January 2019 bulletin

Welcome

The gig economy cases keep on coming. Both the Employment Appeal Tribunal and the Court of Appeal have made decisions on this issue recently. In Lange v Addison Lee, the company provided private hire and courier services. Drivers were formally recruited and given training. They had guidelines on how to do the job. They leased branded cars. Each driver had a handheld computer from which jobs would be allocated. They could log on and off the system when they wanted. However, when logged on they were deemed ready to work and expected to accept jobs.

The drivers’ contractual paperwork said they were independent contractors. Three drivers brought claims for holiday pay and the national minimum wage, saying they were ‘workers’ rather than self- employed. To satisfy the legal test, the claimants had to show that they were contractually obliged to personally perform work for Addison Lee. They would also have to show that Addison Lee wasn’t simply a client or customer of their own small businesses.

Both the employment tribunal and the EAT said the drivers were workers. By signing up to the contract and hiring the car, the drivers were undertaking to do some work for Addison Lee. They remained subject to Addison Lee rules in between shifts: they couldn’t alter the car branding, no one else could drive the car and they paid ongoing vehicle charges. As a result, there was an implied overarching contract between ‘logging on’ sessions. Even without the overarching contract, the ‘worker’ definition was satisfied each time the individuals logged into the computer system. This was because they were undertaking to accept jobs allocated to them (even though the contracts said they did not have to). They were not running small businesses on their own account.

The courts recognise that there is an imbalance in power between company and individual when entering working relationships. Companies will not be allowed to rely on written contractual terms which do not reflect the true position.

Are Uber drivers workers?

The Court of Appeal has confirmed this month that Uber drivers are workers rather than self-employed, in Uber v Aslam. The drivers’ contracts described them as independent contractors. They had to undertake an interview and an induction. They had to perform the work personally. Drivers used their own vehicles, but Uber stipulated appropriate brands and presentation standards. In providing jobs, Uber controlled the key information. They would provide drivers with a passenger’s first name but no surname, contact details or destination. Uber had complete control of the fares. Financial penalties could be incurred for departing from Uber’s suggested route.

When signed onto the Uber App, drivers did not have to accept jobs. However, Uber’s terms said drivers should accept at least 80 per cent of trips. There was an expectation that drivers would accept jobs whilst logged onto the App. Drivers who declined more than three jobs in a row would be signed off the App by Uber. If a driver’s average rating fell below 4.4 (out of 5), they would be removed from the platform and their accounts deactivated.

The employment tribunal found that the drivers were workers when they had switched on the App, were in their working ‘territory’ and able and willing to accept jobs. The employment appeal tribunal agreed. The Court of Appeal upheld the drivers’ worker status. The contractual documents did not reflect the true nature of the relationship between Uber and its drivers. Uber exerted significant control over its drivers. The Court also confirmed that the drivers were ‘workers’ from the moment they were in their working territory with the App switched on – they were at the disposal of Uber during this time.

Interestingly, this decision was a ‘majority’ decision. A very experienced judge did not agree that the drivers were workers. He said that the position was similar to taxi drivers who are usually self-employed. He also said the drivers should only be treated as ‘working’ when they had accepted a trip. The case has been referred to the Supreme Court. We have not yet heard the last word on worker status.

Unfair dismissal

Is it fair to dismiss an employee in the transport industry who fails a drugs test? Not always, said the employment tribunal recently. Ball v First Essex Buses looked at the range of reasonable responses test in conduct dismissals and shows how an employer can come unstuck even in seemingly clear-cut cases.

A bus driver was dismissed for failing a drugs test. He had been employed for 20 years with an unblemished disciplinary record. He was diabetic. He did finger prick blood tests throughout the day and would lick his fingers to stop the bleeding. His bus route took in lots of students and he handled lots of cash. He argued that his drug test had been contaminated by cocaine on bank notes. He also argued that the test was conducted without gloves or prior handwashing and so was open to contamination. He provided his own drug tests which tested negative for cocaine.

The employment tribunal found that the employer’s decision to dismiss was not within the range of reasonable responses. The employer made mistakes about their own drug and alcohol testing policy during the dismissal process. They failed to follow their own procedures, which said they would take an employee’s own evidence into account. There were also flaws in the investigation. Given the issues of contamination and the employee’s own negative tests, the employer should have undertaken additional investigation.

It might seem surprising that an employee in the transport sector who fails a drugs test can win an unfair dismissal case. Employers should not take drug test results as gospel especially in the face of conflicting evidence and contamination issues. Employers should also ensure that managers know the detail of company procedures and follow them religiously.

Part-time workers’ pay

Is it unfair to pay an employee 50 % of full-time pay for being on duty for 53.5% of the time? Yes, the Court of Appeal said in British Airways v Pinaud, in a case which will affect around 600 similar claims pending against BA.

The employee worked part-time as cabin crew for BA. She had to be ‘available for work’ on 130 days per year, compared with 243 for a full-time employee. Of those days where cabin crew were ‘available to work’, the majority would be flying. The rest would be training days or ‘on call’ days (where employees might be called to fly at short notice). The employee brought a claim for discrimination based on her part-time status, because she was paid only 50% of full-time salary even though she was required to be available for work for 53.5% of full-time hours. The employer showed statistics that the employee actively worked fewer hours pro rata than her full-time colleague, despite being on call for proportionately longer. Was that relevant?

