March 2021 Bulletin

Welcome

The following changes will come into force on 6th April 2021:

  • The Limit on a week’s pay for calculating redundancy and unfair dismissal basic award will increase to £544. The new figure will apply to dismissals that take place on or after 6th April 2021.
  • The maximum compensatory award for unfair dismissal will increase from £88,519 to £89,493. This new cap will apply to dismissals that take place on or after 6th April 2021
  • The weekly rate of SMP, as well as paternity and adoption pay, will increase to £151.97 per week.
  • The weekly rate of statutory sick pay will increase by 50p to £96.35.

Employment Status

Uber v Aslam

The long running Uber v Aslam saga has finally come to an end. The Supreme Court has confirmed that Uber drivers are workers rather than self-employed contractors. As such, drivers are entitled to basic employment rights such as the national minimum wage, paid holiday and rest breaks. The Supreme Court upheld the decision of the employment tribunal and changed the emphasis for determining worker status. A ‘worker’ is defined by section 230(3) of the Employment Rights Act 1996. The statutory definition includes  employees and anyone else who works under ‘any other contract…whereby the individual undertakes to do…personally any work…for another party’ provided the other party isn’t a client or customer of the individual (which would make them genuinely self-employed).

Uber and other gig economy cases have shown that written contracts can mask an entirely different state of working affairs. Instead of looking at the individual’s contract with the business, the Supreme Court said the starting point should be the statutory definition. It is important to consider what the statutory wording was designed to achieve in the first place – the protection of vulnerable workers from being paid too little, being required to work too much, or being treated otherwise unfairly. The Supreme Court noted that many individuals in the gig economy do not have the negotiating power to match the businesses they work for. In this case, drivers were subordinate to and dependent on Uber. This imbalance in power means that the contract cannot be the right starting point, as it was drafted by the party who holds all the cards. Laws such as the national minimum wage and paid holiday were brought in to protect individuals and that protection would be undermined if those rights could be circumvented by some clever contract drafting.

In this case, the evidence showed that Uber exercised significant control over drivers in relation to the work, from the car they drove, the price a customer paid and whether drivers could accept or decline work. That control made the drivers workers. A genuinely self-employed person could make these choices for themselves. The contracts were designed to mask the true relationship to Uber’s advantage.

The key point for businesses from this case is that contracts can never trump statute on this issue. If the starting point for deciding worker status is the statute itself, then it doesn’t matter how you dress up the relationship in any contractual documents. This decision will be costly for Uber. The Supreme Court agreed that the drivers were working when they were logged into the app not just when they were driving. The value of drivers’ backdated claims for national minimum wage will be enormous, and that’s before considering paid annual leave. Who’s holding the cards now?

Indirect discrimination

Heskett v Secretary of State for Justice

One of the key differences between direct and indirect discrimination is that a claim for indirect discrimination can be defeated if the employer can show that the provision criterion or practice under challenge is a ‘proportionate means of achieving a legitimate aim’. The circumstances in which this defence of justification will succeed have been the subject of many years of case law. One principle that has emerged is that an employer cannot simply rely on cost savings as a legitimate aim – although it has generally been accepted that cost can be counted as one among several factors – a so called ‘costs plus’ approach.

In this case, the evidence showed that Uber exercised significant control over drivers in relation to the work, from the car they drove, the price a customer paid and whether drivers could accept or decline work. That control made the drivers workers. A genuinely self-employed person could make these choices for themselves. The contracts were designed to mask the true relationship to Uber’s advantage.

The employment tribunal said it did not have the jurisdiction to grant interim relief in discrimination cases. The employee appealed to the EAT. The EAT said the difference in protection for discrimination cases breached the European Convention on Human Rights (ECHR) – article 14 on the prohibition of discrimination and article 6 on the right to a fair trial. The difference in remedy between whistleblowing and discrimination claims was not justifiable. However, they did not have the power to make a ‘declaration of incompatibility’ with section 3 of the Human Rights Act 1998 (which says that UK legislation must be read in a way which is compatible with the ECHR). Nor were they prepared to interpret the Equality Act 2010 in such a way as to extend interim relief to discrimination cases. As a result, they dismissed the appeal but granted permission for the employee to appeal to the Court of Appeal which does have the power to rule on the incompatibility point.

