Category Archives: Employment Tribunal

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.

For further details about all of our commercial legal services for 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.

WHEN TO SAY “NO” TO A SUBJECT ACCESS REQUEST?

 

Does this sound familiar?

An employee has raised a grievance, or a former employee is threatening to launch an Employment Tribunal claim. You receive a Subject Access Request (“SAR”) from the (ex-)employee requesting a mountain of documents many of which appear to be of no relevance to the grievance or claim.

Must you comply with SAR?

Before throwing the SAR in the bin, you need to think again…
The Information Commissioner’s Office (“ICO”) has published guidance which you may find helpful in deciding whether to comply with SAR. Before doing so, you may wish to review the overall legal requirements which remain unchanged. https://ico.org.uk/for-organisations/guide-to-data-protection/guide-to-the-general-data-protection-regulation-gdpr/

The recent ICO guidelines simply clarify certain aspects of the law.
When considering your response to the SAR, consider the following:

  • Is it “clearly or obviously unreasonable”?
  • What is the context in which it has been made?
  • Is the intent behind the request genuine?
  • How much management time will be required to provide the requested information?
  • What will it cost?
  • Is the (ex)employee simply trying to inconvenience the company or apply pressure on It in order, for example, to induce the company to settle a claim?

“Our legal team has seen an increase in vexation SARs over the last year and they are on the increase. Disgruntled employees are making requests as a matter of course with the sole intention of inconveniencing the employer for the purposes of financial gain.”

  • Has the information already been disclosed as a result of a previous SAR or otherwise?

Be careful if you are minded to reject the request
Just because SAR is for a considerable amount of information, and will include a lot of work, the guidelines make it clear that the SAR must be “manifestly unfounded” or “manifestly unreasonable”. Do not reject it solely on the ground that it is excessive. Instead, consider the context of the SAR, the organisation’s resources and take advice if necessary. Having done so, if the decision is made to reject all or part of the SAR because it is manifestly unfounded or excessive, keep a record of the decision-making process and your reasons for refusal. Those reasons should be set out in a letter to the individual along with a reminder of their rights to make a complaint to the ICO and to bring legal proceedings against the organisation to enforce those rights.

FGS’ legal team includes specialists in data protection and privacy law, which enables us to advise on GDPR compliance including commercial contracts, policies and procedures, data breaches, subject access requests and privacy issues.

If you require further advice about data protection, 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 update is for general guidance only and advice should be taken in relation to a particular set of circumstances.

 

Sports Direct: Failure to Pay National Minimum Wage – A Business Model With Exploitation at its Heart? (Part 1)

14184143 - green grass  uk pound symbol against blue skySUMMARY:  The Sports Direct founder, Mike Ashley, faced the Business Innovation and Skills (“BIS”) Select Committee on 7 June 2016 for an evidence session into the working practices adopted by Sports Direct.  A month later, it was widely reported that Sports Direct’s profits had been hit.  Mr Ashley’s fortunes have not improved as this month it has been announced that shareholders will be asked to vote on whether there should be an independent workplace review – we will have to wait until September to see how this latest chapter unfolds.

But how did it come to this?

To recap, Mr Ashley received intense criticism stemming from the Guardian Newspaper’s investigation at the end of 2015, which uncovered allegations that his Company:

  1. Failed to pay its workers the minimum wage;
  2. Engaged a significant proportion of staff via zero hours contracts and short term hours agency worker agreements;
  3. Created a culture of fear throughout its workforce due to arbitrary and outdated disciplinary practices; and
  4. Conducted daily physical security searches of employees.

On the back of the ever increasing publicity of how some high profile companies treat their employees, we have produced a two part series to enable you to assess whether your company is inadvertently making the same mistakes as those reportedly made by Sports Direct.  The first in this series explores the allegation that Sports Direct failed to pay its workers the minimum wage and sets out the law behind this complex issue.

___________________________________________________________________________

THE ALLEGATIONS:

HM Revenue and Customs (“HMRC”) are currently investigating allegations that Sports Direct paid its workers less than the National Minimum Wage (“NMW”) effectively saving the Company millions of pounds per year.

