April 2021 Newsletter

Should workers receive the Minimum Wage whilst sleeping?

Overview: The Supreme Court has given its final word on whether on-call workers should get paid the National Minimum Wage (NMW) whilst sleeping. The case law in this area has been conflicting, with different national courts providing different judgments based on similar facts.

Law: The applicable law is set out in the National Minimum Wage Regulations 2015, originally introduced to implement the Low Pay Commission’s recommendations.

Regulation 32(1) states that a person may be treated as working if they are available (and required to be available) at or near a place of work for the purposes of doing work. This is unless they are at home (the “home exception”).

Regulation 32(2) states that the worker is only treated as ‘available for work’ when they are ‘awake for the purposes of working’, even if the worker sleeps at or near a place of work, the “sleep-in” exception.

Facts: In Royal Mencap Society v Tomlinson-Blake, the employees were sleeping at or near their workplaces and were disturbed infrequently at night. The employees received an allowance for their shifts but not the NMW for each hour of it. They brought tribunal claims saying they should be paid the NMW for the whole of their sleep-in shifts.

Lower court decisions: Both of the employees’ claims succeeded at the employment tribunal. On appeal, the Employment Appeal Tribunal upheld the judgment in one claim but allowed the employer’s appeal in the other. Meanwhile, on further appeal, the Court of Appeal held that the employees were only ‘available for work’, not actually working, while they were asleep. As such, they were only entitled to the NMW when they were disturbed and therefore awake for the purposes of working. They were not entitled to be paid the NMW when they were asleep. The Court of Appeal went through some conflicting case law, criticising some judgments whilst distinguishing others. This still left the legal position unclear in some places.

Supreme Court decision: In March this year, the Supreme Court, who provide the final word on UK law, agreed with the Court of Appeal. It held that the employees were only entitled to the NMW when they were awake and working. It considered the report of the Low Pay Commission which preceded the NMW which the government must implement. The Commission had not intended workers to be paid the NMW while they were sleeping, only when they were awake. The Supreme Court found that the employee’s requirement to keep a ‘listening ear’ while asleep did not mean she was working.

Take-away: This case is good news for employers, mainly in the care sector, who were potentially facing sizeable back-pay bills had the appeals succeeded. In its decision, the Supreme Court went further than the Court of Appeal, finding that more of the previous (conflicting) case law was simply wrong. This clarity on pay for sleep-in workers is welcome. Despite this, the Low Pay Commission report is 20 years old. It is therefore perhaps ripe for Parliament to revisit some of these issues in the future. For example, although the law on sleep-ins is now clear, wider questions have not yet been put to bed, such as the law around the home exception. Given how many employees are currently working from home as a result of the COVID-19 pandemic, the lines between working, being available to work and not working are becoming ever more blurred.

  1. The importance of formal settlement agreements

Overview: When employees are made redundant, they commonly negotiate terms of settlement with their employers before leaving. Discussions usually conclude with agreed sums to be paid to the employee on their departure. This is then written up in a formal agreement signed by both parties, creating a legal and financial “clean break” between them.

Recently, the EAT considered a case where no settlement agreement had been made and the parties had different ideas about what had been agreed and what could be enforced.

Facts: In Evergreen Timber Frames v Harrington, the employee, Mr Harrington, worked for the employer as a manager. Mr Harrington was told he was at risk of redundancy and his severance terms were discussed over several months. Before his dismissal, his employer wrote to him setting out the amounts Mr Harrington would be paid on termination if he worked his notice. It said they would like to ‘gift’ him a car. Mr Harrington wrote back (via an appeal letter) accepting the gift of the car but querying the redundancy calculation and complaining that the employer had agreed in verbal discussions to also give him a computer and a month’s bonus pay. When the car was not transferred on termination, Mr Harrington brought claims for breach of contract. The employment tribunal upheld part of his claim relating to the car, finding that an agreement had been reached for its transfer as part of the severance package. It had been offered in the employer’s letter and accepted in the employee’s appeal letter. The Tribunal awarded Mr Harrington £8,400, representing the car’s value. The employer appealed.