The key point for businesses from this case is that contracts can never trump statute on this issue. If the starting point for deciding worker status is the statute itself, then it doesn’t matter how you dress up the relationship in any contractual documents. This decision will be costly for Uber. The Supreme Court agreed that the drivers were working when they were logged into the app not just when they were driving. The value of drivers’ backdated claims for national minimum wage will be enormous, and that’s before considering paid annual leave. Who’s holding the cards now?

Harassment

Allay v Gehlen

Harassment occurs if an employee (X) engages in unwanted conduct relating to a protected characteristic (such as sex or race) which has the purpose or effect of:

  • Violating another employee’s (Y) dignity or
  • Creating an intimidating, hostile, degrading, humiliating or offensive environment.

X’s employer will be responsible for harassment which takes place during the course of their employment unless they can show that they took ‘all reasonable steps’ to prevent X from behaving that way or doing something similar.

In Allay v Gehlen, the employee was of Indian origin and employed as a senior data analyst between October 2016 and September 2017. During that period, a colleague regularly made racially discriminatory comments to and about him. Mr Pearson commented on Mr Gehlen’s brown skin, suggested that he should work in a corner shop, noted that he drove a Mercedes ‘like all Indians’, and asked why he was in this country. Mr Pearson described the comments as ‘banter’. Another colleague and two managers were aware of the comments, but nothing was done except one manager issuing a mild rebuke to Mr Pearson. Mr Gehlen brought a harassment claim. The employer tried to defend the claim by saying that they had equal opportunities and anti-bullying/harassment policies and had trained staff on their terms. As such they had taken all reasonable steps to prevent this kind of behaviour.

The employment tribunal upheld Mr Gehlen’s harassment claim. They accepted that the employer had policies and had done training, but the standard was poor even for a small employer. The training had taken place in January 2015 and had become stale. The fact that one colleague and two managers failed to challenge the harassment showed that any training had worn off. The employer had not taken all reasonable steps to avoid discrimination – a further reasonable step would have been to provide refresher training. The Employment Appeal Tribunal agreed. If there is a further reasonable step that an employer should have taken, the defence will fail, even if it would not have prevented the discrimination occurring. The EAT noted that the employer had now provided Mr Pearson with additional training, and they wouldn’t have done so if they thought it would be ineffective.

This case shows that the ‘all reasonable steps’ hurdle is a high one to clear, even for a small employer. It isn’t enough to have policies and training – they must be good quality and the message cannot be allowed to go stale. The courts noted here that the message of any training had clearly been lost because staff both made and ignored obviously racist comments. Annual refresher training is a must. So is revisiting policy and practice to see whether there are other reasonable steps which could be taken to protect employees from harassment. This will help protect a business from liability.

Whistleblowing

Dobbie v Feltons

A worker is protected from detriment and dismissal if they have made a ‘qualifying disclosure’. The worker must reasonably believe that the disclosure is in the public interest and tends to show wrongdoing such as a failure to comply with a legal obligation. The public interest element of the test is designed to differentiate between personal interests and those which have a wider application. But the worker need only reasonably believe that the disclosure is in the public interest (rather than it actually being so) and it doesn’t have to be the worker’s only motivation in making the disclosure. The EAT has recently looked at the public interest requirement in Dobbie v Feltons.

The employee worked for a firm of solicitors as a consultant solicitor, working with one of the firm’s biggest clients. He made what he said were protected disclosures about the firm overcharging the client. One of his disclosures also related to his own fees being written off to a greater extent than other fee earners. He said he had been treated badly because of these disclosures including having his consultancy agreement terminated. He brought a whistleblowing claim.

