March 2021 Newsletter
The long-running case of Uber v Aslam finally reached a conclusion on 19 February this year. In a landmark decision, the Supreme Court confirmed that Uber drivers are workers rather than self-employed contractors. As such, they are entitled to basic employment rights such as the national minimum wage, paid holiday and rest breaks.
In determining worker status, the principle espoused by the Supreme Court is that parties must look at the actual relationship on the ground rather than relying on what the written contracts say. When examining the true working relationship between parties, the starting point should be the statutory definition. Section 230(3) Employment Rights Act 1996 states that a worker includes employees and anyone else who works under ‘any other contract…whereby the individual undertakes to do…personally any work…for another party’. This is provided that the other party is not a client or customer of the individual (which would make them genuinely self-employed). The Supreme Court emphasised that it is important to consider what the rationale for the statutory wording was in the first place; i.e. that it was designed to protect vulnerable workers from being paid too little; being required to work too much; or being treated otherwise unfairly.
The Supreme Court noted that there is an inherent “inequality of arms” between individuals in the gig economy who do not have the negotiating power to match the businesses they work for. In this case, drivers were subordinate to and dependent upon 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 Uber’s 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 rather than independent contractors. A genuinely self-employed person could make these choices for themselves. The Supreme Court held that contracts were designed to mask the true relationship to Uber’s advantage. It also held that drivers were working when they were logged into the app and not just when they were driving.
This decision is highly significant for a number of reasons. Firstly, it is hugely beneficial for many in the gig economy who are now considered workers in terms of the benefits and protection they are afforded. However, the decision will be costly for Uber and other employers who have not historically treated those on zero hour contracts as workers. The value of backdated legal claims from such workers for national minimum wage and holiday pay could be vast. Further, employers will have to carefully consider how to organise their workforces and hiring practices moving forward, given the additional expenses they are now on the hook for. It is likely that these increased costs for businesses like Uber and Deliveroo may ultimately be passed onto the consumer.
- HARASSMENT - EXAMINING THE REASONABLE STEPS DEFENCE
Overview: Under the Equality Act 2010, 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 employee Y’s 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. This is known as the “reasonable steps defence”.
Facts: In Allay v Gehlen, the Claimant, Mr Gehlen, was of Indian origin and was employed as a senior data analyst between October 2016 and September 2017. During that period, a colleague, Mr Pearson, 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 that one manager issued a mild rebuke to Mr Pearson. Mr Gehlen brought a harassment claim. The employer tried to defend the claim by saying that it had in place at the time equal opportunities and anti-bullying/harassment policies and that it had trained staff on these policies. As such, the employer argued it had taken all reasonable steps to prevent this kind of behaviour.
Decision: The employment tribunal disagreed with the employer and upheld Mr Gehlen’s harassment claim. They accepted that the employer had policies in place and had carried out some training, however, they noted that the standard of training was poor, even for a small employer. The training had taken place in January 2015 and was out of date at the relevant time. The fact that one colleague and two managers had failed to challenge the harassment showed that they were not acting in accordance with the policy recommendations. The Tribunal therefore found that the employer had not taken all reasonable steps to avoid discrimination; - a further reasonable step would have been to provide refresher training. On appeal, the Employment Appeal Tribunal agreed. If there is a further reasonable step that an employer should have taken, the reasonable steps 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 would not have done so if they thought such a move would be ineffective.
Take-away: This case shows that the ‘all reasonable steps’ hurdle is a high one to clear, even for a small employer. It is not enough to have policies and training – they must be of 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 the obviously racist comments. Annual refresher training should be carried out - ideally for all employees, at the very least for line managers to manage complaints of harassment or other discrimination. This will help to protect employers from liability for harassment claims. Equally, if not more important, it will improve workplace culture and employee relations.
- WHISTLEBLOWING - PUBLIC VS PRIVATE INTERESTS
Overview: A worker is protected from any detriment at work and dismissal if they have made a ‘qualifying disclosure’, i.e. if they have blown the whistle. In order for a whistleblowing claim to succeed, the law requires that the worker must reasonably believe that the disclosure is both in the public interest and indicates wrongdoing, such as a failure to comply with a legal obligation or a health and safety concern. The public interest element of the test is designed to differentiate between personal interests and those which have a wider application. The worker needs only to reasonably believe that the disclosure is in the public interest (rather than it actually being so), and the worker’s reasonable belief in there being a public interest element doesn’t have to be their only motivation in making the disclosure. The EAT has recently looked at the public interest requirement in the case of Dobbie v Feltons.