The underpayment allegedly arose as a result of workers being forced to undergo compulsory rigorous security checks at the end of their shifts as a theft prevention measure, adding as much as 15 minutes onto their working day (or up to one hour and fifteen minutes to their working week), which is unpaid.

In addition, it is also alleged that workers faced a 15 minute deduction from their pay for “clocking on” 1 minute after their designated start time, even if they actually arrived on site on time.

WERE THE SPORTS DIRECT STAFF WHO WEREN’T EMPLOYEES ENTITLED TO NMW?

All employers are obliged to pay the NMW regardless of their size, and the NMW applies to all “workers” ordinarily working in the UK who are over compulsory school leaving age, not just employees.  This includes agency workers and apprentices.

WHAT ARE THE CURRENT NMW RATES?

From 1 April 2016, there are now 5 rates of NMW:

CATEGORY   RATE (£)
National Living Wage Workers aged 25+

7.20

Standard Adult Rate Workers aged 21-24 (inclusive)

6.70

Development Rate Workers aged 18-20 (inclusive)

5.30

Young Workers Rate Workers aged under 18 but above the compulsory school age

3.87

Apprentice Rate Apprentices either:

  1. Under the age of 19; or
  2. Aged 19 or over, but in the first year of their apprenticeship

3.30

HOW DO I DETERMINE IF MY COMPANY IS PAYING THE NMW?

In order to determine whether the NMW is being paid to your workers, you will need to determine their average hourly rate of pay.

On the face of it this calculation seems quite a simple one – sadly, this is not so. The average rate of pay is calculated by dividing the total amount of “money payments” that a worker earns across the relevant reference period, by the number of hours the worker has worked during that same reference period. However, what amounts to a “money payment” frequently trips up the uninitiated – see below.

The number of hours worked (known as “working time”) can also prove a tricky area for companies and one which has given rise to a raft of case law on its own. This is dealt with below.

Turning then to the relevant reference period, this is usually one month and cannot be greater than one month. However, if the worker is paid weekly or daily, then this is their reference period.

What Money Payments Should Be Considered?

Companies must exercise caution as some payments cannot be included as “money payments” for NMW purposes:

EXAMPLES OF INCLUDED PAYMENTS Basic salary
Bonus**An annual bonus paid for example in December, will usually only count for the December reference period
Commission/Incentive Payments Based on Performance
Accommodation Allowances
Allowances Paid by HMRC Dispensation Agreements
 

EXAMPLES OF EXCLUDED PAYMENTS

Benefits in Kind
Loans Given by the Company
Advances of Wages
Pension Payments
Lump Sum Payments on Retirement
Redundancy Payments
Tribunal/Settlement Awards
Premiums Paid for Overtime/Shift Work
Expenses
Tips and Gratuities

What About Deductions From Pay?

Certain deductions from a worker’s pay can reduce their pay for NMW purposes, including deductions made by a company in respect of expenditure in connection with carrying out their duties (e.g. the cleaning or purchase of uniforms). After these deductions have been taken into account the worker must still be left with at least the NMW.

Another famous retailer, Monsoon, was ordered to pay more that £100,000 to its employees in 2015 as a result of its practice of requiring staff to wear Monsoon clothes at work and deducting the discounted cost of the clothes from their wages. After the deduction, staff were left with less than the NMW.

Conversely, certain deductions do not reduce a worker’s pay for NMW purposes such as a deduction permitted by the contract between the Company and the worker due to misconduct.

In the case of Sports Direct, it has been reported that deductions were made from workers’ pay for lateness. If the deductions were not permitted by contract, the deduction would reduce the workers’ pay for NMW purposes.

A deduction of this nature could also amount to an unlawful deduction of wages, allowing the worker to bring a claim in the Employment Tribunal.

What Is Classed As Working Time?

Finally, a key issue for the Sports Direct case is what is actually classed as working time?

Working time is defined as any time during which a worker is working, at their employer’s disposal and carrying out their duties. There has also been recent case law demonstrating that, for those workers without a fixed placed of work, travelling time to their first assignment of the day and travelling time from the last assignment of the day may count as working time.

Against this legal backdrop, should the time spent by Sports Direct workers undergoing compulsory security checks be considered working time that is counted for NMW purposes? It is highly likely that the answer to this question is “yes”.  This is because workers are not free to leave the company’s premises until the compulsory security checks are completed.

