Monthly Archives: February 2021

IT’S THE END OF THE ROAD FOR UBER AND ITS DRIVERS

Supreme court makes its decision on private hire drivers’ legal rights

The ongoing legal battle between Uber and its private hire drivers has arrived at its final destination now that the Supreme Court has confirmed private hire drivers operating through the Uber platform are workers for the purpose of basic statutory employment rights.

Where did the journey start?

The so-called gig economy aims to provide individuals with a degree of flexibility in terms of when and who they work for and to enable businesses to be able to control resources and costs in line with operational needs and budgets. Freedom of choice and the ability of the parties to negotiate unhindered was heralded as positive step for the labour market and the economy. However, the mutual benefits the gig economy provided to both parties over the last few years appear to have lost their appeal. Concerns have been voiced about individuals providing their services in this way not having the same basic rights as employees and workers as they are operating on a self-employed basis. Only employees and workers enjoy basic rights, including the right to be paid holiday pay and the minimum wage and to be protected from deductions being made from their wages.
As a consequence of these perceived inequalities, the tribunal and court system has been asked to determine in a number of cases over the last few years whether individuals are genuinely self-employed or are workers who are entitled to some basic legal rights in relation to the pay. Interestingly, many of the cases have involved couriers and taxi drivers.

The start of the legal journey for Uber

The dispute between Uber and its drivers reads like a travel journal through the UK tribunal and courts system. The journey started in the Employment Tribunal in 2016 when a number of Uber drivers brought claims for unlawful deduction of wages, alleging they were not being paid the national minimum wage and they were entitled to holiday pay. It was also asserted that they had the right not to suffer a whistleblowing detriment. To benefit from these rights the drivers would have to persuade the Employment Tribunal that they were workers and not self-employed.

In simple terms, Uber’s position was that:
The drivers were not workers. Uber asserted that it acted as an intermediary providing a booking and payment platform for self-employed drivers using the Uber app to provide their taxi services to passengers. To support the commercial arrangement, Uber had in place complex contractual documentation.

Any working time was limited. Uber asserted that working time could only be when the driver was actually driving a passenger.
The Employment Tribunal did not agree with Uber and having considered all the facts was satisfied that …..

the drivers were workers for and under contracts with Uber due to the following five key factors ….
• Uber fixed the fare
• Uber’s contractual terms with the drivers were non-negotiable
• Uber issued penalties if drivers did not accept rides when available to work
• Uber issued warnings or could terminate the arrangement where the provision of the services was sub-standard
• Uber limited the communications between a driver and passenger to a minimum

the drivers’ working time was when they were …
• located within their agreed territory
• available for bookings or waiting for bookings
• signed into the Uber App
Uber’s contractual documentation which purported to establish the self-employed status of the drivers was disregarded on the basis it did not reflect the reality of their relationship with Uber.

At the time the claim was brought, Uber had some 30,000 drivers on its books in London and some 40,000 across the UK as a whole. Not unexpectedly given the financial ramifications of this decision involving the real risk of multiple back pay claims, Uber appealed to the Employment Appeal Tribunal (“EAT”).

What happened at the next stop?

The EAT agreed with the tribunal’s decision and dismissed Uber’s appeal. The EAT was not prepared to accept Uber’s argument that it was simply an intermediary putting passenger in touch with drivers and the contractual documentation reflected this.

Uber continued with its journey to the Court of Appeal

Not satisfied with the EAT’s decision, Uber appealed to the Court of Appeal on the same grounds that it had to the EAT. However, there was no moving the judiciary on this issue and the Court of Appeal in a majority decision was satisfied that the drivers were workers.

The following was noted:
• Uber was running a transportation business using the driver to provide the service from which it earned a profit. It was not accepted that Uber was providing a service to the drivers.
• There was no contract between the driver and passenger.
• The contractual documentation did not reflect the reality. The Court of Appeal noted that the contract showed a “high degree of fiction”.
• The drivers were workers when the Uber App was turned on and they were available to accept bookings in their territory.

The Supreme Court was not prepared to change the previous decisions

Uber argued that there had been no legal justification for ignoring the contractual documentation which reflected the true status of the drivers i.e., self-employed. It argued that the terms on which they were engaged were clear and unambiguous. Uber’s appeal to the Supreme Court was however unsuccessful.