Facts: The employee worked for a firm of solicitors as a consultant solicitor, advising 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.
Held: The employment tribunal found that the employee reasonably believed that the disclosure tended to show the breach of a legal obligation; in that he believed the overcharging was a breach of the firm’s client obligations and a possible breach of accounting rules. However, the tribunal found that he did not reasonably believe that his disclosure was in the public interest. It found that he believed it was a private matter relating to the individual client.
On appeal: The employee appealed to the EAT who disagreed with the Employment Tribunal, whom they found had misapplied the public interest test. The tribunal had not 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.
Importantly, the EAT held that, 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 was not a protected disclosure. The EAT sent the case back to a fresh employment tribunal to reconsider whether the disclosures were made in the public interest.
Take-away: This case highlights that disclosures can be made in the public interest even in cases which relate to apparently private matters only, so long as they touch upon principles of a wider public interest. 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 that 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 - CALLING APPROPRIATE TRIBUNAL WITNESSES AND SURVEILLANCE ISSUES AT WORK
Overview: Conduct is one of the five potentially fair reasons for an employer to dismiss an employee. It is the employer’s job to show that the employee’s poor conduct was the reason for their dismissal. If subsequent litigation is pursued, an employment tribunal can then consider whether the dismissal was fair. In making its decision, the tribunal will look at the size of the employer and the resources it had available to it at the time to decide whether its decision to dismiss fell within the range of reasonable responses that an employer could make. A fair procedure must also have been followed for the dismissal to be deemed to be fair.
Facts: In Northbay Pelagic v Anderson, the employee, Mr Anderson, was a director of a seafood company. He was dismissed for gross misconduct at the same time as two other employees. The three cases were connected but were not identical, so the employer organised three different HR consultants to investigate and hear the cases. The grounds for dismissing Mr Anderson were various but included failure 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). Mr Anderson brought a claim for unfair dismissal which the employment tribunal upheld. It said that there was a fatal flaw in the dismissal process because the HR 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.
Decision: The EAT allowed some of the employer’s appeal. It held that the tribunal had not been clear about whether a management instruction had been given for the employee which he then ignored. 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 that it gave a clear answer on the issue; - that the management 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 provide specific guidance on how to deal with procedures relating to multiple employees. The EAT said that 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. On the surveillance point, the EAT agreed that Mr Anderson’s dismissal on this ground was unfair. The secret recording was set against a background of mistrust and a poor relationship between the employee and employer. The employer did not properly consider the fact that the camera was set up in an office to which only Mr Anderson had access. No one’s image had been captured on it. The employer should have weighed up the other employees’ rights to privacy against Mr Anderson’s desire to protect his confidential information. The EAT also said that the employer had failed to call the right witnesses to counter the Mr Anderson’s evidence, which had led to the tribunal believing the employee 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.
Take-away: This case has many take-away points for employers. Firstly, ensure to choose the right witnesses to the relevant issues. Where there are disputed facts, individuals with first-hand evidence of those disputes should be called as witnesses in tribunal. Only calling the people who conducted the disciplinary investigations and processes may not be enough. The EAT’s confirmation about the acceptability of using relevant witness evidence across multiple disciplinary processes is also helpful for employers. 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 as gross misconduct. 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.
4. TUPE – WHO TO CLAIM AGAINST WHEN THINGS GO WRONG
Overview: 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. The rule is designed to protect employees if their business that they work for is sold or transferred to new hands to ensure that their employment is protected and continues. If an employee is dismissed immediately before the transfer for the sole or principal reason of the transfer this is unlawful, and liability for any subsequent unfair dismissal claim they bring passes to the transferee. However, in a recent case, the Employment Appeal Tribunal has decided that an employment tribunal made a mistake when it ordered reengagement of an employee by a new service provider because the new service provider had not been part of the legal proceedings.
Facts: 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. The employee had sufficient 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. Therefore, the only issue for the employment tribunal to decide was remedy. The tribunal ordered that the new service provider, LP, reengage the employee, even though LP was not a respondent in the proceedings. The Health Board appealed.
Decision: The EAT said the employment tribunal had made errors in reaching its decision. 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 remain 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.