How Can Your Company Avoid A Similar Fate?

Those companies operating in sectors where payment of the minimum wage is prevalent often adopt a proactive stance and schedule annual reviews to ensure legal compliance in this respect. These reviews can be linked to annual pay reviews or can form part of wider audits which align HR strategies to deliver the businesses’ objectives.

In any event, and at the very least, all companies need to:

  • have an awareness of the current NMW rates which are updated twice a year;
  • understand what payments can be included for NMW purposes; and
  • understand what counts as working time for NMW purposes.

This then enables a company to identify any risks which may arise on the back of the publicity surrounding high profile NMW cases such as Sports Direct; at the very least this will enable that company to tackle those risks head on.

CONTACT DETAILS:

If you would like more information on this topic, audits or would like to discuss a specific concern in relation to your business, please contact us:

Call: +44 (0) 808 172 93 22     Email: fgmedia@fgsolicitors.co.uk

This update is for general guidance only and does not constitute definitive legal advice.

Settlement Agreements – A Perfect Ending!

160519 Settlement AgreementSUMMARY: Learn more about settlement agreements with the answers to some of the most frequently asked questions.  

Q: When can we use a settlement agreement?

A:   Settlement agreements are often used to resolve workplace disputes, and to give the employer the certainty that once the agreement is signed there will be no subsequent employment tribunal claim from a disgruntled employee.  More often than not, the employment relationship will have broken down. The focus then is usually on avoiding unfair dismissal and discrimination claims. A whole raft of statutory employment rights and breach of contract claims can also be compromised.

There does not necessarily need to be a dispute as settlement agreements can be used in a variety of other circumstances where the employment will end.  For example, where there are performance or ill health issues, a voluntary exit or a restructure.

Settlement agreements are not however always about the employment relationship ending, as they can be used at any time during the employment relationship to resolve workplace disputes. For example, if there has been a complaint about how holiday pay has been calculated.

We would recommend that where a settlement agreement is being contemplated, legal advice is taken before any discussions take place with the employee so that any legal risks are identified and then can be properly managed.

Q: What are the benefits of using a settlement agreement?

A:  A settlement agreement allows an employer to manage legal, commercial and reputational risks all in one go in the knowledge that there will be no tribunal claim.  Significant management time, stress and expense can be saved.

Terms can also be agreed on issues that a tribunal would be unable to address. For example, the offer of a positive reference; or the introduction of post termination restrictions, where the existing contract is silent on the employee’s activities once they have left.

Settlement can also keep a dispute out of the public eye and be subject to strict confidentiality provisions.

These benefits need to be balanced with the fact the employee will want something in return, no matter how at fault they may be. Money is usually the main consideration but the circumstances may dictate an entirely different exit package.  There are also restrictions on an employer’s ability to compromise personal injury and accrued pension rights claims.

Q: Are there any essential requirements which need to be complied with to make the deal binding?

A: The following are essential to ensure that the employee is not able to bring an employment tribunal claim:

  • The settlement agreement must:
    – be in writing;
    – identify the complaints to be compromised; and
    – state that it satisfies certain legal requirements.
  • The employee must also have received independent legal advice.

A poorly drafted agreement or one which has been incorrectly signed may leave the door open for an employee to bring a tribunal claim, even if they have already been paid a sum of money.

Q: How long should we give an employee to consider a settlement agreement?

A: An employee should generally have at least 10 days to consider the settlement agreement and obtain legal advice. A shorter period could lead to allegations of undue pressure, permitting reference to the settlement offer in a subsequent tribunal claim, if settlement is not reached.

If there is a commercial imperative requiring a shorter period, legal advice should be taken.

Q: Do we have to pay for the employee’s legal advice?

A: An employer is not obliged to pay the employee’s legal costs.  To get the job done, an employer will often choose to make a contribution.  A good starting point is £250 plus VAT. The following factors may demand a higher contribution: locality, seniority of the employee and the complexity of the case.

Q: Can we recycle a settlement agreement used in the past for a different employee?