The Supreme Court was unanimous in its decision that the drivers were workers and the following was noted:
• The rights asserted by the drivers were statutory rights under the Employment Rights Act 1996, the Woking Time Regulations 1998 and the National Minimum Wage Act 1998 and not contractual rights. The task was to consider what the legislation said and not what the contract provided.
• When interpreting the statute, it was necessary to give effect to the purpose of the legislation. The legislation relied upon in this case was introduced to protect vulnerable individuals who would have little say over their terms and conditions.
• The legislation in question prevents the parties contracting out of the statutory rights. To allow this would result in the return of the mischief which the legislation had been introduced to prevent.
• It was a question of fact whether the drivers were workers or self-employed, to be decided by the Employment Tribunal. Based on the facts the Tribunal was entitled to decide that the drivers were workers and this was the only reasonable conclusion that could have been arrived at.
• The Employment Tribunal had correctly concluded that the drivers’ working times was when they were logged on to the Uber App, in their territory and ready to start work.

Are businesses prepared for the Supreme Court’s decision?

Uber’s position has been rejected at every level of the UK legal system. The Supreme Court’s decision will have been welcomed by many because it will redress the perceived imbalance by ensuring a larger proportion of the current labour market will have access to basic working rights and protection. While the sentiment is right that the most vulnerable in our society need protecting, in today’s economy is it right that the courts can take away freedom of choice and deny the parties the right to strike a deal and freely enter into a contract which works for them both?

In fullness of time, there is a possibility that a significant number of people who are reliant on the gig-economy to earn a living will be disadvantaged as organisations previously reliant on flexible labour will look at other ways of resourcing their operations. The reluctance to use this group of individuals who are looking for work will be due to the financial and legal risks bearing in mind the agenda appears to have been firmly set about expanding the group of individuals who should have worker rights. Opportunities for those individuals who genuinely want to be part of the gig-economy because it gives them the freedom to choose when and how they work to allow for a better work life balance, to support their health needs or to manage their childcare or caring responsibilities may become limited.

Organisations which have relied heavily on the gig-economy for additional people resources will no doubt be taking stock of what this decision may mean for their operations including dusting off their contracts to identify if they now have any value, assessing the potential future costs to the payroll and the possible risk of legal claims for historical pay claims.

FGS’ legal team includes specialists in employment law who can assist you to identify the legal and financial risks arising from those you engage with for their services and help you to create a strategic plan to minimise these risks.

If you require further advice about protecting your business from worker status challenges, please feel free to call us on 0808 172 9322 for a no obligation discussion.

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This update is for general guidance only and advice should be taken in relation to a particular set of circumstances.

DON’T LET YOUR TERMS OF BUSINESS LET YOUR BUSINESS DOWN!

As a business do any of the following sound familiar?

  • “We tend to rely upon the other party’s terms and conditions!”
  • “Our terms and conditions are on the reverse of the invoice!”
  • “The business’ financial liability is never limited!”
  • “There is no provision for charging for late payments!”

Confused about what your commercial terms and conditions should include? Not sure about whether they protect the business’ financial and commercial interests? Are they exposing the business to legal risk?

If so, there is a solution!

FG Solicitors commercial contracts specialists offers a proactive and practical approach, providing businesses with the confidence to do business 24/7, 365 days of the year.
To find out what your business CAN do please contact FG Solicitors on 080 172 9322 for a no obligation discussion.

WELCOME TO A MORE CONFIDENT FUTURE!

For further details about the commercial legal service and assistance we provide to businesses, please click here. 👇

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This update is for general guidance only and advice should be taken in relation to a particular set of circumstances.

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EMPLOYERS NEED TO MIND THE GAP!

Mental health has moved higher up the workplace agenda when it comes to people management over the last few years with even more focus on the support that workers with mental health conditions may need.

The current pandemic has identified how vulnerable people with mental health problems are when it comes to their jobs and money; there are still many inequalities in the workplace then comparing this group with workers without mental health problems.

How have these inequalities been identified?

The Mental Health and Income Commission’s recent report has highlighted that there is still some way to go to address the differences in treatment between workers with mental health problems and those without mental health problems:

  • A mental health income gap of £8,400 per annum.

Lower employment rates and weaker wages are the main causes of the pay difference. Those who suffer from anxiety and depression are likely to experience a pay gap of more than £8,400 per annum.

  • One in five people with mental health problems in the UK have faced discrimination at work.