Take-away: This decision emphasises that employees who have been automatically unfairly dismissed as a result of a TUPE transfer must bring proceedings against the correct entity. In this case, the employee will now have to apply to join LP as a party to the tribunal proceedings if he wants to seek a remedy against them. In TUPE cases where an employee is arguing they should have transferred, that will include the transferee.
- DISMISSAL DURING THE PANDEMIC– WAS IT FAIR TO DISMISS AN EMPLOYEE FOR NOT WEARING A FACEMASK?
Overview: Throughout the COVID-19 pandemic, employers have had to grapple with the health and safety risks to their employees, customers and third parties. Those working in public facing roles, such as supermarkets checkout attendants, have faced particular exposure to the virus. Many employers have brought in rules about face coverings/masks and social distancing to protect customers and staff. Most employees have no issue with these steps, but there are always exceptions. Recently, an employment tribunal has looked at a claim for unfair dismissal by an employee who refused to wear a face mask at work.
Facts: 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 landing on people below as he spoke to them. The employee continued to refuse to wear a mask, saying that the cab was his own area and he was not legally required to wear a mask. Tate banned him from their site and reported the incident to his employer. The employer dismissed him for breach of both company rules and Tate’s rules.
Decision: The employment tribunal held that his dismissal was fair. The employer had conducted a reasonable investigation into an event where the facts were not disputed and 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. The employee’s ban from the Tate site caused practical difficulties for his continued employment, as this was where the majority of his role was based. The employer was entitled to take into account the importance of maintaining good relationships with its clients. The tribunal held that the decision to dismiss fell within the band of reasonable responses even though another employer might reasonably have issued a warning instead.
Take-away: This case highlights that damage to a customer relationship can be a valid reason for disciplinary action and even dismissal (provided that a fair process is followed). The employer had followed a reasonable process and could show that the decision to dismiss was reasonable in the circumstances.
- COMPENSATION – CLAIMING FOR EMPLOYER’S FAILURE TO PROVIDE A SECTION 1 STATEMENT
Overview: Section 1 of the Employment Rights Act 1996 requires employers to provide employees and workers with a statement of their employment terms at the beginning of employment. It used to be that these terms could be provided to employees or workers up to two months after they commenced employment. However, the law has recently changed so that, from 1 April 2020, all new employees and workers should be given the majority of their contractual terms immediately upon starting work. The penalties to employers for failure to provide a valid section 1 statement are, where it is a standalone claim, the employment tribunal may make a declaration as to what the particulars should include. If an employee piggybacks a section 1 claim onto another tribunal claim they are bringing, under section 38 Employment Act 2002 they are entitled to between 2 - 4 weeks’ pay as compensation. However, to bring a claim, an employee must have at least one month’s service.
Facts: 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 that 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 employer failing to provide a Section 1 Statement of terms in his claim form. He only raised this when he produced a schedule of loss claiming more than £1,000 in extra compensation for the employer’s failure to provide a Section 1 Statement. The employer did not engage in the tribunal process at all because it thought that the employee’s claim was of such low value. At first instance, the employment tribunal awarded the employee £150 compensation for his unlawful deductions from wages claim but made no order for additional compensation under section 38.
On appeal: The employee appealed and the employer did not respond to the notice of appeal either. Later in the proceedings, the employer wrote to the EAT, however, providing additional evidence which showed that the employee had resigned on 27 November with immediate effect, meaning that he had not worked for one month after all. He was therefore not eligible to claim failure to provide a section 1 statement of terms and conditions of employment. The employee tried to argue that it was too late to argue about this, that the tribunal had already decided that 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 because that claim was not 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 £1,000, they might have requested an adjournment, to address the point properly which would likely have been granted. However, the employer’s additional evidence showed that the employee’s last day of work was either 25 or 26 November and he resigned on 27 November. He had therefore not been employed for a month and was not entitled to anything.
Take-away: This claim got a bit sticky for two reasons. Firstly, the employee failed to plead all the relevant points properly, which meant the employer was unaware of 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 the claim’s low value, but it meant that vital evidence was not 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.
- HEALTH AND SAFETY –OFFICE WORKING AND COVID-19
Offices appear to have been worse hit by COVID-19 outbreaks than other types of workplace. The BBC reported recently that there were 60 suspected COVID-19 office outbreaks in the first two weeks of the third lockdown, more than in any other type of workplace including supermarkets, construction sites, warehouses, restaurants and cafes combined. Data shows that in the second half of 2020 there were more than 500 outbreaks or suspected outbreaks in offices. Factors which may contribute to this increased risk of outbreaks in offices are: lack of ventilation, hot-desking and insufficient cleaning.