The employment tribunal found that the employee reasonably believed that the disclosure tended to show the breach of a legal obligation – he believed the overcharging was a breach of the firm’s client obligations and a possible breach of accounting rules. However, they found that he did not reasonably believe that his disclosure was in the public interest. They found that he believed it was a private matter relating to the individual client. The employee appealed to the EAT who agreed with him. The tribunal had misapplied the public interest test. They hadn’t considered the identity of the alleged wrongdoer – a firm of solicitors which is subject to high standards of honesty and integrity. The nature of the wrongdoing had not been properly considered either, which included potential regulatory breaches. Those regulations are in place to protect the public. Although public interest is more likely to be found when more people are affected, there are cases where disclosures relating to one person can have a wider remit. Here, the disclosures could have advanced a wider public interest around solicitors complying with regulatory requirements and not overcharging their clients. Having found that the employee reasonably believed that there had been regulatory breaches by way of overcharging, the tribunal had not explained their finding that this was a purely private matter and wasn’t protected. The EAT sent the case back to a fresh employment tribunal to reconsider whether the disclosures were made in the public interest.

This case shows that disclosures can be made in the public interest in cases which relate to apparently private matters. This can be the case even when matters may be motivated by self-interest – in this case the solicitor’s own fees being disproportionately written off. Provided the employee reasonably believes that the matter is in the public interest, the test will be satisfied. Even if issues relate only to one client or person, they may have a wider public interest as was the case here.

Unfair dismissal

Northbay Pelagic v Anderson

Conduct is one of the potentially fair reasons for dismissing an employee. It is the employer’s job to show that conduct was the reason for the dismissal in question. An employment tribunal will then decide whether the dismissal was fair. In making that decision, the tribunal will look at the size of the employer and the resources it has available and decide whether the decision to dismiss fell within the range of reasonable responses. A fair procedure is also key to a fair dismissal.

In Northbay Pelagic v Anderson, the employee was a director of a seafood company. He was dismissed for gross misconduct at the same time as two other employees. The cases were connected but not identical, so the employer got three HR consultants to investigate and hear the cases. The grounds for dismissing Mr Anderson were various but included failing to follow a management instruction and covertly recording anyone who came into his office via a secret camera (he wanted to protect personal confidential information on his work computer). The employee brought a claim for unfair dismissal which the employment tribunal upheld. They said there was a fatal flaw in the dismissal process because the consultant hearing his case had gleaned information (a witness statement from a Mr Ritchie) about his case from conducting the investigation into one of the other employees. The employer appealed.

The EAT allowed the appeal. The tribunal hadn’t been clear on whether an instruction had been given for the employee to then ignore. Although fact finding is not a job for the EAT (that is the employment tribunal’s job), the EAT looked at the evidence and said it gave a clear answer on the issue – the instruction in question had been given at a specific company meeting. The EAT also found that the consideration of Mr Ritchie’s evidence in the employee’s case was not a procedural flaw. They referred to the Acas Code which did not give specific guidance on how to deal with procedures relating to multiple employees. The EAT said it would not have been reasonable to expect the employer to retain three separate sets of HR consultants. Nor was there any need to seal off the evidence between the individual investigations. If evidence is relevant, it can be used in multiple cases as required. In relation to the surveillance point, the EAT agreed the dismissal on this ground was unfair. The secret recording was set in a background of mistrust and a poor relationship between employee and employer. The employer did not properly consider the fact that the camera was set up in an office to which only the employee had access. No one’s image had been captured on it. The employer should have weighed up the right to privacy against the employee’s desire to protect his confidential information. The EAT also said that the employer had failed to call the right witnesses to counter the employee’s evidence, which had led to the tribunal believing him over the company. The case was sent back to a fresh employment tribunal to decide whether the dismissal was unfair based on the management instruction point.

This case has many take away points for employers. Firstly, choose the right witnesses. Where there are disputed facts, individuals with first-hand evidence of those disputes should be called as witnesses in tribunal. Calling the people who conducted the disciplinary processes may not be enough. Secondly, the EAT confirmed that surveillance by employees involves the same balancing act between rights and privacies that employers are required to undertake in relation to surveillance. Handbooks and policies can address this, for example by saying that covert surveillance will be considered gross misconduct. The EAT’s confirmation about the acceptability of using relevant witness evidence across multiple disciplinary processes is also comforting. In fact, the EAT specifically told the tribunal to consider Mr Ritchie’s evidence when considering the issue of failing to follow a management instruction.