The most common types of discrimination have been cited as being passed over for promotion or being made redundant. Seven per cent of working age people with mental health problems have reported being made redundant compared with four per cent without mental health concerns.

  • Three in ten people with mental health problems experienced an income reduction during the pandemic.

Many of these individuals have gone without daily living essentials such as food and heating to address the loss of pay.

  • Only 15% of people with mental health conditions have ever asked for reasonable adjustments.

Of those who had made such a request, over 66% of requests for reasonable adjustments were reported as having not been met or only partly met.

Wide ranging recommendations have been made for employers

The report discusses the improvements that will help to reduce the pay gap and improve working conditions. Employers can make a difference by:

  • Providing mental health training

The training would ensure that line managers are able to offer support when needed.  The aim would be to ensure that the working relationship becomes fairer.

If managers are better equipped, then there is likely to be an overall improvement in the quality of management, leading to lower absences rates and increased productivity

  • Offering roles flexibly

Flexibly working should be on offer to help new and existing employees to work in a way that is suited to their needs. Larger employers would be required to publish the number of applications received and the number of refusals.

Currently, only employees with more than 26 weeks’ service can apply for flexible working. However, there is some indication that in the future employers will be required to make flexible working the default position. The onus will be on the employer to show the role cannot be done on a flexible basis. The Commission suggests that this approach should be similar to the requirement under the Equality Act 2010 which creates a duty to consider reasonable adjustments to remove workplace disadvantages faced by people with physical and mental impairments

  • Developing a list of reasonable adjustments for employees

The aim of reasonable adjustments for individuals with mental health problems would allow them to remain in work. While many individuals with mental health problems have a legal right to request reasonable adjustments to their duties or workspace, the statistics show that many are not prepared to ask for assistance. This is the case even though the Equality Act 2010 provides protection for those individuals who have mental impairment that falls within the definition of a disability.  Individuals who have a disability are protected from discrimination and employers are under a duty to make reasonable adjustments.

  • Providing a mentoring and support network

Such a network would enable individuals to remain in work and progress.  The aim is to protect an individual’s income

  • Introducing a legal pay gap reporting requirement.

Larger employers would be placed under a legal obligation to report on pay to identify any inequalities between individuals with mental health conditions and those that do not suffer from them. Currently, the only legal pay reporting requirements relate to gender and apply to employers with a headcount of 250 people or more.

Employers must comply with the Equality Act 2010

The Commission’s report addresses some complex financial and social issues but the outcome is clear, those with mental health problems are not being treated fairly in the workplace.

While many employers are trying to do the right thing socially and by complying with the Equality Act 2010 to ensure that there is no disability discrimination and adjustments are made when reasonable, this is still not enough.

Employers particularly those with 250 employees or more could well feel the impact of this report in the future. The starting point is likely to be regulations which will require more transparency about pay; the objective will be to reduce the pay gap and address other inequalities.

For the time being, it is important that when it comes to mental health, risk assessments do cover mental wellbeing and are kept up to date, employees’ health issues are taken seriously and the requirements of the Equality Act 2010 are adhered to. These fundamental steps will assist to manage any legal risks and will be a good starting point to provide the support that individuals with mental health problems need.

FG Solicitors employment law specialists offers a proactive and practical approach, providing employers with confidence when it comes to managing their day-to-day employment law and HR issues.

If your business is concerned about managing ill health absences and reasonable adjustments find out what you CAN do by contacting FG Solicitors on 0808 172 9322 for a no obligation discussion.

WELCOME TO A MORE CONFIDENT FUTURE!

For further details about the commercial legal services and assistance we provide to businesses, please click here. 👇

https://www.fgsolicitors.co.uk/services/

This update is for general guidance only and advice should be taken in relation to a particular set of circumstances.

 

 

AS AN EMPLOYER WOULD YOU BE PREPARED TO INTRODUCE FLEXIBLE WORKING AS THE NORM?

 In the past, employers have tended to respond in three ways to a flexible working request:

“No, we never have part-time roles! We work 09:00 to 5:00, Monday to Friday!”

• “That’s all agreed. How about starting the new arrangement next week?”

• “We are sorry but after careful consideration we are unable to accommodate your request due to the following business reasons…”

Since the pandemic employers have had to rethink their approach to flexible working particularly when it comes to homeworking. Overnight, homeworking became a necessity to respond to legal requirements, protect against health risks and to enable working parents to care for their children.