On appeal: The EAT agreed with the employer.  It found that termination discussions often involve back and forth conversations about different elements of the overall settlement package. Negotiations would become too complicated if it were possible to accept one part of a deal whilst rejecting or trying to improve on other parts of it. In this case, the car was not a standalone promise but part of a wider termination package. The employee’s letter of appeal was not acceptance of part of a deal but a counter-offer to improve the severance terms overall. The matter was sent back to a fresh tribunal on another point (to decide whether there had been a deal struck at a previous meeting to transfer the car in return for doing specific work during the employee’s notice period).

Take-away: This case highlights the importance of agreed written terms when employment is being terminated. The confusion in this case could have been avoided if the employer had used a settlement agreement. Such agreements typically include “entire agreement” clauses which state that the agreement takes priority over any other documents, emails or previous conversations where different settlement terms might have been discussed between the parties. Settlement agreements also have the added benefit of settling outstanding claims, meaning there is a clean break on termination and providing certainty that there will be no future litigation, save in very minimal circumstances.

  1. Health and safety – likely extension of section 44 ERA rights to workers

Overview: Section 44 of the Employment Rights Act 1996 protects employees from suffering a detriment at work in certain health and safety cases. This includes where the employee is absent from work because they reasonably believe that attendance would put them in serious and imminent danger. It also includes where an employee takes appropriate steps to protect themselves if they reasonably believe they are in serious and imminent danger. The right currently only extends to employees, rather than the wider definition of workers.

Upcoming changes: New laws extending certain health and safety rights to workers are due to come into force on 31 May this year. Last year, the case of R (Independent Workers’ Union of Great Britain) v Secretary of State for Work and Pensions confirmed that the UK had failed to implement EU law properly because it limited those section 44 rights to employees. The draft order has now been tabled in Parliament and if it is approved will extend these protections to all workers.

Take-away: This order is likely to be approved and will provide clarity in this area at a time where health and safety is high up on everyone’s agenda. The law will not be retrospective, so workers should be aware that any alleged detriment would have to occur after 31 May 2021 to be actionable.

  1. EU cases on whether standby time is working time

Overview: The Court of Justice of the European Union (CJEU) has recently considered two cases involving workers on standby, looking at the point of whether the whole of the standby period should be considered working time. The Working Time Directive says that working time is: “any period where the employee is working, at the employer’s disposal and carrying out their duties”. A rest period is any period which is not working time. The CJEU has previously held that standby time can be working time if the employee is physically at the workplace (or another place determined by the employer) and able to provide services immediately if required. In a previous case considering the issue, Ville de Nivelle v Matzak, the CJEU held that time spent by firefighters on standby at home was working time because they were required to be at home by the employer and to respond to calls within 8 minutes. This put significant constraints on what they could do in terms of pursuing social and personal interests during that time.

Facts – case 1: In DJ v Radiotelevizija Slovenija, the CJEU held that a period of standby was not working time just because a worker was required to be contactable on the phone and able to return to the workplace within an hour (in circumstances where they were able but not required to stay in employer accommodation). It was for the national courts to looks at each case’s individual facts. This includes: the frequency of disturbances and the consequences of not responding within the time limit. That is to say, how much do the constraints placed on the workers impede their ability to pursue their own interests outside of work?

Facts – case 2: In RJ v Stadt Offenbach am Main, a firefighter on standby had to be able to reach the town boundary in full uniform and in their service vehicle within 20 minutes of a call. The CJEU said it would depend on the circumstances whether a requirement to reach the town boundary within 20 minutes was working time. The Court repeated what it had said in DJ, i.e. that what was relevant was the consequences of a failure to respond in time and the frequency of call outs an employee received when on standby. The relevant question to decide is: do the constraints placed on the worker during standby time objectively and very significantly constrain their ability to freely manage and pursue their own interests? The court noted that a requirement to be at a workplace, or another place, by an employer would be decisive in designating standby time as working time. Time periods for responding may also be relevant - if a worker must respond to a call within a few minutes, that will necessarily constrain what they are able to do during their leisure time in standby periods. If there is a reasonable period to respond though (such as an hour as in the DJ case) standby time may not be considered working time. The frequency of calls is also important – the more calls received during standby, the less likely a worker will be able to pursue their own interests. It goes without saying that time actively working once called out is working time.

