Employment E-Bulletin Article
To help you quickly keep up to date with employment law, we summarise the key developments arising from cases, guidance, legislation and consultations for this month.
In the courts... recent case law developments
Another gig economy employment status case
Once again, employment status in the "gig economy" is in the spotlight. The most recent case Boxer v Excel Group Services involves a cycle courier who has been found by an employment tribunal to be a worker despite being held out as being a self-employed contractor, thus succeeding in his claim for a week's holiday pay.
In making its decision, the tribunal applied the judgment of the Court of Appeal in the case of Pimlico Plumbers Ltd v Smith and decided that the individual's written contract with Excel that purported to hold him out as a self-employed contractor did not reflect the reality of the situation. Some of the factors that influenced the tribunal decision included that he worked nine hours a day for five days a week, he had to be available at all times during the working day and could only take time off, or change hours, on notice and with agreement, he worked for fixed rates set by Excel which were non-negotiable, he did not bear the risk of cost of damage in transit, and the right of substitution was so restrictive that in practice he would have difficultly providing a substitute courier.
Taken alone this case is likely to be of limited significance because Excel did not produce any evidence or attend the hearing and AB's evidence was therefore uncontested (as Excel had gone into liquidation). Nevertheless, the decision re-iterates that in the "gig economy", the day-to-day reality of self-employed contractor relationships is not reflecting the relationship described in the contracts. Our general advice for clients in the relevant sectors is to 'health check' their current labour model to understand its risk profile and where possible take remedial action to limit potential reputational and financial risk exposure.
For a more detailed look at the case, please click here.
For our commentary on previous gig economy cases, please see our previous bulletins including our general update on the gig economy in January and our case commentary articles on Pimlico plumbers, CitySprint and Uber.
ACAS Early Conciliation
There have been two recent cases on ACAS early conciliation, summarised below:
ACAS early conciliation before limitation period doesn't count towards extension of limitation period time
It has recently been held that ACAS early conciliation that takes place before the limitation period has started running cannot count towards an extension of time. The claimant's case was therefore submitted out of time but the tribunal decided to extend the time limit as it had not been reasonably practicable for her to submit her claim in time. It should be noted that this case will not be binding on other tribunals and individuals should not assume that extensions will be granted in other cases. Fergusson v Combat Stress ETS/4105592/16.
The Early conciliation (EC) regime does not allow for more than one EC certificate per 'matter' to be issued by ACAS
The EAT has now clarified a conflict between previous different tribunal decisions in the recent case of Commissioners for HM Revenue and Customs v Serra Garau UKEAT/0348/16. It was held in this case that statute creates only one mandatory early conciliation process in every claim. Legislation is in place to ensure potential claimants cannot bring a claim without first acquiring an early conciliation certificate, but as soon as this certificate has been issued, there is no obligation to apply for a second certificate. Therefore, the issuing of a second certificate for the same matter does not extend the time period further.
- What is the test for reviewing redundancy dismissals where employees compete for new posts in a restructure?
Once an employer has established a potentially fair reason for a dismissal (e.g. redundancy) it must then decide if the employer acted reasonably in dismissing the employee for that reason (s98(4)). This includes looking at whether there was procedural fairness and whether the employer acted reasonably in treating the reason as a sufficient reason for dismissal. In Green v London Borough of Barking & Dagenham, the tribunal considered whether this s98(4) test was necessary in a redundancy dismissal as a result of a competitive process.
The claimant had been one of three jobholders of her grade selected for an internal redundancy process which required them to compete for two new jobs as a result of a restructure. The claimant was not successful and was dismissed for redundancy. At tribunal, the claimant alleged that the subject matter of a written test they had been required to take had been known to another candidate before taking the test, making the process unfair. Further, the claimant alleged that her dismissal appeal had been unfair as the employer had not properly considered the concerns raised.
