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There have been both high profile and important cases this month. In the
high profile category is one wrongly billed as a victory for Christians
against homosexuals. Those of particular importance include decisions
regarding holiday pay, one related to inclusion of overtime pay and the
other concerning accrual during long-term sickness absence. Of course,
there is also the regular dose of TUPE developments - what would my
Newsletter be without that?
I start, though, with two Government initiatives which may have important
consequences for our work.
Darryl Evans
T: +44 (0)7771 725341
E: dfe@evansemployment.co.uk
The government has announced the long-anticipated review into the effect of
the fee system, the results of which are expected towards the end of the
year. The number of claims being made has reduced so dramatically (between
50% and 80%, depending on the periods being compared) that it is likely that
some changes will be made.
A view held by some is that the reduction purely comprises spurious claims
which are now not being made. However, if that were the case, we would have
expected to see an increase in the success rate of claims. In fact, that
success rate has not improved, which suggests that a significant number of
valid claims and are not being brought due to the fee regime.
HMRC has recently published a consultation document regarding potential
changes to the treatment of individuals engaged through a personal service
companies (PSCs) - the well-known IR35 rules. The measures being considered
include placing an increased obligation on the 'employers' of these
individuals to ensure that the correct tax is being paid and limiting IR35
to assignments above a certain duration, presumably with the aim of
increasing compliance in more extreme cases.
The IR35 regime is generally regarded as failing so it is a likely outcome
of this review that tax and national insurance costs to certain people
working through PSCs will increase.
The case of CHEZ Razpredelenie Bulgaria AD v Komisia za Zashtita ot
Diskriminatsia (case C-83/14) is an important one in the area of
'associative discrimination' - that is, where a person who is not
him/herself in the protected category but suffers discrimination owing to
his/her link with someone who is. Does that apply to indirect as well as
direct discrimination?
This case was not about employment, but concerned the placement of
electricity meters in a specific district in Bulgaria that was predominantly
populated by people of Roma ethnicity. The electricity supplier placed the
meters at a height of approximately six metres. In other districts the
meters were fixed at around 1.7 metres, which allowed users to check their
usage. The reason given was that in this particular area there was a high
incidence of tampering.
Clearly there was scope for someone of Roma ethnicity to bring a claim. But
the claimant here was not a Roma - she just suffered the same inconvenience
because she lives in that district.
The European Court of Justice held that she could claim. An individual may
claim indirect race discrimination on the basis of their association with an
ethnic group that is disadvantaged by a provision, criterion or practice,
even if that individual is not part of that group.
This does not mean that she will succeed with her claim, only that she is
entitled to make it. However, it is a significant decision for UK
discrimination law which will now either have to be interpreted in line with
this decision, or could even be found to be incompatible with EU law.
Ms Begum wore a jilbab, which covers the body from neck to ankle. When she
attended a job interview for a position at a day nursery the manager
commented that she would need to ensure that anything she wore was not so
long that it caused a tripping hazard.
The nursery heard no more from her until she started her discrimination
claim against them related to this condition of her work.
The Employment Appeals Tribunal (EAT) supported the nursery, however. It
held that the provision, criterion or practice of ensuring that clothes did
not present tripping hazards was not discriminatory, and even if it was, it
was justified. The nursery manager was best placed to make a judgement as to
the risk to health and safety presented by any employee's clothing. (Begum v
Pedagogy Auras UK Ltd (t/a Barley Lane Montessori Day Nursery)
UKEAT/2015/0309.)
We move on from race discrimination, but curiously do not leave the world of
children's nurseries.
Mbuyi v Newpark Childcare (Shepherds Bush) Ltd (ET/3300656/14) made
headlines which wrongly categorised the case as one in which religion
trumped sexual orientation. That was because, when the nursery dismissed a
Christian employee for expressing negative views about a colleague's
homosexuality, the dismissal was held to be discriminatory.
