017 and the Article 29 Working Party has stated that data protection authorities in the EU will not challenge the adequacy of the Privacy Shield until at least after this review.

In addition, an Irish privacy advocacy group, Digital Rights Ireland, has filed a legal challenge against the Privacy Shield, stating that it provides inadequate protections. A hearing on the challenge is not expected for at least another year.

Corporate Governance inquiry launched

Following recent high profile investigations into the management and businesses of BHS and Sports Direct, the Business, Innovation, and Skills ("BIS") Committee has launched an inquiry on "corporate governance" covering directors' duties, executive pay and the composition of boards (including diversity, worker representation and gender). We will keep you abreast of any updates.


Disability discrimination and reasonable adjustments – G4S Cash Solutions (UK) Ltd v Powell

The Employment Appeal Tribunal (the "EAT") has held that not reducing an employee's salary (even when moving that employee to a lower-paid job) could be a reasonable adjustment, within the meaning of disability discrimination legislation contained in the Equality Act 2010, in appropriate circumstances. In addition, an employee needs to consent to a change in their terms and conditions for a change to take effect, even where that change constitutes a reasonable adjustment.


Under UK disability discrimination legislation, an employer has a duty to make reasonable adjustments where it knows or ought reasonably to know that a person has a disability and there is a provision, criterion or practice which puts a disabled person at a substantial disadvantage in comparison with those who are not disabled. An employer must take such steps as are reasonable to avoid the disadvantage. A failure to make a reasonable adjustment amounts to unlawful discrimination.


Mr Powell worked as an engineer on ATMs until he became disabled through a back injury that meant he was no longer fit for jobs involving heavy lifting or working in confined spaces. G4S Cash Solutions (UK) Ltd ("G4S") gave him a new and alternative role as "key runner" at his original salary. Mr Powell was led to believe that this role was long term; however, G4S later considered discontinuing the key runner role for organizational reasons. G4S provided Mr Powell with a list of alternative vacancies, but stated to him that if nothing was available he would be dismissed on medical grounds. After Mr Powell involved solicitors, G4S decided to make the key runner role permanent but at a reduced rate of pay (£207 per month less before tax, a roughly 10% reduction in his salary) because the role did not require engineering skills. Mr Powell refused to accept the lower rate of pay, as a result of this refusal and because no other suitable vacancy could be identified, he was dismissed.

The Employment Tribunal (the "ET") found that:

  • G4S was fulfilling its statutory duty by making reasonable adjustments and it was entitled to make that adjustment without the consent of the employee.
  • The duration of a reasonable adjustment is not indefinite and can be subject to change in certain circumstances.
  • However, G4S failed to make a reasonable adjustment because it should have allowed Mr Powell to work as a runner without reducing his salary. Accordingly, his dismissal amounted to discrimination arising from disability and was unfair.

EAT Decision

The EAT held that the ET had made an error of law on the variation of contract issue. A change to terms and conditions of employment, even if made pursuant to the statutory obligation to make reasonable adjustments, still requires employee consent.

The EAT further found that pay protection could be a reasonable adjustment in appropriate cases. The EAT found no reason why pay protection could not be a reasonable adjustment – it was just another potential form of cost that an employer might need to incur in order to comply with its duty to make reasonable adjustments.


  • This case provides useful guidance that pay protection can be a reasonable adjustment in appropriate cases. It also makes clear that reasonable adjustments that vary an employee's employment contract must be consented to by an employee like any other variation of terms.
  • All offers made and changes to terms and conditions should be made clear and documented so that there is a paper trail.

Whistleblowing and who has to know about a protected disclosure – Royal Mail v Jhuti

The EAT found that a dismissal was automatically unfair in circumstances where the Claimant's line manager (to whom the Claimant had made a protected disclosure) had engineered her dismissal by misleading the person who decided to dismiss the employee.


Ms Jhuti started work in the sales division at Royal Mail as a media specialist. Shortly after, Ms Jhuti witnessed and believed that another employee was offering incentives to clients contrary to Royal Mail's internal regulations and regulatory requirements. Ms Jhuti later notified her concerns to her line manager, Mr Widmer, who told her that she should admit that she had made a mistake about the irregularities and advised her to send an email retracting the allegations made. She reluctantly sent the retraction email.

Following a series of events, including Ms Jhuti expressing concern to Mr Widmer that she had been unfairly allocated customer accounts, Mr Widmer began to monitor Ms Jhuti's progress through weekly meetings and set her an "ever changing unattainable list of requirements". Mr Widmer remained critical of Ms Jhuti and told HR that "if things don't change, we will need to look at exiting this individual". This was in contrast to another team member who complimented Ms Jhuti on her fulfilment of Mr Widmer's latest requirements.

Ms Jhuti raised the issues about Mr Widmer's treatment of her with HR, but no action was taken. She raised a grievance (which was not dealt with until 18 months later), and soon after was signed off sick. She was offered three months' salary and then one year's salary to not return to work, which she refused.