A: We would caution against recycling for two reasons:

  • Each employee’s circumstances are different; and these circumstances need to be taken into account in the agreement. A one size fits all approach will not provide the employer with the best possible protection; and may give no protection at all.
  • Any changes to the law may require amendments being made to the agreement.

Contact Details

If you would like to explore whether a settlement agreement may be the best option for your business where you have a workplace problem – please contact:

fgmedia@fgsolicitors.co.uk

+44 (0) 808 172 93 22

This update is for general guidance only and does not constitute definitive advice.

FG Solicitors’ quick guide to key payments by employers

As part of our popular “quick guides” series, our team of employment law experts has produced an easy to use guide to key payments by employers. For more comprehensive advice on payments which should be made as well as when employees qualify for them, please contact a member of our team using the details below.

STATUTORY WEEKLY PAYMENTS DURING ABSENCES FROM WORK

April 16

Maternity/adoption pay prescribed rate (max)

£139.58

Paternity pay (max)

£139.58

Shared parental pay (max)

£139.58

Sick pay

£88.45

Lower earnings limit  (a)

£112.00

 

NATIONAL MINIMUM WAGE RATES (HOURLY)

April 16

October 16

Apprentices  (b)

£3.30

£3.40

Age 16-17

£3.87

£4.00

Age 18-20

£5.30

£5.55

Age 21-24

£6.70

£6.95

National Living Wage (Age 25+)

£7.20

£7.20

 

KEY COMPENSATION LIMITS

April 16

Week’s pay

£479

Statutory redundancy payment: up to 30 weeks’ pay

£14,370

Unfair dismissal basic award: up to 30 weeks’ pay

£14,370

Unfair dismissal compensatory award  (c)

£78,962

Breach of right to be accompanied: up to 2 weeks’ pay

£958

Breach of flexible working regulations: up to 8 weeks’ pay

£3,832

Failure to give written particulars of employment: 2 or 4 weeks’ pay  (d)

£958 or £1,916

Breach of contract claim in employment tribunal

£25,000

Failure to inform or consult: collective redundancy  (e)

90 days’ pay

Failure to inform or consult: TUPE transfer  (e)

13 weeks’ pay

…….

Key:

(a). To qualify for these payments, in addition to other criteria such as length of service, the employee must earn the same or more than the weekly lower earnings limit (“LEL”), which is set by the government. The LEL from April 2016 is £112.00 before tax.

(b). Only applicable to those under 19 or in the first year of their apprenticeship. For all other apprentices, refer to age bands.

(c). Maximum compensatory award is lower of statutory limit or 52 weeks’ actual gross pay at the time of dismissal. Limit does not apply where reason for dismissal or redundancy selection is carrying out health and safety activities or making a protected disclosure.

(d). Please see our guide to essential contracts.

(e). Calculated by reference to employee’s actual gross pay – the limit on a week’s pay does not apply.

Contact Details

For more details about amending handbooks or contracts of employment or consulting with your workforce please contact:

fgmedia@fgsolicitors.co.uk

+44 (0) 808 172 93 22

This update is for general guidance only and does not constitute definitive advice.

Common Employment Myths

Perception v Reality

SUMMARY: Employers have a number of misconceptions about their rights in relation to employees. Read this if you want to know five common reasons employees may bring a claim against their employer when these misconceptions have been held.

Retirement

“I can retire someone when they reach 65”.

This is not the case. Retirement is no longer a fair reason for dismissal and an employer cannot force someone to retire unless it can be objectively justified (employers should seek legal advice if they think that a retirement may be objectively justified). If it cannot be justified, dismissal will be unfair and discriminatory on the grounds of age.

If an employee’s performance is not satisfactory, an employer should go through a performance management process in the normal way. If there are questions to be asked relating to workforce planning, consider incorporating discussions about an employee’s future plans, which would include retirement, into the appraisal system. However, only ask open questions about short, medium and long term goals and not direct questions about retirement. All employees irrespective of their age should be asked these questions.

All employees, irrespective of their age, should be treated consistently, otherwise there is a risk of age discrimination claims in an employment tribunal.

Probationary period

“I don’t need to give anyone an employment contract now, I’ll give it to them when they’ve done a trial”.

