May 2021 Newsletter

Court of Appeal confirms gig economy drivers are workers

The recent decision of the Supreme Court in Uber v Aslam, which held that Uber drivers are workers, has already been applied to another case last month.

In Addison Lee v Lange, the employer applied to the Court of Appeal for permission to appeal the EAT’s decision that Addison Lee drivers are workers. The appeal had previously been stayed pending the outcome of the Supreme Court’s decision in Uber v Aslam.  Now that that the Supreme Court has reached its decision, the Court of Appeal have refused Addison Lee’s permission to appeal the point any further. This means that, like Uber drivers, Addison Lee drivers are also considered workers entitled to National Minimum Wage and Holiday Pay.

Facts: Addison Lee provide private hire cab and courier services. In terms of organising work, drivers are recruited, provided with training and given guidelines on how to do the job. The drivers lease branded cars from Addison Lee and each driver is given a handheld computer from which jobs are allocated. Drivers can log on and off the system at will. However, when logged on, the drivers are deemed ready to work by Addison Lee who expect them to accept jobs. In this claim, whilst the drivers' contractual paperwork stated they were independent contractors, the drivers brought claims arguing that they were in fact workers entitled to holiday pay and the national minimum wage.

Initial decisions: Both the Employment Tribunal and the Employment Appeal Tribunal found that the drivers were workers. By signing up to the contract and hiring the car, the drivers were undertaking to do some work for Addison Lee. They remained subject to Addison Lee rules in between shifts (for example: they could not alter the car branding; no one else could drive the car; and they paid ongoing vehicle charges). As a result, the tribunals found that there was an implied overarching contract between 'logging on' sessions. Even without any overarching contract, the tribunals held that the 'worker' definition was satisfied each time the drivers logged into the app. This was because the drivers were undertaking to accept jobs allocated to them (even though the contracts said they did not have to). Unlike true independent contractors, the drivers were not found to be running small businesses on their own account.

Court of Appeal: Preventing the employer from arguing the point further, the Court of Appeal has now applied Uber v Islam, finding that there was a contract in place every time an Addison Lee driver logged onto the Addison Lee app. The position is now clear that such workers are entitled to holiday pay and National Minimum Wage. Whilst welcome news for such workers, this development will be expensive for employers and, in all likelihood, also consumers to whom the additional employment costs will likely be passed on.

  1. Equal pay – who is an appropriate comparator?

Overview: The Supreme Court has handed down its judgment on a preliminary point in an ongoing equal pay case in the supermarket sector.

In Asda v Brierley, a group of predominantly-female Asda store workers argued that they should be paid the same as a group of predominantly-male distribution depot workers paid.

The Supreme Court were asked to consider a preliminary issue as to whether the Claimants were entitled to rely on the distribution workers as comparators so that their claim can progress further.

The law: Section 79(4)(c) Equality Act 2010 provides that, if equal pay comparators do not work at the same workplace (e.g. here they were working at the Asda store and depot centres respectively), then, in order to bring an equal pay claim, the employees must be on ‘common terms’ of employment.

‘Common terms’ is not defined in law, but case law indicates that this test is met where: the worker and comparator are on broadly the same terms of employment; common terms apply in general for employees across the employer’s sites; individuals employed to do the kind of work as the comparator does, but at the claimant’s workplace, are on broadly the same (or ‘common’) terms as the comparator; and no work similar to the comparator takes place at the claimant’s workplace but, if it did, those workers would be on broadly the same terms as the comparator.

The facts: In Asda v Brierley, the 35,000 store workers bringing the group litigation claim were on retail terms, whilst the comparator distribution workers were on distribution terms. Although these terms were set by different management bodies, all management was ultimately controlled by Asda’s executive board, and (as was the case then) Wal-Mart governance. The store workers’ terms were not collectively negotiated by a trade union, but the distribution workers were represented by recognised trade union GMB in terms of pay bargaining.

