2017 Legal Round-Up

30 December 2017

Employment Status and the Gig Economy

11th January 2017

In the first of four soon to be heard employment cases against courier companies (according to the BBC: Addison Lee, Excel and E-Courier), an Employment Tribunal has decided that a cycle courier working for City Sprint was a worker under section 230(3)(b) of the Employment Rights Act 1996, and not a self-employed contractor. The courier succeeded in her claim for two days’ holiday pay. The decision follows the ruling against Uber in October 2016.

Following a recruitment process, couriers are “awarded” with notification that they have successfully tendered to provide courier services. Under the arrangement they are termed as ‘self-employed contractors’ and ostensibly treated accordingly. The terms provide that:

1. there is no mutuality of obligation;
2. there is a right of substitution (by the individual courier);
3. unless the courier works they will not get paid;
4. there is no entitlement to holiday, maternity or sick pay; and
5. they are paid per job.

The tribunal found that the terms of the “Confirmation of Tender” document did not reflect the true relationship between the parties (e.g. in practice couriers do not submit invoices and City Sprint automatically calculates payments due and pays them weekly in arrears, after deductions). As such, the ET went behind the terms of the contract to look at the relationship in practice. They found Ms Dewhurst:

1. was required to log into and out of the company’s Citytrakker tracking system at the start of and the end of the day;
2. wore a uniform;
3. was expected to work when she said she would;
4. was directed by a controller (through radios and mobile phones); and
5. had little autonomy to determine the way the services were performed.

The ET held that Ms Dewhurst had been recruited by City Sprint to work for it, and was integrated into the business. Accordingly (and very importantly) Ms Dewhurst was a worker during periods when she was logged into the Citytrakker system. The Employment Judge, described City Sprint’s contractual arrangements as “contorted”, “indecipherable” and “window-dressing”.

The case offers nothing new in terms of law, but it is part of a growing wave affecting the so-called “gig economy”.

Please see here for an introductory analysis of the categorisation of employees, workers and the genuinely self-employed.

If you would like to talk with someone in our team about the issues raised then please contact us.

Gross Misconduct from Gross Negligence

23rd January 2017

Yesterday the Court of Appeal gave judgment on Adesokan v Sainsbury’s Supermarkets Limited [2017] EWCA Civ 22. Whilst this was not an Employment Tribunal case – it came up from the High Court – it will be of interest to HR professionals and advisers.

It should be noted that the claim in the High Court was for wrongful dismissal (i.e. a contractual claim for notice pay) and not for unfair dismissal as per section 94 of the Employment Rights Act 1996.

Adesokan was employed by Sainsbury’s for 26 years. Before his dismissal he was a Regional Operations Manager managing 20 stores.

The key facts of the case related to an employee feedback procedure in place at Sainsbury’s: Talkback Procedure (TP). “The philosophy behind this procedure is the desire to ensure that staff should be engaged, motivated, and take pride in their work. It is believed that this will improve customer service which in turn leads to happier and more loyal customers.” All managers in the business were aware of the significance of TP and the need to have accurate reporting.

In essence, the HR business partner for Adesokan wrote to the store managers under Adesokan’s management and suggested fixing the TP by having the most loyal and eager employees complete the process. Adesokan was copied on the email but only read it a week later (when the TP was still running). Adesokan then advised the HR business partner to follow up with the store managers to “clarify what [he meant]”. Adesokan did not follow up with the HR business partner – to check he had done so – or the store managers directly.

When the email from the HR business partner was subsequently and anonymously disclosed to Sainsbury’s CEO an investigation in to Adesokan’s action began. This culminated in his dismissal for gross misconduct on the basis of gross negligence. In the dismissal letter is was noted that after the attempt to manipulate the scores “[Adesokan] failed to take any adequate steps to rectify this serious situation”.

Adesokan brought a High Court claim for breach of contract. He lost and appealed.

His grounds of appeal related to:

  • his (previously unblemished) length of service;
  • the sanction being too harsh;
  • the results of the TP not being impacted in the event;
  • the listed examples of gross misconduct not including negligence (or if, they did, then only negligence towards third parties); and
  • his assertion that there was no serious breach of policy or procedure by his personal actions or inactions.

None of the grounds were successful and the Court of Appeal found that Sainsbury’s were entitled to dismiss for gross misconduct; it was a conclusion that had been open to the High Court judge. The Court of Appeal re-confirmed that listed examples of gross misconduct (for example in handbooks or contracts) are not to be seen as conclusive lists.