Take-away: This case was decided after the UK left the EU. However, courts and tribunals may still have regard to post-Brexit CJEU case law if it is relevant. These cases are likely to be highly persuasive if considered by UK courts and tribunals in considering cases under the Working Time Regulations 1998.

  1. Equal pay - what amounts to a “fishing expedition” at Tribunal?

Overview: Sometimes employers receive claim forms from employees with scant detail, essentially ‘fishing’ for information from the employer to inform them of any potential claims they might have. Often, these claims lack any merit at all and can be frustrating for employers to receive (who must spend considerable time and resources defending them). However, in some cases it can be impossible for employees to obtain hard data to back up their allegations before bringing a claim. This is especially true when it comes to closely-guarded information about pay.

In recent years, there have been a considerable number of group litigation equal pay claims. Originally, many claims were brought against public sector employers. They were brought on behalf of women in predominantly female roles claiming that they do work of equal value to predominantly male roles within a business. Most recently, this mass litigation has moved into the private sector, with multiple claims against supermarkets such as Asda, the Co-op and Sainsbury’s. The EAT has recently considered an equal pay claim in which the Claimants made a request for supporting data.

Facts: In Tesco v Element, a group of predominantly female employees who worked at Tesco stores brought equal pay claims. They claimed they did work of equal value to men who worked in Tesco distribution centres who were paid more than them. Little information was given by the Claimants about the male comparators in the claim forms, who said their claims would be further clarified after the disclosure of more information from Tesco. The employment tribunal ordered Tesco to disclose more information, including how much the distribution centre employees were paid, the work they did, and potential ‘material factor’ defences for the difference in pay. Tesco appealed, arguing this went too far and saying the employees were on a fishing expedition.

On appeal: The EAT dismissed Tesco’s appeal. They reiterated that employment tribunals have broad case management powers. The test for whether an application for disclosure should be granted by a tribunal is whether disclosure is necessary to fairly dispose of the proceedings. A claim must have some reasonable prospect of success and, in this case, the employees were arguing that they did undertook of equal value to their male comparators who got paid more. In order to establish this point, the EAT were satisfied that disclosure was necessary and that this would assist in disposing of proceedings fairly. The EAT commented that, where a claim clearly had no reasonable prospects of success (for example, if a junior clerk tried to compare her work to that of senior managers) that might result in a refusal to order disclosure because it was not necessary to fairly dispose of the case, or even strike out of the claim. In this case, however, the EAT held that the Tesco employees had not gone on a fishing expedition to find an actionable claim, rather they had requested information to narrow and clarify their existing claim.

Take-away: On one reading, this case seems to place an unfair burden on employers at a stage where the merits of a claim are often unclear. However, the majority of employers understandably keep pay rates confidential which can be a particular issue for employees attempting to bring equal pay claims.  Tribunals are therefore likely to exercise their discretion in such cases to order disclosure of comparator and pay information. This helps the parties achieve an equal footing in relation to the facts about pay, which is in the interests of justice.  

  1. Discrimination - Can an employee be dismissed for the way they express religious beliefs rather than the beliefs themselves?

Overview: It is unlawful under the Equality Act 2010 for employers to discriminate against employees or workers on the grounds of their religion or religious beliefs.

In Page v NHS Trust Development Authority, the Court of Appeal considered whether it could be fair to dismiss an employee for the way they express their beliefs, rather than the beliefs themselves. 

Facts: Mr Page was a Christian non-executive director of an NHS Trust. He also sat as a magistrate on a panel which considered the adoption of a child by a same-sex couple. Mr Page told his fellow magistrates that children should be brought up by a mother and father and that it was 'not normal' for children to be adopted by a single parent or same-sex couple. His magistrate colleagues complained and Mr Page was disciplined by his magistrate employer. Mr Page then spoke to the press, stating that his views stemmed from his Christian beliefs. After Mr Page’s NHS Trust employer heard about the press coverage, it told him to stop talking to the press. Mr Page ignored this instruction and continued to give high profile interviews, including on primetime TV. Mr Page was removed as a magistrate and was also suspended by the Trust. His position as a non-executive director was not renewed on account of his refusal to obey management instructions. Mr Page subsequently brought a religious discrimination claim against the Trust.