The tribunal distinguished this case from Williams v Compair Maxam and held that the question to assess was why the Claimant had not been appointed to one of the remaining positions as opposed to why she had been selected for redundancy. The tribunal applied Morgan v Welsh Rugby Union which had distinguished Williams and had expressed that appointments to new roles after reorganisations may allow for more employer judgement. The tribunal here interpreted Morgan to mean that it should not address questions arising from s.98(4), including looking at the redundancy selection pool composition and how genuine redundancy dismissal appeals had been dealt with. However, the EAT disagreed and expressed that the tribunal had wrongly applied Morgan as a legal rule. The benchmark for tribunals should always be s98(4) for dismissals. Tribunals must review decisions and processes in order to assess whether every stage would fall within the band of reasonable responses.
TUPE employee liability information is not limited to contractual particulars of employment
In Born London Ltd v Spire Production Services Ltd UKEAT/0255/16.), the EAT has decided that the employee liability information (ELI) that a transferor must provide under TUPE does not have to specify whether an employee's entitlements are contractual or not. This is because the requirement to provide particulars of employment under section 1 of the ERA 1996 does not distinguish between contractual and non-contractual matters and TUPE does not alter that position. As a consequence, inaccurately stating that a bonus was non-contractual in the ELI did not breach regulation 11 of TUPE.
- Right to be accompanied
A tribunal has awarded £2 nominal compensation for a breach of an employee's right to be accompanied (section 10 of the Employment Relations Act 1999). This decision applies the case of Toal v GB Oils  which determined that, as long as a companion falls into one of the permitted categories (i.e. certified or employed TU official or a colleague) then the employee has an unfettered right to be accompanied by their chosen companion. However the case also established that tribunals had the option of awarding nominal compensation where there was no detriment or loss suffered. Gnahoua v Abellio London Ltd ET/2303661/2015.
Indirect discrimination: no need to establish the reason for particular disadvantage
In the joined cases of Essop v Home Office (UK Border Agency) and Naeem v The Secretary of State for Justice, the Supreme Court overruled the Court of Appeal in their assessment of the scope of indirect discrimination and held that a claimant does not need to prove the reason why the relevant provision, criterion or practice (PCP) places people who share their protected characteristic at a disadvantage (the "context factor"). It also said that the reason does not have to relate to the protected characteristic. The key question for the UK's highest Court to decide in both Essop and Naeem was whether or not the claimant had to show some reason why they and those sharing their protected characteristic had suffered the disadvantage. The Supreme Court's answer to this question was no. It held that that the definition of indirect discrimination does not contain any express requirement for an explanation of the reason why a PCP puts one group at a disadvantage compared to others - it is enough that it does as a matter of fact. However, there does need to be a causal link between the PCP and the particular disadvantage suffered.
For more detailed commentary on this case, please refer to our article on the case here.
There are a number of changes that have taken place in April, and these are summarised below but for more detail please see our March bulletin:
- Gender Pay Gap reporting Regulations bringing into force gender pay gap reporting requirements come into force: a) on 31 March 2017 for specified public authorities with at least 250 employees (with a snap shot date of 31 March); and b) 6 April 2017 for private and voluntary sector employers with at least 250 employees (with a snap shot date of 5 April).