TUPE

Greater Glasgow Health Board v Neilson

The Transfer of Undertakings (Protection of Employment) Regulations (TUPE) provide that employees who are employed in the relevant part of the business, immediately before a transfer, will automatically transfer to the transferee. This is called the automatic transfer principle. If an employee would have been employed immediately before the transfer but for being automatically unfair dismissed – where the transfer is the sole or principal reason for the dismissal – liability for the dismissal passes to the transferee. The Employment Appeal Tribunal has recently decided that an employment tribunal made a mistake when it ordered reengagement of an employee by a new service provider when the new service provider wasn’t part of the proceedings.

In Greater Glasgow Health Board v Neilson, the employee was a GP who was employed on a fixed term contract which was terminated when the GP service transferred to a new service provider. He had enough continuity of service to bring an unfair dismissal claim.  He brought a claim against the old service provider – the Health Board – saying he had been automatically unfairly dismissed and should be reengaged by the new service provider, Levenside Practice (LP). The Health Board admitted that the employee’s dismissal was TUPE related so the only issue for the employment tribunal to deal with was remedy. The tribunal ordered that LP reengage the employee, even though LP was not a respondent in the proceedings. The Health Board appealed.

The EAT said the employment tribunal had made errors. If the employee had been assigned to the group of employees which transferred, he had no claim against the Health Board at all. Either his employment would have transferred to LP or he would have a claim against LP for automatic unfair dismissal. Either way, the Health Board would not be liable. The tribunal was wrong to make an order against one respondent to be reengaged by another business (LP) which was not a respondent in the proceedings. The EAT sent the case back to the employment tribunal to decide whether the employee was assigned to the group of employees which transferred: either he was, and liability passed to LP as his new employer, or he wasn’t, and liability would rest with the Health Board. If the employee wanted any remedy against LP, he would need to apply to join them into the proceedings as a respondent.

It will now be for the employee to join LP into proceedings if he wants to seek a remedy against them. This case shows the importance of employees identifying the correct respondent. In TUPE cases where an employee is arguing they should have transferred, that will include the transferee.

Dismissal – Covid-19

Kubilius v Kent Foods

Throughout the Covid-19 pandemic, employers have had to grapple with the health and safety risks to employees and customers. Jobs where employees have contact with the public are particularly exposing in terms of the virus. Many employers have brought in rules about face coverings/masks and social distancing to protect customers, clients and staff. Most employees have no issue with these necessary steps, but there are always exceptions. An employment tribunal has recently looked at a claim for unfair dismissal by an employee who refused to wear a face mask at work.

In Kubilius v Kent Foods, the employee was a delivery driver whose job involved travel to and from Tate & Lyle, the main provider of work at the Basildon depot where the employee worked. The employee handbook required employees to be courteous with clients and take all reasonable steps to safeguard their own health and that of others they worked with. The drivers’ handbook required employees to follow customer rules on PPE. Tate’s rules required visitors to their site to wear face masks at all times, even when in their vehicles. The employee attended Tate’s premises but refused to wear a face mask while in his own cab. He was told that it was a Tate rule and necessary in his elevated cab to avoid droplets from his mouth from landing on people below as he spoke to them. He continued to refuse, saying the cab was his own area and he wasn’t legally required to wear a mask. Tate banned him from their site and reported the incident to the employer. The employer dismissed him for breach of both company rules and Tate’s rules.

The employment tribunal said his dismissal was fair. The employer had conducted a reasonable investigation into an event where the facts were not disputed. They had formed a reasonable belief that the employee was guilty of misconduct. The employee continued to insist that he had done nothing wrong which caused concerns about his future conduct. His ban from the Tate site caused practical difficulties for his continued employment. The employer was entitled to take into account the importance of maintaining good relationships with its clients. The decision to dismiss fell within the band of reasonable responses even though another employer might reasonably have issued a warning instead.

Employers will breathe a sigh of relief at this judgment. It isn’t binding on other tribunals, but it feels like a common sense decision. The employer had followed a reasonable process and could show that the decision to dismiss was reasonable in the circumstances. The message to employees is simple: if you are asked to wear a face mask for work, you need to do it unless there are sound medical or other reasons for not doing so. In this case, the employee had no justification, no regrets and clearly no regard either for the health and safety of those he worked with or the reputation of the business which employed him. He paid for that with his job.