If you would like to read the judgment click here.

If there is a matter you would like to discuss with our team then contact us here.


Sexist Dress Codes

25th January 2017

Since an agency receptionist was sent home from work for not wearing high heels, the issue of female dress codes has been in the news on and off.

Today a group of MPs called for additional measures to prevent companies applying sexist dress codes such as those requiring women to wear revealing clothes, make up and/or high heels.

Two House of Commons’ committees – for Petitions and for Women and Equalities – produced a report which concluded that the Equality Act 2010 should already protect women from discriminatory appearance requirements but in reality this was not happening. They advocate launching a publicity campaign to advise employers of their legal obligations and employees of their rights. The committees also concluded that Employment Tribunals should be given the power to impose greater penalties on employers who enforce dress codes found to be sexist. For example, having to pay compensation to all affected employees – not just the claimant/s. The committee also noted that the current legislation should be reviewed to ensure adequacy.

Nicola Thorp – the receptionist who brought this to light in May 2016 – commented that the debate was similar to the historic argument about whether women could wear trousers to work. She believes a requirement for women to wear high heels – in her case 2 to 4 inch heels which she would have been walking on for up to 9 hours – is similarly outdated and sexist.

If you would like to read the BBC article on this topic then click here.

If this is a live issue in your company then contact us if you would like to discuss it further.


In the news: National Minimum Wage investigations

28th Feb 2017

In recent news it was revealed that another household-name company had breached the National Minimum Wage Act 1998. Argos was fined £1.5 million and ordered to pay back-pay of £2.4 million to current and former staff. This is not the first time a large employer has been “named and shamed”. Debenhams, Monsoon Accessorize and Brighton & Hove Albion FC are amongst previous companies highlighted by HMRC.

We have looked in to these matters for corporate clients who were very surprised to have been investigated. Given the ways in which work can be “measured” and the complex calculations that need to be factored in for different workers (particularly atypical workers whose remuneration can vary as a result of different factors), it can be extremely time-consuming to gather the paperwork to demonstrate National Minimum Wage (NMW) compliance. The onus is on the employer to demonstrate compliance over the period in questions – which may span years.

We have produced both a guide to NMW compliance and a summary of our NMW experience – both of which are on the website.

If you would like to speak to us about an internal audit or a potential or live investigation then contact us directly. We will deal with your enquiry discreetly and can work to your timeframe.

Employment Tribunal and EAT fees are unlawful

9th August 2017

On 26 July 2017 the Supreme Court handed down a judgment specifying that Employment Tribunal and Employment Appeal Tribunal fees were unlawful.

HM Courts and Tribunals Service subsequently announced that the fees previously payable upon issuing a claim and prior to a full hearing would no longer be levied.

The Supreme Court determined that the Tribunal fees (introduced in July 2013) were inhibiting access to justice. Whilst it was not necessary to give judgment on the point given the first finding, Lady Hale also expressed a view that the fees were indirectly discriminatory.

Unison had brought the action in 2014 as a judicial review on the introduction of fees. A few months after the introduction of Tribunal fees Unison were able to demonstrate the dramatic decline in the number of claims.

The major question now will be how the rebate process will work for those who paid Tribunal fees in the intervening years (employees, workers and employers).

Assessing and addressing disadvantage for Part-time Workers

6th October 2017

The recent case of British Airways v Pinaud reminds us that part-time workers are entitled to proportionately the same as full-time workers and that statistical evidence will be relevant to the consideration.

At Employment Tribunal level it was found that British Airways had treated Ms Pinaud – a part-time worker – less favourably than full-time workers. The terms of her contract required her to be available for proportionately more days than full time staff and she was regularly required to work proportionately more ‘duty hours’ than her full time ‘equivalents’.

British Aiways’s contractual shift patterns meant that full-time employees had to be available to work for 243 days per year. While 50% of this figure is 121.5 days, the pattern applicable to part-time workers working for 50% of ‘full time’ pay meant they had to be available for 130 days per year. Therefore, proportionately, this required more days’ availability for the same level of pay.

One of British Airway’s arguments was that the hours actually worked fluctuated – because cabin crew had to ‘bid’ for flights of varying lengths on their available days.

BA appealed to the EAT.

The EAT upheld the Employment Tribunal’s original finding of less favourable treatment. However, on the question of whether it was a “proportionate means of achieving a legitimate aim”, the EAT concluded that the Tribunal had been wrong to disregard statistical evidence showing the actual hours worked by the employee and her full-time equivalent.