Initial decision: The employment tribunal decided that the women were entitled to compare themselves to the distribution workers for a number of reasons, including that there was a single source of all the employees’ terms (i.e. Asda’s executive board). The tribunal held that the store and distribution workers’ terms were similar enough to be ‘common’, having been set within the same employer. The tribunal also found that the comparators would have been paid on distribution terms had they been employed at store locations.

On Appeal: The Employment Appeal Tribunal; the Court of Appeal and now the Supreme Court also agreed. With no comparator class of employees at the stores, the Supreme Court said that the correct question to apply was whether the comparators would have been paid in the same way had they been employed in their roles at Asda stores. It found that the comparators would have been on distribution terms rather than retail terms. That satisfied the ‘common terms’ test. In future, The Supreme Court suggested that all an employment tribunal needs to do is ask whether the comparators would be employed on the same (or substantially the same) terms if they were employed at the site where the claimants worked. If the claimants and comparators are already on broadly the same terms, wherever they work, then the common terms test will already be met.

Take-away: This does not mean that Asda has lost the equal pay case proper. Having won the right to rely on them, the Claimants must now demonstrate that that they do work of equal value to the comparators. Asda can seek to defend these claims by highlighting any genuine material factors which justify a pay difference. This case proves that, where there are no comparators at the same site, claimants are entitled to bring claims using comparators at other sites provided that they are on similar employment terms.

  1. New 2021 Vento Bands for Injury to Feelings

Overview: If an employee wins a discrimination claim against their employer, an Employment Tribunal will make an award to them for injury to feelings. Injury to feelings awards aim to compensate the employee for any hurt and embarrassment caused by the act(s) of discrimination. The employee may also receive other compensation for financial losses suffered as a result of discriminatory treatment.

Attaching a financial value to such a nebulous concept as “injury to feelings” can be tricky. Guidance on how to do so was originally set out by the Court of Appeal in a case called Vento v Chief Constable of West Yorkshire Police.

The Vento case established three bands or injury to feelings awards: a lower band for less serious cases (including one-off acts); a middle band for more serious cases and a top band for the most serious cases (such as a lengthy campaign of discrimination). Only in exceptional cases will injury to feelings exceed the top band or fall below the bottom band. As the award is intended to be compensatory rather than punitive, its value is based on how the discrimination has subjectively affected that particular employee, rather than an objective judgement on the employer’s behaviour.

New rates:

The ‘Vento’ bands are adjusted each year to take account of inflation. The new rates set out below will apply to claims brought on or after 6 April 2021:

  • Bottom band - £900 -£9,100
  • Middle band – £9,100 – £27,400
  • Top band – £27,400 to £45,600

Claims that were brought before 6 April 2021 will still have the old rates applied: lower band £900 - £8,800; middle band £8,800 to £26,300 and top band £26,300 to £44,000.  

  1. Does shared parental leave discriminate against men (to the detriment of women)?

Overview: An employer will be found to have directly discriminated against an employee if it has treated them less favourably compared to others on the basis of sex. To bring a successful claim, an employee needs to show that they have been treated less favourably than an actual or hypothetical comparator of the opposite sex whose circumstances are not materially different from theirs. Two recent cases of wide application have considered gender comparators in relation to different types of family leave.

Case 1: In Ali v Capita Management, the Court of Appeal held that a man on shared parental leave was not entitled to compare himself to a woman on maternity leave who was paid more than him. This was because the purpose of maternity leave goes beyond childcare; centring around the health and wellbeing of the mother both pre and post-partum; and not just the parental leave part of it. Mr Ali’s claim failed because his circumstances were materially different to his comparator’s. The correct comparator was a woman on shared parental leave, not a woman on maternity leave.

The EAT has recently considered a similar case, this time involving a man on shared parental leave and a woman on adoption leave.

Case 2: In Price v Powys County Council, a male employee wanted to take shared parental leave so his wife could return to work. He was told he would be paid shared parental leave pay, which was the same as statutory maternity pay. Under Council policies, employees on statutory maternity leave or statutory adoption leave were entitled to enhanced maternity or adoption pay. Mr Price decided not to take the leave and brought a claim for direct discrimination, comparing himself with a female employee on statutory maternity leave and a female employee receiving adoption pay, both of whom were paid at the enhanced rates.