What’s the trend likely to be?

Currently, publicity around the issue of flexible working is gathering momentum most likely triggered by the fact that the end of the current national lockdown may now be insight. Flexible working is broader than just homeworking and could involve a shorter working week or even term-time working.

Larger employers are acknowledging that flexible working will be on the table for their workforces, with the tech sector leading the way. While the drivers for these organisations may be cost savings because the workspace can be downsized or the roles are more suited to a more flexible approach to the working day, for many organisations flexible working may not be suitable or sustainable in the long-term. This is likely to become more apparent during the pandemic recovery period.

What are an employee’s current rights?

After 26 weeks’ service an employee is entitled to make a request for flexible working.

Employers need to ensure that a proper process is followed when considering a request, which will involve a right of appeal. All this has to be done within a three-month period.

A request can be refused but only on one of more of eight defined business reasons.

Are employers likely to be faced with more requests?
There is already some indication that there will be more formal requests for permanent flexible working arrangements as flexi-furlough and homeworking arrangements start to be withdrawn.

Some employees may still be concerned about returning to work because of health risks. In other cases, the pandemic and a positive experience of flexible working may lead to employees wanting to ensure they have a better work life balance. Other employees may consider it is now an automatic right.

Expectations will be different and employers are going to have to be ready to manage this.

How should employers be preparing for a request

Employees should be treated in a fair and consistent way to manage any legal risks. Answering the following questions will help you assess how ready you are:

What is our policy on flexible working?
This about the organisational culture and attitude and whether your response would be the first response identified above.

 What procedure will we use?
This is about ensuring that requests are dealt with in line with legal requirements. There is a statutory scheme and Acas has a Code of Practice and guide on handling requests.

• On what basis can a request be rejected?
One or more of the eight business reasons must exist together with the supporting evidence. If flexible working was the norm during the pandemic, it may be harder to reject a formal application in the future.

• How would you deal with competing applications?
Several applications arriving at the same time is a probability as restrictions ease. Requests must be dealt with in a reasonable and consistent manner. Employers should not be making decisions based on the most deserving request.

• Do you know what the legal risks are?
Tribunal claims are a possibility. Employers can be asked to reconsider their decision or pay compensation (a maximum of eight weeks’ pay). However, the more significant risks are constructive dismissal and discrimination complaints.

What does the future hold?

For the time being, employers can stand firm that there is not automatic right to flexible working and make decisions within the parameters of the eight business reasons. However, there is every possibility in the future that the government will make flexible working a right from the first day of employment i.e., the default position; employers will need to have a good reason not to offer a role on a flexible basis.
For certain roles it will be obvious that flexible working is not going to be an option. However, when it can work it can employers are likely to benefit from increased productivity and engagement.

FG Solicitors employment law specialists offers a proactive and practical approach, providing employers with confidence when it comes to managing their day-to-day employment law and HR issues.

If you are not sure if flexible working should be the new norm for your business or are concerned about managing a formal request, find out what you CAN do by contacting FG Solicitors on 0808 172 9322 for a no obligation discussion.

WELCOME TO A MORE CONFIDENT FUTURE!

For further details about the commercial legal services and assistance we provide to businesses, please click here. 👇

https://www.fgsolicitors.co.uk/services/

This update is for general guidance only and advice should be taken in relation to a particular set of circumstances.

ARE EMPLOYERS ABOUT TO LOSE A VALUABLE WEAPON AGAINST COMPETITION?

For many years employers have used non-compete clauses in contracts of employment to get some breathing space for a specified period between an employee’s departure and them engaging in competitive activities. The justification for the period where the ex-employee’s activities are restricted is that it gives the employer the chance to shore up relations with customers. Over this period any confidential information the ex-employee was privy is likely to lose its commercial sensitivity.

The Department for Business, Energy and Industrial Strategy is now considering reforming the use of non-compete clauses in contracts of employment and is seeking consultation on the options. At the end of this month, the consultation process closes – 26 February 2021.

What’s on the government’s agenda?

Views are being sought on whether there should be a “think twice” approach or an outright “ban”. What will this mean for employers?

The “think twice” approach

The first option would be to discourage non-compete restrictions by employers having to pay compensation during the term of the restriction. The need to pay compensation may mean that employers think before they automatically reach for a non-compete clause.