- Limits on tribunal awards and statutory payments increased from April 2017
The following increases in compensation payments apply to dismissals (or detriments, etc) occurring on or after 6 April 2017:
- The limit on compensation for unfair dismissal has increased from £78,962 to £80,541
- The limit on a week's pay for the purposes of calculating, among other things, statutory redundancy payments and the basic award for unfair dismissal, has increases from £479 to £489
- Guarantee pay has increased from £26 to £27 per day
- The minimum basic award in cases where a dismissal is unfair by virtue of health and safety, employee representative, trade union, or occupational pension trustee reasons will increase from £5,853 to £5,970
- National Living Wage. From 1 April 2017 the national living wage for workers aged 25 and over increased by 30p to £7.50 an hour. The rates of other minimum wage bands also increased please see our changes on the horizon table
- Regulations brought into force sections 22, 23 and 25 of the Enterprise Act 2016, establishing the Institute of Apprenticeships from 1 April and creating an offence which bans training providers in England from using the word "apprenticeship" except to describe a statutory apprenticeship
- Statutory payments. The level of statutory maternity, adoption, paternity and shared parental pay rose to £140.98 from 2 April 2017. Statutory sick pay rose to £89.35 on 6 April 2017
- Apprenticeship levy. Regulations made on 15 March made provision for the calculation and payment of the apprenticeship levy through PAYE, alongside income tax and NICs, and took effect on 6 April 2017. Provision for the calculation and payment of the Apprenticeship Levy came into force on 6 April 2017. For more information click here and here and for commentary on the Levy click here. Regulations were also made to bring into force the penalty provisions for errors in Apprenticeship Levy returns from 6 April 2017. We are still awaiting the commencement regulations to bring into force the penalty provisions for late payment of Apprenticeship Levy and late filing of Apprenticeship Levy returns. Employers in England that pay the levy will be able to access funding through a digital service which is expected to open from 1 May 2017.
- Tax Free Childcare launches on 28 April 2017
The tax free childcare scheme will be introduced on 28 April 2017, and will then be gradually rolled out during the year, with parents of children under two invited to access the scheme initially. The aim of this scheme is to support parents with the cost of childcare, allowing more parents to go to work. Unlike the current salary sacrifice scheme (which is offered by employers), this new tax-free childcare scheme provides help to any working family, provided they meet the eligibility requirements. The old scheme will continue to run, allowing new entrants to register until April 2018. Parents already registered by this date will be able to continue using it for as long as their employer offers it.
Requirements for annual reports for prescribed persons into force
The Prescribed Persons (Reports on Disclosures of Information) Regulations 2017 were due to come into force on 1 April 2017. They will require prescribed persons to report annually on disclosures of information received from workers. The report should not contain information that may identify the worker, the employer or the person in respect of whom the disclosure has been made. The Regulations introduce a new obligation on all prescribed persons under the whistleblowing legislation to produce an annual report on whistleblowing disclosures made to them by workers. Prescribed persons are regulators and other bodies to whom a worker can make a protected disclosure instead of, or in addition to, their employer. The reporting period will be 12 months beginning on 1 April each year and the report must be published within six months of the end of the reporting period. The regulations set out how the report should be published and what it should contain. They are made under section 43FA of the Employment Rights Act 1996, introduced by the Small Business, Enterprise and Employment Act 2015. The government has also updated its guidance for prescribed persons which now includes information on the new duty. It states that the aim of producing an annual report is to increase transparency in the way that disclosures are dealt with and to raise confidence among whistleblowers that disclosures are taken seriously.
Public employers information on union officials
On 8 March 2017, the Trade Union (Facility Time Publication Requirements) Regulations 2017 (SI 2017/328) were published. These came into force on 1 April 2017 and set out the information that relevant public employers will have to provide with regard to union officials and facility time.
Guidance and Consultations and Ombudsman decisions
- Acas and Geo publish revised final Guidance on Gender Pay Gap Reporting
Acas and the Government Equalities Office have launched the final version of the joint guidance on mandatory gender pay gap reporting which came into force on 31 March 2017 for large public sector employers, and 6 April 2017 for large private and voluntary sector employers. The guidance has been expanded to cover both the Equality Act 2010 (Gender Pay Gap Information) Regulations ("GPG Regulations") and the Equality Act 2010 (Specific Duties and Public Authorities) Regulations 2017 ("SDPA Regulations"). The final guidance clarifies a number of areas of uncertainty; in particular in relation to salaried partners and LLP members, casual workers and contractors, pension contributions and bonuses The main changes to the guidance are as follows:
- Partners, where they would usually also be considered employees, should be used to establish the employee headcount. However they do not need to be included for the purposes of the calculations and you do not therefore need to report on them. The GPG Regulations exclude partners in traditional partnerships and limited liability partnerships from the definition of 'relevant employee', because partners are not "paid" but instead take a share of the profits, which is not directly comparable with employees' pay
- Employees who receive no pay at all during the relevant pay period should be excluded from the gender pay gap calculations (although they may be included in the headcount). The GPG Regulations and SDPA Regulations allow employers to exclude employees on reduced or nil rates of pay as a result of being "on leave", but not where pay is reduced due to working patterns
- Clarification in relation to aspects of ordinary pay
Clarification in relation to the calculation methods for bonuses
- The guidance highlights the minor differences between the GPG Regulations and the SDPA Regulations, and contains some additional information concerning gender pay gap reporting for public sector bodies generally, for example, employers subject to the SDPA Regulations do not need to publish a written statement (although the SDPA Regulations impose a further reporting duty on public authorities that obliges them to publish information demonstrating compliance with the public sector equality duty).