Decision: The employment tribunal initially dismissed Mr Page’s claims. They held that Mr Page was not dismissed by the Trust because of his religious beliefs or his expression of it, but because he continued speaking to the press despite being asked to stop by his managers. Mr Page appealed to the EAT and Court of Appeal but both courts dismissed his appeals. The Court of Appeal found that the Trust’s actions were not because of Mr Page’s religion or views on homosexuality but because he had expressed those views to the media against management instruction. Mr Page’s public expression of his views about homosexuality risked damaging the Trust’s reputation by alienating homosexual people with mental health issues. Mr Page’s views went beyond those relating to same sex adoption. They encroached into an opinion on homosexual activity which was more likely to cause offence. In relation to direct discrimination, the Court said Mr Page had not been dismissed because of his Christian beliefs but because he expressed his views about the ‘traditional family’ and homosexuality in the national media. The Court made it clear that Christians with traditional views could still hold public office, but there would be limits on how those views could be publicly expressed.

Take-away: This case continues highlights the difficulty in discrimination claims, when one protected characteristic, e.g. religious belief, comes into conflict with another, such as sexual orientation. This case makes clear that it is reasonable for employers to ask employees with views which conflict with safeguarding specific characteristics not to promote these publicly where this might risk an employer’s reputation.

  1. Holiday pay and Gig Economy Workers

Overview: In 2017, in the case of King v Sash Windows, the Court of Justice of the European Union (CJEU) established that a worker is entitled to carry over unlimited annual leave which they have been prevented from taking because the employer refuses to pay for it.  The CJEU ruled that domestic time limits for bringing such a claim (for example, the UK’s 3-month time limit to bring an employment claim for unpaid holiday under the Working Time Regulations 1998 or unlawful deduction from wages) should not prevent workers from exercising these important EU rights.

In Smith v Pimlico Plumbers, the EAT considered whether a worker could carry forward holiday that he had taken, but not been paid for, into future leave years.

Facts: Mr Smith worked for Pimlico Plumbers as a plumbing and heating engineer. The business maintained that he, and other Pimlico Plumbers, were self-employed and were not entitled to paid holiday. Mr Smith took periods of unpaid leave between 2005 and 2011. In 2011, he stopped working for Pimlico Plumbers and brought a claim for unpaid holiday pay. In 2018, in a ground-breaking judgment impacting the gig economy, the Supreme Court held that Mr Smith and other Pimlico Plumbers were workers, not self-employed. As such they were entitled to paid holiday. However, an employment tribunal went on to dismiss Mr Smith’s holiday pay claim because it had been brought out of time. They did not believe that the case of King entitled Mr Smith to ‘carry over’ a right to payment for unpaid annual leave that had already been taken.

On appeal: The EAT agreed. King was about carry over and payment in lieu of accrued but untaken holiday, not holiday that had been taken but unpaid. Mr Smith’s remedy – for holiday which had been taken but unpaid – was a holiday pay or unlawful deduction from wages claim, rather than carry over of annual leave that had already been taken. The EAT held that Mr Smith’s last period of unpaid holiday was January 2011 which he should have been paid for in February 2011. Therefore, he should have lodged a claim by May 2011 at the latest. When Mr Smith lodged his claim in August 2011, it was too late. The EAT also confirmed that Bear Scotland - the case which said that a gap of more than 3 months in a series of deductions would ‘break the chain’, meaning earlier deductions would be out of time - was still good law.

Take-away: This case puts to bed a longstanding issue which has had an enormous impact on wider workers’ rights. Employers will welcome the clarity that claims for unpaid but taken holiday cannot be carried forward in the same way as holiday which is untaken. The holiday pay saga continues at pace though. The case of Agnew – which decided, contrary to Bear Scotland, that gaps of more than 3 months in a series of holiday pay deductions may not be fatal – is going to the Supreme Court in June. This is another issue which employers hope will be resolved in their favour.

