January 2020

Welcome

In December 2019, the government set out its plans for new employment law legislation in the Queen’s Speech. Much of it will be familiar from the Good Work Plan and includes:

Creating a single labour market enforcement agency to protect the rights of vulnerable workers;
Requiring employers to pass on all tips and service charges to staff;
The right for workers to request a more predictable contract after 26 weeks;
Extending redundancy protection so that women who are pregnant or on maternity leave are protected from the point they tell their employer about their pregnancy until 6 months after they return to work;
Making flexible working the default position.

These changes could have a significant impact on employer practice and procedure. We will keep you informed if and when these come into law.

TUPE Transfers and ‘Workers’

The worker status debate leached into the TUPE sphere towards the end of 2019. A ‘worker’ is defined by section 230(3) of the Employment Rights Act 1996 (ERA) as:

An individual who…works under:
A contract of employment, or
Any other contract…where the individual undertakes to do or perform personally any work…for another party who…is not…a client or customer of…the individual.

TUPE is a legal mechanism which protects employees when the business they work for transfers to a new owner. TUPE defines ’employee’ as ‘any individual who works for another person whether under a contract of service or apprenticeship or otherwise‘ but does not include the genuinely self-employed. Previously there has been no case law on whether workers are covered by TUPE. Employers have considered it unlikely and usually limited TUPE obligations to employees.

Dewhurst v Revisecatch & City Sprint may have put a cat among the pigeons then. In this case, three workers said that they fell into the definition of ’employee’ under TUPE. They brought claims for holiday pay and failure to inform and consult. At a preliminary hearing to decide whether TUPE applied to them, the employment tribunal decided that workers were ’employees’ under TUPE. They were covered by the ‘or otherwise’ part of the definition. Only the genuinely self-employed were not included. The judge said that this interpretation was necessary to preserve the employment rights of those who work within businesses when they change hands.

This is an employment tribunal decision which means that other tribunals or courts don’t have to follow it. The employers are likely to appeal though, and the appeal decision will create binding law. Most employers treat workers differently to employees in a TUPE situation. If this decision is upheld on appeal, employers will need to revisit their approach to workers when considering their obligations under TUPE. With 13 weeks’ pay at stake per ’employee’ for a failure to inform and consult, any failure could be costly. Watch out for an appeal decision towards the end of the year.

Unfair dismissal

If an employee has contributed to their dismissal, their compensation can be reduced by anything up to 100%. This is called ‘contributory fault’. A tribunal will use its discretion to decide what deduction would be fair in any given case. In Jagex v McCambridge, the Employment Appeal Tribunal looked at whether the conduct in question must be gross misconduct in order to justify a reduction for contributory fault.

The employee found some paperwork on a communal printer which revealed the pay of a senior employee. He mentioned the document to colleagues. One of the colleagues started a guessing game over lunch about how much the senior employee earned (the employee wasn’t there). This got back to management who dismissed the employee for gross misconduct for disclosing details of a confidential document. The employee brought an unfair dismissal claim and won. The tribunal said his employment contract did not state that pay information was confidential. Disclosing this information was not an act of gross misconduct and his dismissal was unfair. They also said there could be no reduction for contributory fault because revealing the senior employee’s pay was not gross misconduct. The employer appealed.

The EAT agreed that this was not gross misconduct. However, they disagreed with the tribunal’s conclusion that a reduction for contributory fault could only be made in gross misconduct cases. The tribunal should have looked at whether it was fair in this case for a reduction to be made. The case was sent back to the employment tribunal to look at the issue afresh.

This case shows that simple misconduct, not just gross misconduct, can be taken into account by an employment tribunal when considering an employee’s compensation.

Worker status

Workers don’t have as much employment protection as employees but do have important legal rights such as paid holiday and the right to be paid the national minimum wage. Employment tribunals will look at multiple factors when deciding whether an individual is a worker or self-employed. The main ones are

Control – How much control does the company exert over the individual?
Mutuality of obligation – Is there an obligation for the company to provide work and the individual to accept it?
Integration – How integrated into the business is the individual?
Personal service – Does the individual have to do the work themselves or can they send someone else instead?
Running their own business – The courts will assess whether the individual is running their own business, rather than working for someone else’s business.

The issue of personal service is one which often arises in the employment tribunal. Will a contractual right of substitution – the right to send someone else to do the work – automatically rule out worker status? In Stuart Delivery v Augustine, Mr Augustine was a delivery driver. He signed up for ‘slots’ when he agreed to be online for a certain period in a certain location in return for a guaranteed minimum payment. He couldn’t work for anyone else during these slots. He had to remain in the agreed area and accept deliveries that were offered. Once signed up for a slot, he could only get out of doing it if another courier in the pool agreed to cover it. Otherwise Mr Augustine faced financial penalties or even removal from the platform.