The employment tribunal applied Ali and said the comparators’ circumstances were materially different and that the purposes of parental, maternity and adoption leave were all different. For example, adoption leave goes well beyond facilitating childcare and is designed to allow parents to take steps to prepare and maintain a safe environment for the child and time to form a parental bond. Adoption leave begins at the latest on the day of adoption, which was a material difference to shared parental leave and underlined the need for the adopter to prepare a safe environment and develop a bond with the child. The flexibility in relation to shared parental leave (which can move back and forth between parents) showed that it was designed to give parents greater choice about childcare responsibilities. Ordinary maternity and adoption leave can only be taken in one continuous block of 26 weeks which, the EAT said, showed that its purpose went beyond childcare. The EAT said that the correct comparator was a woman on shared parental leave, who would receive the same pay as Mr Price.

Take-aways: Firstly, in order for a man to bring a sex discrimination claim in shared parental leave cases, he must select the appropriate female comparator, i.e. a woman also on shared parental leave rather than on maternity leave. However secondly, and of wider application, whilst these cases have clarified the purposes of different types of family leave (enabling the tribunals to rule differently regarding whether each should attract enhanced pay) they do also highlight a potential issue with shared parental leave. Namely, that because parental leave does not attract enhanced pay, uptake will likely be lower by (predominantly) men creating inequality in the workplace as against women. It could be seen to reinforce the assumption that women will bear the brunt of childcare if payment for men taking parental leave is not equal to women taking other kinds of child-related leave.

  1. Unfair dismissal – if trust and confidence has broken down, can an employee be re-engaged?

Overview: An employee who has been unfairly dismissed may request the remedies of reinstatement and reengagement. Reinstatement means that the employee is put back into the job from which they were dismissed. Re-engagement means that the employee is taken back on by the employer in a comparable role. Where a tribunal has found that an employee was unfairly dismissed, and the employee has requested reinstatement or reengagement, the tribunal must first consider reinstatement, and, if it decides not to reinstate the employee, go on to consider re-engagement. At each stage, the tribunal must consider whether taking the employee back on in their previous or another role, is “practicable”. “Practicable” means that the re-employment is more than just possible but is capable of being carried into effect with success.

The Court of Appeal has recently looked at the practicability test in Kelly v PGA European Tour.

Facts: Mr Kelly worked for the employer for 26 years, latterly as Group Marketing Director. In 2015, the employer took on a new CEO who quickly raised concerns about Mr Kelly’s performance and his ability to ‘buy in’ to his new vision for the business. The CEO tried to negotiate his exit. During this process, Mr Kelly secretly recorded meetings. When negotiations failed, he was dismissed without following a fair procedure. Mr Kelly subsequently brought claims for unfair dismissal. The employer conceded that Mr Kelly’s dismissal had been unfair due to the lack of procedure. Mr Kelly sought reinstatement or re-engagement to the business.

Initial decision: The employment tribunal ruled that Mr Kelly should be reengaged into the role of Commercial Director, China. The employer objected to this because Mr Kelly could not speak Mandarin (an essential criterion for the role) and also because it felt that trust and confidence had broken down. The tribunal noted that Mr Kelly was willing to learn and was adept at languages. It ruled that the trust and confidence issues were not so serious and that concerns about the employee’s performance and integrity could be overcome. It therefore ruled that re-engagement was practicable.

On Appeal: The company appealed and the EAT agreed with the employer so the employee appealed to the Court of Appeal. The Court of Appeal agreed with the EAT. It found that an employer’s genuine belief in either an employee’s lack of capability, or that trust and confidence has broken down, can mean reengagement is not practicable. The tribunal here had substituted its own view rather than considering whether the employer’s doubts about integrity and capability were genuine and rational. It also noted that reengagement to a job where the employee did not meet the essential criteria was perverse.