Subsequently, Ms Vickers was appointed to review Ms Jhuti's case (excluding her grievance). The ET found that Mr Widmer had withheld material information from Ms Vickers. Based on the information provided to her, Ms Vickers terminated Ms Jhuti for poor performance.

The ET found the fact that Ms Jhuti had been offered a termination payment of one year's salary in circumstances where she was deemed to be a poor performer raised suspicions that Ms Jhuti had made protected disclosures. However, applying CLFIS (UK) v Reynolds [2015] ICR 101 (a case about direct discrimination), which held that the focus should be on the decision-maker, rather than those who provided information to the decision-maker, Ms Vickers herself needed to have been motivated to terminate Ms Jhuti because of the protected disclosures. However, there was no basis to suggest Ms Vickers was so motivated and, accordingly, the ET held that Ms Jhuti was not automatically unfairly dismissed because she had made protected disclosures.

EAT Decision

The EAT held that even though the person who was responsible for dismissing Ms Jhuti was not aware of the protected disclosures, Ms Jhuti was still automatically unfairly dismissed because of the protected disclosures.

Importantly, the EAT held that CLFIS (UK) v Reynolds did not apply because that case focused on direct discrimination rather than protected disclosures, which are subject to different rules of causation. The EAT was satisfied that even though Ms Vickers made the decision in ignorance of true facts, because her decision was manipulated by someone in a managerial position responsible for an employee and who was in possession of the true facts, a causal link could be made between Ms Jhuti's protected disclosures and the decision to dismiss her, such that her dismissal was deemed to be because of her having made protected disclosures.

In reaching this decision, important factors here included that (i) Mr Widmer was
Ms Jhuti's line manager, (ii) Ms Jhuti made protected disclosures to Mr Widmer and Mr Widmer appreciated the significance of those disclosures, (iii) Ms Jhuti was deliberately subjected to detriments by Mr Widmer following the protected disclosures, (iv) Mr Widmer lied to Ms Vickers about the disclosures, and (v) Ms Vickers was not given access to all information. This meant that the reason and motivation of Mr Widmer also needed to be taken into account.


  • In certain circumstances, especially where there has been willful concealment of relevant facts, a decision-maker can be fixed with knowledge of a protected disclosure about which they are unaware.

Whistleblowing and the definition of "Worker" – McTigue v University Hospitals Bristol NHS Foundation Trust

The EAT decided that an agency worker can bring a whistleblowing claim against the entity for whom they provide services (the "end user") even if the end user does not employ that agency worker, if the end user substantially determines the terms of an agency worker's engagements and even where the agency that engages the agency worker also substantially determines the terms of engagement.


Section 43K of the Employment Rights Act 1996 (the "ERA 1996") provides an extended definition to the term "worker" in the context of protected disclosures and whistleblowing. This provision was enacted primarily to protect agency workers provided to an end user in circumstances where the worker would not fall under s.230 ERA 1996, which sets out definitions for "employees" and a limited definition for "workers". The dispute in this case centered on s.43K(1)(a)(ii) ERA 1996, which requires that the terms on which the worker is engaged to do the work are or were in practice substantially determined not by the individual but the person for whom the individual works, by a third party or both of them.


Ms McTigue was an agency worker employed by Tascor Medical Service Limited ("Tascor") under a contract of employment to perform work for University Hospitals Bristol NHS Foundation Trust (the "Trust"). She was removed from this engagement and raised claims alleging that she was subject to detriments by the Trust. Ms McTigue's employment contract with Tascor dealt with remuneration, holiday entitlement, sick pay, pension, maternity leave, disciplinary and grievance procedures and notice to terminate. Ms McTigue also had an "honorary contract" from the Trust. The honorary contract authorised her to carry out her duties for the Trust, it identified her supervisor and it reserved the right to terminate the honorary contract in certain circumstances. There were significant amounts of cooperation between Tascor and the Trust in relation to her employment/engagements including in relation to holiday, time off and uniform requirements.

The ET held that it was Tascor who substantially determined Ms McTigue's terms, rather than the Trust, so that Ms McTigue's claims against the Trust failed.

EAT Decision

The EAT held that the ET erred in law in its approach to section 43K(1)(a)(ii) ERA 1996 in deciding that because Tascor substantially determined the terms of Ms McTigue's contract, the Trust could not. It was not a question of either/or: both Tascor and the Trust could be said to substantially determine Ms McTigue's terms. The ET should have focused on the Trust and Ms McTigue's relationship, rather than conduct a comparison exercise between the Trust and Tascor. The EAT's decision is consistent with the fact that the overall purpose of s.43K ERA 1996 is to extend protection to agency workers in relation to victimisation for protected disclosures made while working at the end user (indeed it was specifically designed to protect health workers).


  • The case sets out the questions to be addressed in determining whether an individual is a worker within the meaning of s.43K(1)(a) ERA 1996.
  • Businesses can be liable for whistleblowing claims brought by agency workers they do not employ and whom they engage through third parties.

A Month In UK Employment Law - November 2016

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.