The EAT said that this right to ‘release a slot’ back into the pool was not a free right of substitution. Only approved couriers could take the slot off Mr Augustine. He had no control over who, if anyone, would accept it. It wasn’t a right of substitution at all, rather a right to hope that another courier would release him from that obligation. If no one did, the obligation remained his. The EAT agreed that he was a worker during these periods, despite the ability to release the slots back into the pool of couriers.

Worker status cases are always fact specific. However, this decision follows other appeal judgments in showing that limited rights of substitution will not necessarily defeat a worker status claim.

Philosophical belief discrimination

The Equality Act 2010 protects people from discrimination based on their philosophical beliefs. In order to be protected, the belief must be:

Genuinely held;
Be a belief not an opinion or viewpoint;
Concern a weighty or substantial aspect of human life;
Have attained a certain level of cogency, seriousness or importance (in a similar way to a religion);
And must be worthy of respect in a democratic society.

In the high profile case of Forstater v CGD Europe, an employment tribunal has looked at whether the philosophical belief that humans cannot change sex is protected by the Equality Act 2010. The employee was a consultant charity worker. She tweeted extensively (in a private rather than work capacity) on proposed changes to the Gender Recognition Act 2004 (GRA). One tweet read ‘men cannot change into women’. Other employees complained and her contract was not renewed. She brought a discrimination claim, saying her contract was not renewed because of her belief about sex change.

The employment tribunal found that the belief met the thresholds set out above save for one aspect: her ‘absolutist’ belief was incompatible with human dignity and the fundamental rights of others. Her belief meant that she would refer to someone by their birth sex even if that violated their dignity or created an intimidating or hostile environment for them. This belief was not worthy of respect. She did not get protection under the Equality Act 2010 and could not bring a discrimination claim.

The judge in this case said that campaigning against changes to the GRA and calling for spaces for women assigned female at birth is one thing but insisting on calling transwomen men is something else entirely. It is this violation of someone else’s dignity that stopped her belief being protected in law. This case is an employment tribunal decision and not binding on other courts. It is likely to be appealed though and any binding decision could have a significant impact on freedom of speech.

Sex discrimination

Section 18 of the Equality Act 2010 deals specifically with pregnancy and maternity discrimination. A woman bringing a claim under section 18 does not need to show that a male comparator would have been treated more favourably (they can’t, because men cannot be pregnant or go on maternity leave). In normal direct discrimination claims under section 13, employees need to provide details of a comparator who was treated more favourably than them in comparable circumstances.

In City of London Police v Geldart, the employee was a police officer. During her maternity leave she was paid full pay for 13 weeks, half pay for ten weeks and then statutory maternity pay for the remaining period. She was contractually entitled to a London allowance of £4338 per year. The employer paid the allowance at the same rates as her normal pay – full allowance for 13 weeks, then half allowance for ten weeks and then no allowance until she came back to work. The employee said the allowance should not have been reduced. She brought claims for direct sex discrimination under section 13, rather than using section 18.

The employment tribunal upheld her claim. The police rules governing the reductions in pay for maternity leave did not apply to the allowance. Not paying her the allowance whilst on maternity leave was direct sex discrimination. The employer appealed. Among other things, the employer argued that she had brought her claim under section 13 – direct discrimination – and therefore needed to show a comparator who would have been treated more favourably in comparable circumstances.

The EAT agreed with the employment tribunal. The workplace rules about the allowance simply said that London officers would receive a London allowance. The employee remained a London police officer during maternity leave and was therefore entitled to the allowance. The EAT confirmed that a woman on maternity leave is in a special position. If they are treated less favourably due to pregnancy or maternity leave, they do not need to prove that a man would have been treated differently. This is the case regardless of which section of the Equality Act 2010 they choose to rely on when bringing their claim.

Whistleblowing

A dismissal will be automatically unfair if the main reason for the dismissal is the fact that the employee has ‘blown the whistle’ on malpractice. The Supreme Court has recently decided that an employer was liable for automatic unfair dismissal even though the decision maker was unaware of the protected disclosures.

In Royal Mail v Jhuti, the employee made protected disclosures about suspected breaches of Royal Mail rules and Ofcom requirements. She told her team leader who suggested her allegations could cause problems for everyone. He suggested she retract them. The team leader then raised performance issues for the first time. The employee was upset and worried about her job and so retracted the complaint. She was then subject to performance management with unrealistic targets and expectations which she said were detriments because of the protected disclosure. Another manager was appointed to consider her dismissal for poor performance. This manager was not given the details about the whistleblowing allegations. She was told that the employee accepted that it had been a misunderstanding. She dismissed the employee for poor performance.

The Supreme Court said the employee had been unfairly dismissed. If a more senior employee decides someone should be dismissed but hides the real reason in something else (such as underperformance) which the decision maker accepts, the reason for dismissal is the hidden reason. In this case, the real reason for the employee’s dismissal was the fact that she had blown the whistle, rather than poor performance.