Take-away: Employers will be heartened by confirmation at this level that reengagement to a role where an employee lacks essential skills, or where trust and confidence has been destroyed, is not reasonable or practicable. The Court of Appeal also noted that the rules did not require an employer to consider vacancies that had been filled by the time the remedies hearing took place, just vacancies which existed at the time of the hearing.  Reemployment remedies are tricky as they necessarily follow a dismissal which is unfair. That will always have an impact on relationships. This case shows that the reengagement remedy is limited, and in some cases an employer can avoid it.

  1. Defending health and safety claims where employee relies on COVID-19

Overview: Employees who consider there to be a real and imminent danger at work are protected from dismissal if they take steps, such as leaving the workplace, to protect themselves. This protection is found in section 100(1)(d)-(e) of the Employment Rights Act 1996. It protects employees who have a reasonable belief in danger to health and safety.

The pandemic has raised the issue of whether an employee could reasonably rely on such protection to refuse to work due to COVID-19? An employment tribunal has recently considered the matter in Rodgers v Leeds Laser Cutting including whether the employer’s subsequent dismissal of the employee was fair.

Facts: Mr Rodgers had less than two years’ service as a laser operator. He was one of around five employees who worked at any one time in a large warehouse-type building. A colleague developed COVID-19 symptoms and was off work. Mr Rodgers developed a cough so decided to self-isolate. At this point, the employer had already put some safety measures in place including social distancing, extra cleaning and staggered breaks. It reiterated government advice to staff. On 29 March 2020, Mr Rodgers sent a text message to his manager stating that he would not be returning to work until lockdown eased because he was worried about bringing the virus home to his vulnerable child who had sickle cell anaemia. Mr Rodgers was dismissed a month later. As he did not have enough service to bring an ordinary unfair dismissal claim, he brought claims for automatic unfair dismissal under s100(d) and (e) Employment Rights Act (which do not require two years’ service).

Decision: The employment tribunal found that a reasonable belief in serious and imminent danger should be judged on what was known at the time that the actions were taken. On the facts, the tribunal found that Mr Rodgers did not believe that there was serious and imminent danger in the workplace as he believed there was serious and imminent danger everywhere. That said, his evidence about his fear was undermined by his decision to drive a friend to hospital the day after he left work. The message to his manager referred to coming back when the pandemic eased, not when the workplace had been made safe. The size of the workplace and the real ability to socially distance also meant that, objectively, such a belief was not reasonable. Mr Rodgers could have averted danger by following the safety measures and refusing to do the occasional task that overstepped them. It was not reasonable for him to have unilaterally absented himself from work when it was possible to socially distance. Nor had Mr Rodgers taken appropriate steps to communicate his fears of imminent danger to his employer. Most interestingly, the tribunal rejected the employee’s assertion that COVID-19 presents serious and imminent danger regardless of what steps an employer takes to mitigate the risk. To do otherwise would mean that any employee could rely on these provisions to ‘down tools’ (as the judge put it) during the pandemic. However, the judge did say that these provisions could apply to situations arising from the pandemic and every case will have to be decided on its facts.

Take-away: This case is not binding on other tribunals but seems to provide them with some leeway to rule on such matters either way. Clearly, in this case the judge preferred the evidence and arguments of the employer; Mr Rodgers had given contradictory and confusing evidence which undermined his evidence about workplace danger. The workplace was large, social distancing was possible and safety measures were already in place even in March 2020. It is conceivable however that similar cases could go the other way depending on the facts. This case highlights that employers who properly implement safety measures will minimise the risk of potential claims by reducing the risk of ‘danger’ posed to staff by the virus in the workplace.

  1. When is an impairment substantial enough to be considered a disability?

Overview: The definition of disability is contained in s6 Equality Act 2010. Legally, a person is disabled if they have a physical or mental impairment which has a substantial and long-term adverse effect on their ability to carry out normal day to day activities. Substantial means more than just minor or trivial. In Elliott v Dorset County Council, the EAT looked at the test for disability in relation to an employee who was only diagnosed with autism because of difficulties he faced at work.