Compensation

Levy v 34 & Co

Section 1 of the Employment Rights Act 1996 requires employers to give employees a statement of their employment terms no later than the beginning of employment. The law changed recently – previously employers had a period of 2 months after employment commenced to comply with this duty, which didn’t apply at all if employment continued for less than a month. Section 38 of the Employment Act 2002 provides for additional compensation of between 2 and 4 weeks’ pay if an employee wins a claim in the employment tribunal and, at the time those proceedings began, the employer had been in breach of section 1 duties.

In Levy v 34 & Co, the employee worked for the employer for a short period. He brought a claim for unlawful deduction from wages of around £150. He told the tribunal he worked for the employer from 29 October to 28 November, which he said was one month. He did not raise the issue of the section 38 claim in his claim form and it wasn’t raised at all until he produced a schedule of loss claiming more than £1000 in extra compensation. The employer did not engage in the tribunal process because he thought the claim was so low value. The employment tribunal awarded the employee £150 compensation for his unlawful deductions claim but didn’t make an order for additional compensation under section 38. The employee appealed.

The employer didn’t respond to the notice of appeal either. They wrote to the EAT later in the process, providing additional evidence which showed that the employee had resigned on 27 November with immediate effect, meaning he had not worked for one month after all. The employee said it was too late to argue about this: the tribunal decided he had been employed for a month and he was therefore entitled to the extra 2-4 weeks’ pay. The EAT disagreed. The employment tribunal had not been obliged to order the extra compensation under section 38. That claim wasn’t in the claim form and had not been brought to the attention of the employer, who had failed to take part in the process because of its apparent low value. Had the employer known there was a claim for up to 4 weeks’ pay, of over £1000, they might have requested an adjournment, to address the point properly, and it would likely have been granted. The EAT said the additional evidence showed the employee’s last day of work was either 25 or 26 November and he resigned on 27 November. He had not been employed for a month. The employment tribunal had not been wrong in law. Quite the opposite, it would have been wrong in law to award the uplift in the first place.

This claim got a bit sticky for two reasons. Firstly, the employee didn’t plead all relevant points properly, which meant the employer didn’t know about a valuable part of what the employee was claiming. However, this was compounded when the employer did not engage in the tribunal process. The EAT noted that this may have been a proportionate choice by the employer based on its low value, but it meant that vital evidence wasn’t brought to the attention of the employment tribunal. This case shows the potential dangers of ignoring tribunal process, and how small claims can sometimes grow into much bigger claims if they are left unchecked.

And finally…

Brexit rather slunk into effect back in January, the headlines overtaken by Covid-19 and the third national lockdown in the UK. To salve some of the negative effects on business, many employers have been wondering whether Brexit would mean a change to some EU-derived employment laws that cause consternation on the ground. Hope therefore surged earlier this year when the Financial Times hinted at government plans to rip up certain employment laws including the 48 hour weekly working time limit, rest breaks and the inclusion of overtime in certain holiday pay calculations.

It wasn’t to be. The newly appointed business secretary has confirmed that there is no plan to reduce workers’ rights. Kwasi Kwarteng MP said it is the government’s intention to protect and enhance workers’ rights rather than row back on them. He confirmed that the department of Business, Energy and Industrial Strategy was carrying out a consultation with business leaders  on EU employment rules including the Working Time Directive. Apparently, the consultation will look at our previous EU membership and the aspects that the UK may want to keep. Mr Kwarteng acknowledged that there had been stories about a bonfire of rights but added that ‘this couldn’t be further from the truth’. Sadly, for anyone hoping that TUPE would be a thing of the past, or that holiday pay calculations might become a bit easier, a seismic post-Brexit shift in employment law isn’t on the cards just yet.

 

About David Parry

David graduated with a Law with French degree from Leicester and Strasbourg Universities. He qualified as a solicitor in 1989 and has specialised in employment law ever since, first at Cole & Cole (now Morgan Cole) then at Mallam Lewis & Taylor who merged with Darbys in 1999. David became a partner in 1995. Until 2013, David was the Head of the Employment Team at Darbys that became one of the best-regarded in Oxford and the Thames Valley. Contact David now

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