Employees should be issued with contracts when (or preferably before) they start employment. Employers should not wait until the “trial” period or any probationary period has expired. If certain key terms and conditions are not provided to them within two months of commencing employment, the employer could be liable to pay additional compensation to them if they bring a claim in an employment tribunal.

Employers should also be aware of the commercial risk. A retained employee could, at some point in the future, argue that they are not bound by the terms and conditions given to them after they have started. This could be an issue particularly if reliance on confidentiality provisions and post terminations restrictions is an important consideration for the employer.

Interviews and record keeping

“When I interview people, I just have a chat with them to see whether I like them or not. I don’t need to do anything more formal than that.”

An employer does not need to have an elaborate assessment regime set up to employ people. It is legitimate to have a short interview, but it is vital to have considered before-hand the skills, experience and personal attributes necessary for the job (which should have been done when creating the job description/person specification). Interview questions should focus on establishing whether the prospective employee meets the criteria for the job; similar questions should be asked of all candidates.

A record should be retained of the questions and candidates’ answers as well as the reason for selecting the successful candidate. Employers should be aware that unsuccessful candidates could make a data subject access request to obtain copies of these documents, particularly if they are unhappy with the decision. Managers when making their notes should be mindful not to incorporate opinions, which could cause embarrassment at a later date or could be used as evidence in an employment tribunal claim for discrimination.

Individuals do not have to be employed in order to bring a claim in an employment tribunal. A prospective employee who believes they have been discriminated against during the selection/recruitment process may bring a claim; any notes an employer has retained of the interview would be essential in the defence of such a claim.

Pregnancy

“She was pregnant at the interview and didn’t tell me. She’s not getting maternity leave – I’ll dismiss her.”

An employee has no obligation to tell a prospective employer that she is pregnant at the interview and the prospective employer should not ask this question because they would risk a sex/pregnancy/maternity discrimination claim. An employer cannot dismiss on these grounds as this would also be discriminatory. Compensation for discrimination in the employment tribunal is unlimited.

Employers should remember that all female employees, no matter how short a time they have been employed, are entitled to take maternity leave of up to 52 weeks and retain the right to return to a suitable job.

Outsourcing

We are going to outsource the cleaning to a cleaning company. We won’t need the cleaners we employ anymore so we will make them redundant.”

If an organisation has an outsourcing situation, the Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPE”) may apply. This means that in some cases the organisation’s cleaners will automatically transfer on their current terms and conditions to the newly appointed cleaning company if this work is outsourced. If employees are dismissed because there will be an outsourcing, the employer could be in breach of TUPE and the employees could bring a claim for automatic unfair dismissal in the employment tribunal.

If an outsourcing is being considered, employers should seek early advice on whether TUPE may apply. If it does apply, an employer has information and consultation obligations to fulfil before the outsourcing takes place. Non-compliance could lead to an employer being ordered by a tribunal to pay up to 13 weeks’ gross pay per employee.

Contact details

If you would like advice on any of the issues raised in this article, please contact:

fgmedia@fgsolicitors.co.uk

+44 (0) 808 172 93 22

This update is for general guidance only and does not constitute definitive advice. 

Holiday Pay Must Include Commission

FG Solicitors - Holiday Pay CommissionSUMMARY: The Employment Tribunal has decided that, by adding a new provision, the Working Time Regulations 1998 (“WTR”) can be interpreted so that holiday pay must take into account commission.

Background

Mr Lock received a basic salary and was entitled to benefit under a commission scheme where payment was made for sales achieved.   Whilst on holiday, Mr Lock’s rate of pay was calculated with reference to his basic salary; he was also paid commission earned during previous weeks.  He was not however able to generate commission during his period of annual leave, so when he returned to work he received reduced remuneration. Mr Lock brought a claim for unlawful deduction of wages for unpaid holiday pay in the employment tribunal; he argued that holiday pay should be calculated to include all payments he would normally receive.  As the exclusion of commission from the holiday pay calculation appeared to be inconsistent with European law, the Employment Tribunal referred the matter to the Court of Justice of the European Union (“CJEU”).

Decision of the CJEU

For those of you who were keeping pace with the issue of what payments other than basic pay should be included in the calculation of holiday pay, you will remember that the CJEU concluded that Mr Lock’s commission payments must be taken into account when calculating holiday pay for the first 4 weeks of the 5.6 weeks statutory holiday period.