In fact, the main reasons for the discrimination were the employer's
procedural failings (which included a failure to carry out a proper
investigation). The employer had to explain why it had fallen so short in
its procedures and it could not, so the employment tribunal felt it had to
infer that the dismissal had been based on stereotypical negative
assumptions of the beliefs of evangelical Christians.
That said, the tribunal did comment that inappropriately expressing a
religious belief of this type could in some circumstances justify a fair
dismissal (Ms Mbuyi had less than two years of service so unfair dismissal
was not in issue here). The implication is that, had the employer followed
reasonable procedures, the decision may well have gone the other way.
In Newbound v Thames Water Utilities Limited (2015 EWCA Civ 677) Mr Newbound
had been employed by Thames Water for 34 years before he was dismissed for
gross misconduct. He had gone into a sewer without wearing breathing
apparatus, in contravention of a new safety rule which had been brought
verbally to his attention by his line manager.
The employment tribunal held that his dismissal was unfair, a decision which
the EAT reversed, only to be overturned by the Court of Appeal, which
reinstated the original unfair dismissal finding.
The reason for the unfairness was that despite having been told about the
new rule in advance by his line manager, Mr Newbound had not been trained in
the observance of the rule, he did not know that he could be dismissed if he
failed to comply with it, and the practice of entering sewers without
breathing apparatus had been condoned for many years. In addition, another
employee, who was in charge of sewer entry, allowed him to enter without the
breathing apparatus, and was himself only given a final written warning.
That was held to be an unjustifiable disparity in treatment.
There are three lessons from this case. The first is the benefit of
highlighting if a policy is important and if a breach is so serious that it
could lead to dismissal. The second is the need to ensure consistency in
sanctions. The third is that tribunals will not give limitless discretion
to the employer to make its own decisions over disciplinary matters - there
is a 'band of reasonable responses' within which a tribunal should not
interfere, but that band is not of unlimited width.
The EAT has decided that an employee was not under a general duty to
disclose to his employer allegations of sexual misconduct made against him
while working elsewhere.
The employment contract did contain express terms requiring disclosure of
misconduct in certain circumstances, either during employment or in
circumstances set out in additional documents. However, the employer did not
provide these additional documents to the tribunal in evidence, so it was
unable to establish that the employee was subject to an obligation to
disclose. In the absence of an express term, disclosure was not obligatory.
Especially in regulated sectors contracts increasingly include a requirement
to disclose wrongdoings. This case emphasises the value of that and of
doing so in clear terms. (The Basildon Academies v Amadi UKEAT/0343/14.)
The Advocate General of the European Court of Justice has given his opinion
(which means advice to the ECJ - this is not a legal decision yet) that the
time spent travelling by peripatetic workers between appointments counts as
working time for the purposes of the Working Time Directive and that
includes the journeys between their homes and their first and last
assignments of the day. A peripatetic worker includes anyone who is not
assigned to a fixed place of work, such as home-based salespeople.
This emphasises the benefit of requiring such employees to sign an opt-out
from the requirement to limit average weekly working to 48 hours.
(Federación de Servicios Privados del sindicato Comisiones Obreras v Tyco
Integrated Security SL and another C-266/14.)
You will remember, because I keep going on about it, the Bear Scotland case,
in which it was held that overtime which the employee was obliged to work if
requested by the employer may need to be included in the calculation of
holiday pay.
That case did not, though, address purely voluntary overtime, so it remained
uncertain whether that should be subject to the same principles. Well, the
Northern Ireland Court of Appeal thinks it should.
Although the Northern Ireland Court of Appeal is not binding on English
courts, this will no doubt be seen to point to an acceptance that holiday
pay may need to include an allowance for any form of overtime.
Other uncertainties from Bear Scotland apply equally to voluntary overtime
of course - such as: is the overtime 'normally' carried out, is it part of
'normal remuneration', over what reference period does the calculation need
to be made, and how retrospective can claims be? (Patterson v Castlereagh
Borough Council (2015 NICA47).)