Not to the question of less favourable treatment, said the Court of Appeal. The requirement to be available for more than half of full-time hours for only half of the pay was less favourable treatment. However, the Court said that actively working fewer hours might be relevant to justification, because it may limit the impact of the less favourable treatment. The Court of Appeal sent the case back to the employment tribunal to decide whether the treatment was justified.

If BA cannot justify its part-time pay structures, the cost for the company could be huge. Over 600 employees have brought similar claims. Employers should ensure that pay terms for part-time workers are consistent with their full-time colleagues or have a watertight business reason for any differences.

Redundancy trial periods

Is it unfair not to offer a trial period for a more junior role even if the employee did not complain at the time? Yes, if it is a contractual right, said the employment appeal tribunal in George v London Borough of Brent. Trial periods allow an employee to try out a new role whilst being able to fall back on the redundancy package if the new role does not work out.

The employee was made redundant. She was offered a more junior role, but the employer refused to offer a trial period. As a result, the employee rejected the offer, was dismissed and then claimed unfair dismissal. The employer’s own contractual policy said that the employee had a contractual right to a four-week trial period. They admitted they were in breach of contract not offering one. The important question was whether the denial of the trial period made the dismissal unfair.

The EAT said that a failure to offer a contractual trial period was likely to make a dismissal unfair. They sent the case back to a new employment tribunal panel to decide about the fairness of dismissal.

This is another case which shows how important it is for employers to follow their own procedures in dismissal cases. Failure to do so might render an otherwise fair dismissal unfair.

Dismissal for long term sickness

Can an employer dismiss an employee for capability reasons when they are contractually entitled to long term disability benefits? No, not fairly, the Employment Appeal Tribunal has said in Awan v ICTS.

Mr Awan went on long term sick leave. After six months’ full pay, he was contractually entitled to a disability benefit plan which paid two thirds of his pay until he returned to work, retired or died. His contract did not refer to any insurance policy or scheme terms. The insurer refused to pay due to the employee’s previous TUPE transfer from another company with a different insurer. The employee was dismissed for capability reasons before the issues were resolved.

The employment tribunal found that the employee had been fairly dismissed. There was an express term in his contract that allowed the employer to dismiss on notice. No implied term – such as one not to dismiss whilst entitled to long term benefit payments – could override that express term.

The EAT disagreed. Mr Awan’s contract entitled him to benefit payments until he returned to work, retired or died, not until he was dismissed on capability grounds. It would completely undermine the purpose of the payment plan if the employer could dismiss the employee and deny him the benefit. The EAT said there was an implied contractual term not to dismiss the employee while he was entitled to long term benefits that required his continued employment. By dismissing him, the employer had breached that term, and therefore his contract.

In this case, the employer’s fatal error was that the employee’s contract did not refer to any insurance policy. The employer was obliged to pay regardless of whether an insurer covered the costs. Employers should link any PHI or long-term disability benefit plans to specific insurance policies. Limitations under the policy and insurer rules should be brought to an employee’s attention.

Holiday pay

Do workers lose the right to a payment in lieu of holiday at the end of their employment if they did not try to take it? No, said the Court of Justice of the European Union in Kreuziger v Berlin.

The employee worked for a German public sector employer. His employment ended but the employer would not pay him in lieu for untaken holiday. The employee brought a claim. The German court agreed with the employer. It relied on national rules saying payment in lieu was only necessary if the employee had been prevented from taking the holiday by matters beyond his control. The appeal court doubted this were true and referred the matter to the CJEU.

The CJEU said that national laws can only provide for the loss of holiday entitlement if the employer can show that it enabled the worker to take the leave. The employer must provide information to the employee, who is given an effective opportunity to take the holiday. The case was joined with another case for an employee employed in the private sector. The CJEU confirmed that a private sector employee can rely on his individual rights to paid holiday under the European Charter of Fundamental Rights directly against his employer. If national laws clashed with the Charter, national courts must disapply any offending national provision to give effect to European law.

This case suggests that, contrary to previous assumptions, entitlement does not automatically lapse at the end of a holiday year unless the employer has actively enabled the employee to take it. Employers should consider whether they do enough to encourage their employees to take holiday.

And finally…

It looks like it might be a happy new year for vegans. The employment tribunal will decide in March 2019 whether ethical veganism is protected by the Equality Act 2010 as a ‘philosophical belief’, akin to a religion. Jordi Casamitjana will have to show that his ethical veganism meets the legal test: his belief is genuinely held; it is a belief rather than an opinion; it relates to a weighty and substantial aspect of human life; it attains a certain level of seriousness and cogency; and it deserves respect in a democratic society. He claims that he was dismissed by the League Against Cruel Sports because of his philosophical belief in veganism.

This case comes hot on the heels of William Sitwell’s resignation from Waitrose Food magazine after comments he made in a private email to a freelance journalist hit the press. Well known for his acerbic tongue, Mr Sitwell jokingly suggested killing vegans one by one and force feeding them meat. His comments were meant to be funny, but the fall out was far from it.

There is little doubt that ethical veganism can be a ‘philosophical belief’ in principle. Whether Mr Casamitjana will go on to win his discrimination claim is another matter entirely. Employers should foster a culture of tolerance in the workplace. Beliefs of all kinds should be respected, regardless of whether the Equality Act 2010 applies. A respectful culture makes for happy employees, and happy employees are better for business.