Employers should ensure that dismissing officers ask for full details of any allegations raised by an employee, especially ones relating to whistleblowing or discrimination. This level of manipulation by managers will be rare but can be costly so care must be taken.

Redundancy – alternative employment and trial periods

A dismissal for redundancy is likely to be unfair unless the employer has considered whether there is suitable alternative employment within the business (or group). If suitable alternative employment is offered, it might be subject to a statutory 4 week trial period if the role, place of work or other terms and conditions are different from the previous job. A statutory trial period starts at the end of the employee’s employment under their old contract or within 4 weeks of it ending. What happens if a role is deleted in a reorganisation and an employee works in another suitable role for more than four weeks – do they lose the right to a redundancy payment?

In East London NHS Trust v O’Connor, the employee was a PSI Worker who had been employed for nearly 20 years. He was told his post was going to be deleted in July 2017 and he was at risk of redundancy. He was also told that formal notice of dismissal for redundancy would follow at some point. He started a trial period as a Care Coordinator in July 2017. He did not agree with the employer that it was suitable alternative employment. He raised a grievance which was rejected. He went off sick and continued to refuse the Care Coordinator role. He was eventually dismissed with notice in December 2017. The employer refused to pay him a redundancy payment. They said he had undertaken a statutory trial period for the Care Coordinator role which had expired in August 2017. The role had been suitable alternative employment which he had refused and so he was not entitled to a redundancy payment.

The employment appeal tribunal agreed that the employee had not been given formal notice of termination in July 2017 despite his role being deleted. Deletion of a role does not necessarily amount to notice of dismissal. As a result, a statutory trial period could not have begun (because it can only start at the end of the original contract) in the Care Coordinator role. The EAT sent the case back to the employment tribunal to decide whether the employee’s dismissal in December 2017 was for redundancy and whether a redundancy payment was due.

This case highlights the complexity of the rules about suitable alternative employment and trial periods. Statutory trial periods for suitable alternative roles can only start at the end of original contract. That means that the employee must have been given notice and the notice period must have expired. Employers who fail to get their processes right might find themselves having to defend unfair dismissal claims on more grounds than just redundancy.

Holiday pay and carry over

The European Working Time Directive entitles workers to at least 4 weeks’ holiday per year. Many countries, including the UK, choose to give workers additional holiday entitlement over and above the minimum. The Working Time Regulations 1998 gives UK employees an additional 1.6 weeks of leave per year. The Court of Justice of the European Union (ECJ) has looked at whether the right to carry over holiday due to sickness applies only to the 4 week entitlement under the Directive.

In TSN v Hyvinvointialan, the ECJ considered two cases involving Finnish law. In each case the employee had been prevented from taking all their leave in the holiday year due to sickness absence. This included holiday entitlement over and above the 4 week minimum. One of the key questions for the ECJ was whether member states could have domestic laws which limited carry over of unused holiday to 4 weeks. The ECJ confirmed that the rules about extra holiday over and above the 4 week minimum were controlled by domestic law rather than European law. It is not unlawful to limit carry over of unused holiday to 4 weeks.

This case confirms the position adopted by the EAT in Sood Enterprises v Healey. Unless there is a contractual right which changes the position, carry over will be limited to 4 weeks.

And finally…

How many working days is your business losing to hangovers? This is particularly relevant after the festive season where Christmas parties and social events often fall on a school night. Did your business suffer a flurry of suspicious tummy bugs during Christmas party season? Some businesses are choosing to accommodate hangovers in a different way, keen to avoid the extra absence which seems to occur around this time of year.

The Audit Lab is a Bolton based business which has decided to do things a bit differently. The business allows employees to book ‘hangover days’ in advance when they know they are going out midweek. This enables employees to work from home in their pyjamas rather than come into the office when feeling delicate. Founder and director, Claire Crompton, told BBC5 Live’s Wake Up To Money that the system appeals to the younger generation and promotes honesty. She said that alarm bells might ring if staff were pulling two or three hangover days a week or missing important meetings but said employees have been respectful so far.

Does this kind of system encourage heavy drinking mid-week or simply reduce the incidence of employees ringing in sick when they have overindulged? This kind of policy won’t suit every business, but flexible working is increasingly becoming the norm. Employers should consider what flexibility can bring in terms of honesty and commitment, as well as the positive effect on working hours lost to sickness absence. And wouldn’t you rather know the real reason for someone staying in bed?

Disclaimer: This post is for information purposes only. Reasonable steps have been taken to provide accurate information, but no responsibility is taken by the author (Hunter Law Ltd) for any consequences arising from its usage.

This post is not intended to and does not constitute legal advice and you should instruct a solicitor formally should you require this.