At the time of writing, the message from the government is still for employees to only go to work if they cannot reasonably work from home. However, a Trade Union Congress (“TUC”) survey found that one in five employees are still travelling to work despite the government edict. 40% of respondents to the survey said that they had been pressured by management into going in.
Despite the high attendance of staff at workplaces, the Health and Safety Executive (“HSE”) confirmed this month that it has not issued any prohibition notices to employers since March 2020 in relation to unsafe pandemic practice. The Guardian reported that inspectors’ hands were tied because the virus is only classified as a ‘significant’ rather than a ‘serious’ threat. However, the HSE has refuted allegations that it is not taking the pandemic seriously. It confirmed that it would prosecute where appropriate if necessary, but said that it was using persuasion, advice and reprimand to effect change rather than time-consuming legal processes.
This pragmatic approach by the HSE must be welcome news to employers, who have faced a myriad of changing guidance since restrictions began last year, and many of whom have been severely commercially affected. Employers are trying to do their best in unprecedented and testing times. Many have learned that it simply isn’t possible to do certain tasks or jobs at home.
Despite this, businesses must take care to ensure that appropriate risk assessments are in place for employees who must attend work, with particular importance placed on good ventilation, social distancing and advanced cleaning measures. We are not out of the woods yet; - try to keep those who must come into work to a minimum; employees should still work from home if they can.
- FLEXIBLE WORKING
The Chartered Institute of Professional Development (“CIPD”), which represents HR professionals, has called for flexible working to be a right for employees from day one of employment. It has called for job adverts to stipulate that they can be done flexibly.
Currently, the law requires an employee to have a minimum of 6 months’ continuous employment before they can make a Flexible Working Request (“FWR”). Employers can reject such FWRs for a variety of reasons including: the burden of additional costs; the detrimental impact on meeting customer demand; an inability to organise work amongst existing staff or having to recruit more staff; the detrimental impact on performance or quality of work; or a lack of work to provide to the employee during the periods where they want to work.
The CIPD’s recent survey included more than 2000 workers and found that almost half do not have any kind of flexible arrangement such as flexitime, part-time working, compressed hours or job shares. The survey revealed that, although the pandemic has resulted in a huge increase in homeworking, two out of every 5 employees continue to go to work, with most saying that the nature of their jobs prevent them from working at home. The CIPD has argued that, where employees cannot work from home, flexible working would help give them greater control over when and how they do their work.
At a time where we have lost control over so many of our choices and freedoms, it is understandable that employees might want more control over their work. Flexible working can also benefit employers. For example, studies have shown that remote working can increase employee productivity, promote a healthy work life balance and reduce stress and burnout. Flexible working can also increase work satisfaction, enabling businesses to attract the best talent.
In summary, employers are urged to be open-minded about flexible working requests and the positive impact it can have on the workforce. That being said, you do not have to accept every request from employees to change their hours, particularly unreasonable ones (for example those which do not correspond with the business or organisation’s opening hours).
- AND FINALLY – HAS BREXIT IMPACTED UK EMPLOYMENT LAW?
After years of uninterrupted media attention recent headlines have understandably turned their primary focus away from Brexit towards the COVID-19 pandemic and the third national lockdown in the UK.
To counteract some of the possible negative effects on business of the UK’s departure from the EU, many employers have been wondering whether Brexit would mean a change to some EU-derived employment laws that were unpopular. Earlier this year, the Financial Times hinted at government plans to rip up certain employment laws such as the 48 hour weekly working time limit, rest breaks, and the inclusion of overtime in certain holiday pay calculations.
However, the newly appointed business secretary, Kwasi Kwarteng MP, has recently confirmed that there is no plan to reduce workers’ rights. He 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 employment-law rights but added that: ‘this couldn’t be further from the truth’.
For those hoping that TUPE would be a thing of the past, or that holiday pay calculations might become a little easier, a seismic post-Brexit shift in employment law does not appear to be on the cards just yet. However, any departures from EU law, particularly surrounding the protection of workers’ rights, should surely be considered very carefully. In addition, it arguably benefits both employers and employees that any departures from EU law are introduced gradually in order to mitigate increased uncertainty during the transition period.