A newly constituted tribunal will now consider the impact on Ms Pinaud, with reference to this evidence.

This case reminds employers that those working part-time should always be dealt with using the pro-rata principle (i.e. in reference to full-time workers in comparable roles). This applies to both their contractual arrangements and working patterns.

If any less favourable treatment is unavoidable due to a legitimate business interest, employers should clearly record the business aim they have pursued; and, if possible, use statistics to evidence how the relevant measures facilitate this in a proportionate way. A straightforward increase in a part-timer worker’s salary may not necessarily solve the problem. The EAT emphasised the need to evaluate the impact of unfavourable treatment on individual part-time employees when determining what is proportionate.


Suspension As A Breach Of Trust And Confidence

1th October 2017

Although a High Court decision, Agoreyo v London Borough of Lambeth [2017] EWHC 2019 (QB) is a salutary lesson for those employers relying on the “neutral act” justification for suspension. Whilst not new law, the case is helpful as a reminder to employers that the mere right to suspend is only the first step in justifying suspension. Furthermore that the contemporaneous reasons for the suspension should be recorded (and be recorded accurately/fully).

The case was brought by Ms Agoreyo an experienced primary school teacher working with children with challenging behaviour. Allegations were made against Ms Agoreyo of using unreasonable force (dragging and carrying a child out of the classroom). Two of the instances had already been looked into by the Head, who found that Ms Agoreyo had used reasonable force. However, shortly thereafter, the Executive Head informed Ms Agoreyo that she was suspended on the basis of these allegations.

Ms Agoreyo almost immediately asked if she could resign and the Executive Head agreed. Ms Agoreyo’s resignation letter, written while she was still on the premises, was friendly but referred to certain very unpleasant issues. The suspension letter stated:

The suspension is a neutral action and is not a disciplinary sanction. The purpose of the suspension is to allow the investigation to be conducted fairly.

Ms Agoreyo argued her suspension constituted a repudiatory breach of the implied duty of trust and confidence. She argued suspension was not necessary for the allegations to be investigated. The County Court found the Employer was “bound” to suspend Ms Agoreyo after receiving reports of the allegations against her. Ms Agoreyo appealed against this finding.

The High Court allowed the appeal, stating that the Employer did not have reasonable and proper cause to suspend Ms Agoreyo. The reasons included:

1. the Employer’s reliance on its overriding duty to protect children could not stand, as the suspension letter recorded the reason for suspension was to ensure a fair investigation not protect children;

2. there was no evidence of any attempt to ascertain Ms Agoreyo’s version of events, or the Head’s knowledge of the events, prior to the Executive Head taking the decision to suspend;

3. there was no evidence of any consideration of any alternative(s) to suspension; and

4. the letter did not explain why an investigation could not be conducted fairly without the need for suspension.

The Judge felt suspension had been adopted as the “default position” and in the circumstances it breached the implied term of trust and confidence. It was clearly relevant that the Head had previously investigated two of the incidents and had not taken disciplinary action.


Mental Health and Employers

27th October 2017

Yesterday the government published a report on Mental Health and Employers following a review that commenced in January.

By way of background, it sets out that 15% of those at work have symptoms of an existing mental health condition. The estimated annual cost to employers is between £33 billion and £42 billion; over half of which comes from “presenteeism” – when individuals are less productive due to poor mental health in work – with additional costs from sickness absences and increased staff turnover.

The 84-page report, produced by Dennis Stevenson and Paul Farmer, contains 40 recommendations for employers (see pages 8 to 11 of the report) including:

  • All employers, regardless of workplace type, industry or size to adopt the mental health core standards (as set out on page 8 of the report).
  • Encouraging employers to report on workplace mental health.
  • Professional bodies to include workplace mental health in their training programmes and assessments.
  • The Health and Safety Executive to revise its guidance to raise employer awareness of their duty to assess and manage work-related mental ill-health.
  • The Government protects and promotes the current tax relief for employers to invest in the mental health of their employees.
  • The Government consider legislative change to enhance protections for employees with mental health conditions, particularly fluctuating mental health conditions and clarify the role of employers in providing reasonable adjustments.
  • The Government develops a new flexible model for Statutory Sick Pay to better support those with a mental health condition, where willing and able, to return to work on a voluntary phased return and receive wages and SSP on a pro-rata basis.

We regularly advise on mental health issues in the workplace. If you would like to discuss a current or anticipated matter – please do contact us at your convenience.