The following were key in relation to the CJEU coming to its decision: Mr Lock’s commission payments were directly and intrinsically linked to the performance of the tasks he was required to carry out; during annual leave Mr Lock could not generate any commission and, as a consequence, on his return would receive reduced remuneration; and the financial impact of this on a worker may deter them from taking their annual leave.

The CJEU referred the case back to the Employment Tribunal to consider how the decision sits alongside our domestic law.  Basically the tribunal would have to consider how holiday pay should be calculated.

Decision of the Employment Tribunal

The Employment Tribunal has concluded that the WTR can be interpreted so that commission must be included in holiday pay.  In order to arrive at this position the WTR should be read as if they contain a new Regulation 16(3)(e), which effectively confirms that, for the purposes of calculating holiday pay, a worker with normal working hours whose pay includes commission or similar payments shall be treated as having remuneration which varies with the amount of work done.

What Does this Mean for Employers?

In terms of calculating holiday pay, this means that a week’s pay for the purposes of calculating holiday pay will be calculated using the employee’s average remuneration to include commission payments over the 12 weeks before the calculation date. This calculation method will only apply in respect of the first four weeks’ leave not the whole of the 5.6 weeks maximum statutory holiday entitlement.

Any commission previously earned which falls due whilst the employee is on holiday will also need to be paid. 

Case

Mr S J Lock (and others) v British Gas and others ET case number 1900503/2012 & others 

Contact Details

For more details about this decision and what payments should be taken into account when calculating holiday pay please contact:

 fgmedia@fgsolicitors.co.uk

+44 (0) 808 172 93 22

This update is for general guidance only and does not constitute definitive advice.

Labour Campaign to Change the Employment Tribunal System

 

abolish employment tribunalsSUMMARY: Labour promise to abolish current employment tribunal system and reconsider fees

At the TUC Congress 2014 various debates took place to consider and create strategies for how the trade union movement can come together to defend its members.

One area that came under close scrutiny was the issue of workplace justice. Since the reforms to the employment tribunal system including the introduction of fees in July 2013, there has been growing concern from the unions and workplace representatives that workers are being denied access to justice. There is mounting evidence to show that there is a continuing downward trend in employment tribunal claims.

The latest statistic released by the Ministry of Justice this week show a significant decline in the number of employment tribunal claims received. Between the period April and June 2014, 3,792 claims were recorded, which is 70% fewer than in the same period of 2013.

These latest statistics will add weight to the Labour Party’s new campaign for change.  On 8 September 2014, the Shadow Secretary of State for Business, Innovation and Skills, Chuka Umunna MP pledged at the TUC Congress that the Labour Party will undertake major reforms of the employment tribunal system, if elected in 2015.  Starting from the premise that the employment tribunal system has curtailed individuals’ access to justice and is both “unfair” and “unsustainable” it would be  Labour’s intention to “abolish the current system, reform the employment tribunals and put in place a new system”, although no further details were provided.

One commentator has indicated that even under Labour, fees are unlikely to be eradicated but replaced by a system of means testing.

As a law firm we too have witnessed a decline in the number of claims against our employer clients. Early intervention via the ACAS Early Conciliation Scheme introduced earlier this year, which requires anyone seeking to go to the tribunal to try and settle their dispute before they can claim may provide one explanation for the reduction in claims.  Undoubtedly individuals faced with having to pay both an initial fee and hearing fee has also had a significant impact.

The introduction of fees has and will continue to be controversial. Whilst employers welcome the fact that fees discourage vexatious claims and those who wish to play the system, no one wants to see an individual denied the right to seek redress for a genuine grievance.

The fee debate is not going to disappear.  Whilst the government indicated in April 2014 that it would consider lowering fees, no further announcement has been made. The latest statistics and Labour’s recent announcement may be the catalyst for a further review. We will keep you posted of any developments in future briefings.

Contact Details

For more details about how to deal with Early Conciliation and employment tribunal claims please contact:

fgmedia@fgsolicitors.co.uk

+44 (0) 1604 871143

This update is for general guidance only and does not constitute definitive advice. 