“The consultation has identified three possible levels of compensation based on 60%, 80% or 100% of weekly average earnings for the restricted period.”

Unless the individual is operating at a senior level, has access to highly sensitive information or plays a key role in maintaining customer relations it appears unimaginable that any business would want to consider paying compensation at these levels for a defined period after the employee has left. Views are however being sought on time.
The consultation is also considering transparency measures and statutory limits on the length of non-compete clauses to sit alongside the compensation requirement. Transparency measures are likely to make it mandatory for employers to disclose the terms of the non-compete agreement before the employment starts. The consultation document has identified three potential maximum restricted periods i.e., 3, 6 or 12 months. Clearly, the longer the restricted period the greater the level of compensation.

Non-compete restrictions may be banned!

In simple terms, the second option would be for non-compete clauses to be prohibited once the employment has ended.

“The consultation is inviting thoughts on whether organisations would be able to sufficiently protect their business interests by other means, giving examples of confidentiality clauses and intellectual property law.”

Is there a reference point for these changes?

The government appears to be looking at how other countries approach this issue. Those businesses that operate on an international basis will already be aware that there is a marked difference across the globe with regard to the control of post-termination activities. In the USA for example, each state has its own set of rules. An employer in California which has a reputation for being an employee friendly state, will know too well that a non-compete restrictions is unlikely to be enforced by the court. If you operate in Texas, the court is more likely to look on your business more favourable.

The concept of ex-employees being paid compensation is not new. In Germany restrictive covenants are permissible subject to the detailed requirements of the German Commercial Code, which requires employers to pay compensation amounting to at least 50% of the employee’s total recent earning for the period of the restraint. France takes a similar approach where compensation is usually around 30% of the employee’s former salary for the duration of the restriction.

Why is this change being proposed?

While it may appear counterintuitive in the current climate to remove the protection which goes to the core of most business operations, the government considers reforming non-compete clauses may be one way of supporting the economic recovery and the labour market, which is much needed due to the COVID-19 pandemic.
While the justification appears on the face of it to have merit given the challenges the country is facing, some employers and lawyers may feel it is flawed.

“Enforcing a non-compete restriction in the employment context has always been notoriously difficult given the starting point is that it is unenforceable.”

The onus is on the employer to establish the restraint of trade is reasonable with reference to a variety of factors. If it gets to the point where the court needs to intervene, many employers are put off because of the risks associated with this type of litigation including high costs, there being no guarantee of success and the chance of having to pay the ex-employee damages. Many businesses gave up on non-compete restrictions some time ago due to a lack of confidence that a claim would be successful. Armed with this knowledge and the fact that only those employers with deep pockets will pursue them through the courts, savvy employees would often take the risk.

In reality, are non-compete restrictions hampering business innovation and the creation of new jobs to the level which requires consultation and ultimately statutory control? If so, to what degree?

What protection are businesses likely to be left with?

Looking ahead, compensation may be a more attractive option as it at least provides an employer with the choice when it is identified that an individual could do significant harm to the business if they joined a competitor.

“Non-compete restrictions never exist in isolation particularly as these are the ones that the court is least likely to enforce.”

Usually, other restrictions will be in place as a fallback position such as the confidentiality clause, or the non-solicitation or non-dealing clauses. The courts prefers these restrictions because an individual is not prevented from earning a living. These types of restrictions can survive alone and if properly drafted could give a business the protection it needs.

However, the consultation documents indicates that consideration is also being given to whether other post-termination restrictions should be reformed in the future.

Should employers now be exploring more innovative ways to protect their businesses?

For the time being and until the government legislates for something different, there is no reason why well drafted restrictive covenants that have been properly incorporated into the contract of employment cannot be used to protect the businesses’ commercial interests. While it may be some time before there is any clarity on the limits employers will face, it will do no harm for employers to consider what other ways their interests can be protected.

FG Solicitors’ legal team are experts in helping its clients safeguard
their businesses, so that they have greater certainty
over their financial and operational outcomes.

If you require further guidance on how to manage the departure of a key employee, please feel free to call us on 0808 172 9322 for a no obligation discussion.

For further details about the commercial legal service and assistance we provide to businesses, please click here. 👇

https://www.fgsolicitors.co.uk/services

This publication is for general guidance only. Advice should be taken in relation to a particular set of circumstances.