Facts: The employee, Mr Elliott, had worked for the Council for 34 years. He had agreed with a previous manager to record his working hours as 9am – 5pm regardless of the hours he worked. A new manager started with whom the employee had had problems communicating. The manager started disciplinary proceedings against Mr Elliott for falsifying his hours of work. In reality, Mr Elliott was obsessive in the way he worked, habitually working late into the night. Whilst helping Mr Elliott with his disciplinary, his union representative recommended that he undertake an autism assessment which subsequently confirmed he had autism and Asperger’s. Whilst Mr Elliott was being disciplined, a restructure was announced at the council. Mr Elliott chose to leave his employment with a redundancy package in order to avoid resuming the disciplinary proceedings. He subsequently brought a claim against his old employer for disability discrimination. At first instance, the employment tribunal held that Mr Elliott was not disabled because the impact of his autism on day-to-day activities was only trivial and not “substantial”.

On appeal: The EAT, who were only asked to consider the Tribunal’s preliminary-issue decision on whether Mr Elliott had a disability (rather than the full case) disagreed. It found that the tribunal had set out the law on disability correctly but had applied it incorrectly. The tribunal had not properly identified the relevant day to day activities in the case and then decided whether the disability had a substantial adverse effect on them. It had focussed on what Mr Elliott could do rather than what he couldn’t do/ could only do with difficulty as a result of his conditions. The EAT also held that the fact Mr Elliott had an effective coping strategy did not prevent the effect of his disability from being substantial unless the strategy could always work and never break down (for example, if the employee were under stress). The EAT confirmed that the test for whether a disability is substantial is not a spectrum; if the employee can show that the adverse effect is more than minor or trivial then the effect will be substantial. There is no need to look at the Equality Act guidance for further help if the answer is clear.

Take-away: This is a case where the employee was only diagnosed with autism precisely because of the difficulties he was having at work. He left employment because of those difficulties. The EAT judge remitted the case to a fresh tribunal to decide whether or not Mr Elliott was disabled (but gave a big hint that determining disability at a preliminary hearing may not be the best way forward). This case may make it harder for employers to argue that impairments do not have a substantial adverse effect on an employee’s ability to carry out day to day activities. Tactically, it may be better to only argue against disability as a preliminary point in cases where the employee has less than two years’ service and where a negative finding will therefore knock out the whole of the case.

  1. Directors' liability – a rare case where aggravated damages were awarded

Overview: Directors’ duties are set out in the Companies Act 2006, which requires them to act in good faith in the best interests of the company, taking into account the interests of employees. Directors must also exercise reasonable care, skill and diligence in their duties. A director will not be liable for a breach of contract if they are acting in good faith and within the scope of their authority.

Facts: In Antuzis v DJ Houghton, the employees were chicken catchers on a farm. They worked extremely-long hours and were regularly underpaid. They were not paid holiday pay and were underpaid in relation to overtime. Pay was sometimes withheld by their employer as a punishment. In 2019, the High Court found that the directors, as well as the company, were personally liable for those breaches of contract. The directors had known about the breaches and had not complied with their general duties under the Companies Act to act in good faith or in the best interests of the company. The directors had actually induced the breaches for purely financial gain.

Remedy Decision: At the remedy hearing, the High Court awarded the employees everything they had claimed for overtime, holiday pay and wages. The employees also asked the Court to award aggravated and exemplary damages (aggravated damages being compensatory, exemplary damages being punitive). The Court found that the contractual payments would not compensate the employees for the exploitation and abuse they had suffered. It awarded aggravated damages of 20% on top of the sums already awarded to the employees. The Court did not award exemplary damages because of the high sums awarded in aggravated damages and the fact that there was no evidence that the directors had made more money than this by exploiting their staff.