Plumb v Duncan Print Group Ltd (UKEAT/0071/15) concerned the vexed question
of what happens to an employee's holiday accrual if they are on long-term
sickness absence. Does an employee who is covered by a permanent health
insurance arrangement (so stays in employment whilst long-term ill, but the
employment costs are covered by insurance) accrue holiday throughout and
rack up a large accrued holiday entitlement which has to be granted or paid
out when the employee returns to work or leaves?
In this case the EAT has held that the worker on sick leave need not
demonstrate that they are physically unable to take annual leave in order to
carry over accrued unused statutory holiday to a subsequent leave year. It
is sufficient that they are absent on sick leave and do not choose to take
annual leave during that period. That much, I think we have assumed.
The good news for employers from the decision is that the EAT also decided
(relying on the ECJ decision in the Schulte case) that a worker should be
able to take annual leave within 18 months of the end of the leave year in
which it accrued. In other word, carry over is not unlimited. Use it
(within 18 months of the leave year ending) or lose it.
The case may be appealed, though.
OK, it is TUPE time at last.
One of the risks I often identify in outsourcing contracts is that if a
client receiving outsourced services fails to look ahead to the end of the
contract and draft protections accordingly, it can find itself with the
outgoing provider's weakest staff assigned to its service team, who remain
attached like limpets to the provision of the service when it switches to
the new provider because of the operation of TUPE. Here's a case in which
the client was exposed to this type of risk even despite protecting itself
in the contract.
Ms Jakowlew was employed as a care worker by Saga Care, working principally
on a contract for the London Borough of Enfield. Owing to concerns about her
conduct and that of two of her colleagues, the Council instructed Saga Care
to remove them from the service, in accordance with the service contract
terms. Saga Care disputed the Council's right to do this and did not
immediately comply. Instead, it took disciplinary steps against the three
employees and gave Ms Jakowlew a written warning.
At around the same time the service contract expired and the relevant
services transferred to a new provider. There was confusion over whether Ms
Jakowlew had transferred under TUPE. Eventually, Saga Care accepted that
she had not, because of the Council's unwillingness to have her working on
the contract. It continued paying her until it dismissed her for redundancy.
Ms Jakowlew claimed unfair dismissal, arguing that her employment had
transferred under TUPE.
The EAT held that it had. She remained 'assigned' to the organised group of
employees supporting the contract despite the requirement that she be
removed, because the instruction had not been actioned.
The moral of the tale is: include wording in the services contract which
allows you to control the composition of the staff providing the service and
ensure those provisions are followed by the service provider. (Jakowlew v
Nestor Primecare Services Ltd (t/a Saga Care) and another UKEAT/0431/14.)
Jinks v London Borough of Havering UKEAT/0157/14 is an alert to the fact
that where a service provider sub-contracts some of its services to another
company, employees of that sub-contractor might fall within TUPE and
transfer to the client or a new service provider when the contract ends.
The Council contracted with a company called Saturn to operate an ice rink
and car park. Saturn sub-contracted the car park operation to Regal. Regal's
subcontract ended when Saturn gave up the car park, the Council passing it
on to a local NHS Trust. Mr Jinks, an employee of Regal, claimed that his
employment transferred from Regal to the Council.
The employment tribunal struck out the claim as having no real prospect of
success. For there to be a TUPE transfer, the 'client' must be the same both
before and after the transfer. Saturn was Regal's client, not the Council.
The EAT disagreed. The question was: who was Regal running the car park on
behalf of? The identity of the client is a question of fact, not law. The
EAT sent the case back to an employment tribunal for reconsideration.
'Ignorance of the law is no defence' is how the expression goes. The
employer discovered its truth in E Ivor Hughes Educational Foundation v
Morris and others (UKEAT/0023/15) when it faced liability for a full a 90
day protective award having undertaken no collective redundancy consultation
because it was unaware of its legal obligation to consult.
Neither could it rely on the defence of 'special circumstances rendering it
not reasonably practicable to comply with consultation requirements'. The
employer could not possibly have considered such circumstances if it was not
aware of the consultation obligation in the first place.
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