  1. Flexible working after the pandemic

Overview: The minister for Women and Equalities, Liz Truss, has asked employers to make flexible working a standard option for employees. She argues this would boost both productivity and morale whilst improving employment prospects for women (who are twice as likely to work flexibly while they juggle childcare responsibilities). It will also assist those living far from big city employers. The Government Equalities Office has published a report: ‘Encouraging employers to advertise jobs as flexible’, by the Behavioural Insights Team and jobs website Indeed. Amongst other things, the report found that the opportunity to work flexibly increases job applications by 30%.

Pros and Cons: Some employers, such as PWC, are already trying to harness some of the positive effects the pandemic has had on work patterns. It announced in March that employees can work from home a couple of days a week and start as early or late as they like, giving staff much more control over their work. Staff can condense their hours and clock off early on Fridays this summer, as a nod to the testing times everyone has had to overcome. Chairman Kevin Ellis has said he hopes the changes make flexible working the norm rather than the exception. He wants staff to feel trusted and empowered.

This might not work for every business. By contrast, Goldman Sachs’ CEO David Solomon has called working from home is an ‘aberration’ which he wants to correct as soon as possible. In his view, young employees need direct contact and mentorship that can only be achieved in the office.  The company has 3000 new recruits joining this summer who he says need “hands on” training and mentoring to learn their trade.

Take-away: Every business is different. But it’s worth heeding Mr Ellis’s belief that conscious planning is needed to ensure some of the rare benefits of the pandemic are not lost when the economy finally opens up. Now is the time for businesses to analyse what has worked over the last year and what has not. Despite the drawbacks, businesses may wish to seriously consider offering flexible working which has been proven to improve employee satisfaction and increase job applications.

  1. National Living Wage and National Minimum Wage increases

On 1 April 2021, the government increased the National Living Wage (NLW) and National Minimum Wage (NMW).

The National Living Wage has increased to £8.91, the equivalent of more than £345 a year for a full-time employee. For the first time, adults aged 23 and over will qualify for this top pay rate, rather than 25s and over.

The new NLW rates are:

  • Age 23 and over - £8.91
  • Age 21 and 22 - £8.36
  • Age 18-20 - £6.56
  • Age 16 and 17 - £4.62
  • Apprentice rate - £4.30

Furloughed employees: The situation is different for employees on furlough who must wait longer for a pay rise. Their wages will not increase by law until they go back to work. In the meantime, they will remain on the previous rates. This should help businesses in the worst hit sectors, such as hospitality and retail, who will not be required to pay wage increases until they are back open and cash is coming in.

  1. The thorny issue of monitoring employees

Remote working has arguably hidden employees from sight, causing some employers to worry about what staff are doing during their working hours. The Guardian has recently reported that one of the world’s biggest call centre companies, Teleperformance, is planning to install surveillance systems to monitor all staff activity (whether they are working, eating or going to the toilet). Teleperformance, which employs 380,000 staff in 34 countries, works for a number of household name organisations in Britain such as the government, NHS Digital, Vodafone, Aviva and The Guardian itself. Teleperformance said its surveillance plans evolved from employees saying they felt isolated while working at home. However, it has now indicated that surveillance will not be rolled out in the UK.

This article raises a broader question of whether companies need to monitor employees to ensure they do their jobs.  There will always be some employees who take advantage of being invisible to managers. But in normal times, such employees might take a few minutes extra for lunch or do personal activities such as online shopping when they should be working. Most employees understand that they need to get their job done, regardless of where they are doing it. Video recording employees at home and asking them to tick a box before they go to the toilet is likely to be viewed as infantilising and intrusive. It may also breed distrust and aggravate the majority of hardworking employees. Further, it is unlikely to help businesses to recruit and retain the best people.

Take-away: The best way for most employers to monitor performance is to monitor performance as they would in the office. Apply clear and measurable targets. Conduct appropriate day to day management, usually including communication with employees about tasks achieved and future goals. Create an open dialogue between staff and management.