For our amended commentary guidance, please refer to our article here.
The Government Gender Pay website is also now live and includes the data for some companies.
- High heels and workplace dress codes
The response the House of Commons Petitions Committee and Women and Equalities Committee report on dress codes in the workplace has been published. This was as a result of a petition following a high profile incident (for more information and our previous article click here). Whilst the response states that the issue of discriminatory dress code is taken very seriously by the government, it rejects any recommendations that require legislative change. Instead it prefers an approach of issuing detailed guidance, having an awareness campaign and having "persuasive enforcement" by the EHRC. Guidance is expected to be issued during the summer of 2017.
- Caste Discrimination consultation
The government launched its consultation paper on caste discrimination and equality law on 29 March 2017. The consultation will seek views on whether additional measures are needed to ensure victims of caste discrimination have sufficient legal protection and effective remedies under the EqA 2010.. The consultation suggested two methods of addressing caste discrimination: (1) prohibiting caste discrimination through developing case law; (2) prohibiting caste discrimination by specifying caste in the Equality Act. The government has asked for responses to the consultation to address a number of key issues, including which types of caste discrimination, if any, would not be covered by the concept of ethnic origin and suggestions on the pros and cons (such as social and economic) of relying on case law versus bringing in specific legislation on caste. The consultation highlights a possible issue regarding the explicit addition of caste to the Act in that it could instigate a greater awareness of caste-based identity within British society which could ultimately lead to divisiveness. Originally, the consultation was due to take place in autumn 2014, however this was delayed pending the outcome in Tirkey v Chandok and another ET/3400174/13 which concerned race discrimination by reference to caste. Following the EAT's judgment in this case the government states that the EqA 2010 is already capable of protecting against caste discrimination. For example, under the Act, race includes colour, nationality and ethnic or national origins. The consultation will close on 18 July 2017.
In the News
- General election
Theresa May has called for a general election on 8 June 2017. Employment law and workers' rights is likely to be on the agenda for all parties. The announcement of a snap general election on 8 June 2017 raises the question of whether proposed employment legislation will make its way through parliament in time.
Parliament will be dissolved on 3 May, after which no further legislation will be passed until parliament is opened again after the election. Bills not passed by 3 May will lapse. The next government will then be able to decide whether to present them again either in their current or an amended form. Statutory instruments not passed 3 May will also have to be laid before parliament again after the election.
Whilst the Finance Bill 2017 is being fast-tracked through, the government has decided to leave out of the Bill changes to the taxation of termination payments. These include measures that made notice pay taxable where notice is not worked and measures making all termination payments subject to class 1A NICs above £30,000. The Bill still contains the changes to off-payroll working in the public sector. It is likely that these provisions will be brought back and debated in parliament again after the election.
GMB union launches gig economy case against Amazon logistics supplier
GMB union has instigated legal action against national logistics company UK Express (according to reports from FleetNews), on behalf of workers carrying out deliveries for Amazon arguing that, like Uber drivers, they should be described as workers rather than self-employed.
On 29 March 2017, the Prime Minister triggered Article 50 giving the European Council notification of the UK’s intention to leave the EU. Unless extended, the UK will leave the EU at midnight on 29 March 2019.