Take-away: This case is an example of how employees can use a variety of claims to seek financial compensation that is greater than the sums owed. This case was an extreme one, where the employees were treated very badly and the court considered it judicious to compensate them accordingly. Although aggravated damages are rare, this case shows the Courts will not hesitate to prosecute directors personally for serious breaches of duty.

  1. Sex discrimination – a case of misunderstanding

Overview: Direct sex discrimination is where someone is treated less favourably because of their sex. In normal direct discrimination claims brought under section 13 of the Equality Act, employees need to provide details of a comparator who was treated more favourably than them in comparable circumstances. However, section 18 of the Act deals with pregnancy and maternity discrimination. A woman bringing a claim under section 18 does not need to show that a male comparator would have been treated more favourably (for obvious reasons).

Facts: In City of London Police v Geldart, the employee was a police officer. During her maternity leave she was paid full pay for 13 weeks, half pay for ten weeks and then statutory maternity pay for the remaining period. She was contractually entitled to a London allowance of £4,338 per year. The employer paid the allowance at the same rates as her normal pay (i.e. full allowance for 13 weeks, then half allowance for ten weeks and then no allowance until she came back to work). The employee said the allowance should not have been reduced. She brought claims for direct sex discrimination.

Initial decision: The employment tribunal upheld her claim. It held that the police rules governing the reductions in pay for maternity leave did not apply to the allowance. Not paying her the allowance whilst on maternity leave was direct sex discrimination.

On appeal: by the employer, the EAT agreed with the employment tribunal. The workplace rules about the allowance simply said that London officers would receive a London allowance. The employee remained a London police officer during maternity leave and was therefore entitled to the allowance. The Court of Appeal, on further appeal agreed that the allowance was due under the police rules about pay. However, it said that the employer’s non-payment was not direct sex discrimination. It was not paid due to a misunderstanding by the employer that the allowance was ‘pay’ and therefore could be paid (and reduced) in the same way on maternity leave as the employee’s salary. Its non-payment was not because of sex. In dismissing the direct discrimination claim, the Court of Appeal allowed the employee’s cross-appeal against the dismissal of her indirect discrimination claim in relation to the same facts. However, in doing so, the Court strongly suggested that the parties come to some sort of compromise. It was now clear that the allowance should have been paid during maternity leave and the sum involved was relatively small compared to the legal costs of defending an indirect discrimination claim.

Take-away: This case highlights that a genuine non-discriminatory reason, such as mistake, can defeat a direct sex discrimination claim which will be welcome news to many employers. It is perhaps also an example of using a sledgehammer to crack a nut. The sums involved here were relatively small, the issues easily established, and the employee remained in employment. This was a case ripe for settlement from the beginning. It is also a reminder that mistakes can turn out to be costly. Consideration of commercial settlement at an early stage is essential.

  1. And finally… homeworking during and post COVID-19

The Office for National Statistics has recently undertaken a study of working patterns during the pandemic. The study (which looked at working patterns over the last 10 years) showed an increase of people working from home over this period, rising, unsurprisingly to more than a third of the working population during the pandemic.

Rather than affecting productivity, the survey showed that there was an unpaid overtime boom in favour of employers during the pandemic. Full-time homeworkers did the most unpaid overtime in 2020, with an average of 6 hours a week of unpaid overtime compared to 3.6 hours a week for non-homeworkers. The study also showed that sickness levels for homeworkers actually fell during the pandemic, albeit at just under 1 per cent. There is a suggestion that this may mean people are working through periods of illness rather than taking time off, which may not always be a good thing. However, it could also be down to the fact people are catching fewer other seasonal colds and viruses due to social distancing and other lockdown measures.

Advanced Workplace Associates suggests the data shows how much employees have embraced home working during lockdown with many wanting to retain this kind of flexibility in future.  Surveys suggest that only 5% of employees are now happy to work five days a week in the office, from 45% before lockdown. If employers can come to some sort of compromise with employees, a hybrid model of home and office working, the advantages may go further than overtime and sickness. Happy employees are invariably more productive, and flexibility creates loyalty amongst the workforce.