13 Years’ Holiday Pay

29th November 2017

Today the CJEU (ECJ) gave judgment in the case of King v The Sash Window Workshop Ltd and another C‑214/16.

Mr King worked for SWW from 1999 to 2012 under the capacity of a “self-employed commission-only contract”. He received commission only and any annual leave he opted to take was unpaid.

After his retirement he brought an Employment Tribunal claim for unpaid annual leave covering the 13 years of work. The Tribunal accepted that Mr King had been a worker (our guide on Employment/Worker/Contractor status can be found here). There followed appeals to the Employment Appeal Tribunal and Court of Appeal on a number of different points.

In spring 2016 the Court of Appeal referred questions to the CJEU on the compatibility of UK law (Working Time Regulations 1998, as amended) to EU law (the Working Time Directive 2003) and the interpretation of the latter. As a reminder: the EU Working Time Directive 2003 is implemented in to UK law by Working Time Regulations 1998 (as amended).

The CJEU concluded that Mr King was entitled to 13 years’ holiday pay regardless of not taking all of the annual leave to which he had been entitled. It was not for Mr King to take unpaid leave and then seek to claim payment after the event. The CJEU set out that “any practice or omission of an employer that may potentially deter a worker from taking his annual leave is equally incompatible with the purpose of the right to paid annual leave”. And it was “irrelevant whether or not, over the years, Mr King made requests for paid annual leave”.

The European court adjudged: “an employer that does not allow a worker to exercise his right to paid annual leave must bear the consequences”.

In conclusion: EU law precludes (1) workers having to take their leave first before establishing whether they have the right to be paid in respect of that leave; and (2) national provisions/practices that prevent workers from carrying over and, where appropriate, accumulating, until termination of their employment relationship, paid annual leave rights not exercised in respect of numerous consecutive reference periods because their employer refused to remunerate that leave.

This case is making national news today because of the potential impact on workers who are incorrectly classified as ‘self-employed contractors’ and those who engage them. Such individuals may be able to claim back pay in respect of unpaid annual leave going back many years (from when their ‘worker’ status can be established). The case also indicates that the Deduction from Wages (Limitation) Regulations 2014, which limit claims for back pay to two years, may be incompatible with EU law. Certainly, at the termination of the engagement, workers can bring claims going back a lot further than 2 years.

If you would like to speak to our team about the issues raised by this case then do contact us.

Disciplinary linked to Without Prejudice/Protected Conversation

22nd November 2017

An employee’s conduct during a Without Prejudice discussion or ‘protected conversation’ (section 111A of the Employment Rights Act 1996) cannot become the subject of a disciplinary matter without waiver of the Without Prejudice privilege.

This matter arose in the Employment Appeal Tribunal (EAT) case of Graham v Agilitas IT Solutions Limited [2017] UKEAT/0212/17.

Here, the employee – a Sales Director at an IT company – raised allegations against the company to the CEO within a Without Prejudice conversation. The company subsequently sought to use the employee’s actions as one ground of a disciplinary for breach of trust and confidence. By doing so the company waived the Without Prejudice privilege that had attached to the conversation in question.

At the EAT, President Simler noted that the company could not cherry-pick parts of a conversation which were Without Prejudice whilst also “waiving privilege or suggesting that matters spoken by the [Employee] in the self-same meeting were not subject to the same without prejudice rule”.

The Nottingham Employment Tribunal’s finding that Without Prejudice privilege had not been waived was unsupported and the point directly above had not been dealt with by the Employment Judge.

The case was remitted to the same Employment Tribunal to deal with the case in light of this new finding regarding evidence from the meeting in question.

As a reminder:

  • Without Prejudice privilege applies where litigation is in contemplation in the event that parties cannot agree a way forward. Any voluntary waiver of  Without Prejudice privilege must be mutually agreed unless there has been ‘unambiguous impropriety’ (e.g. threatening behaviour or violence, perjury or blackmail).
  • Pre-termination negotiations (under s.111A, ERA 1996) can be instigated by an employer or an employee with a view to agreeing the terms of the employee’s exit. Such conversations cannot be referred to in any subsequent litigation unless they demonstrate automatically unfair dismissal or improper behaviour. In contrast to Without Prejudice conversations, protected conversations or pre-termination negotiations can take place without a pre-existing dispute and the parties are not able to waive the protection by mutual agreement.
  • In practice Without Prejudice conversations and pre-termination negotiations frequently run in parallel.

If you have any questions about this case or the issues raised by it then please contact us. We are highly experienced in guiding clients through these conversations and the issues they raise.