Early Conciliation – A New Era – Q&A

Handshake (123rf ref 9932791)We think we have underpaid ten of our employees. Someone mentioned early conciliation – what’s that all about?

Early conciliation (EC) is a new process and is intended to give parties the opportunity of settling disputes through ACAS to avoid tribunal claims. EC for most types of claim became mandatory from 6 May 2014. It covers, for example; the following types of claim; unfair dismissal, breach of contract, discrimination and equal pay, protection from a detriment and in the situation you describe, unlawful deduction of wages.

How will we know if conciliation has started?

There are five stages to the EC process:

  • Stage 1: The claimant must contact ACAS to provide notification of their intention to bring a claim and will provide your details.
  • Stage 2: The ACAS EC officer (CO) will contact the claimant to clarify the complaint.
  • Stage 3: The CO will then contact you to see if you would like to participate in conciliation.
  • Stage 4: If both parties are willing to discuss settlement there will be a period of conciliation for up to a period of one month. This period can be extended for up to 14 days with both parties’ agreement, where there is a prospect of settlement occurring. The CO will explore the options for resolution without the need for a tribunal hearing. This could include the claimant withdrawing the claim or conversely, you paying compensation or in dismissal cases, considering reinstatement or re-engagement. ACAS cannot make any judgment or provide you with legal advice.
  • Stage 5: The CO will end the EC process and issue a certificate where at any time it appears that there is no reasonable prospect of achieving settlement. If settlement is reached the CO will prepare a COT3 setting out the terms of the settlement.

Do we get a choice?

Yes. Each party can choose whether or not to participate. If either party refuses to enter into conciliation an EC certificate will be issued to confirm this is the case. You can also withdraw from the process at any time. A claimant is not prevented from bringing a claim if they choose not to participate in the EC process so long as they initially contact ACAS.

Do we have to pay for the service?

No. It’s free.

Will there be ten separate EC periods in this case?

Not necessarily. If one of the employees in the group of ten has already complied with the EC requirements in relation to the same dispute and the claims are similar, the others will not need to comply with this obligation.

When can the employee bring the claim?

The claim cannot be brought until the CO has provided a unique EC reference number. The EC period can give the claimant a longer time period in which to bring a claim of up to one extra month, with a possibility of a two-week extension.

As we have lots of minor tribunal claims each year, do you have any tips for managing early conciliation?

We would recommend that you have one point of contact in your HR Department or at a senior management level for dealing with ACAS. This should be publicised as it is possible employees may give their line manager’s details to ACAS.

You can of course nominate your legal representatives to deal with the CO. This may be advisable where the claim is likely to be complex or the amount of money involved is high. In any event, legal advice may assist at any stage of the EC process to help you understand the merits of the potential claim and decide whether settlement is the right way to proceed bearing in mind ACAS cannot advise you. Not all cases will be suitable for settlement but where they are, EC provides an early cost free mechanism for doing so on a confidential basis.

Contact Details

For more details about Early Conciliation please contact:

fgmedia@fgsolicitors.co.uk

+44 (0) 1604 871143

This update is for general guidance only and does not constitute definitive advice. 

Whistleblowing – The Line Between a Quick Toot and a Vuvuzela Style Blast

vuvuzelaUK Workers who blow the whistle are protected from employers dismissing them or subjecting them to a detriment on the grounds that they have made a protected disclosure.

A protected disclosure is the disclosure of information which, in the reasonable belief of the worker making the disclosure, is made in the public interest and tends to show the existence of one of six particular states of affairs (e.g. failure to comply with a legal obligation).

Although not the subject of this article, following a recent Supreme Court decision, an LLP member is considered as a worker and so has whistleblowing protection.

But what happens if a worker blows the whistle and will not stop?  Will they remain protected or could the continual noise be separated from the initial blast?

This situation was considered in Panayiotou v Kernaghan by the Employment Appeal tribunal (EAT).

Facts:

Mr P was a police officer who made protected disclosures relating to officers’ treatment of victims.  Although an investigation largely upheld his concerns, he continued to campaign to right the wrongs he had identified and which he thought had not been rectified.  This campaign made Mr P increasingly difficult and time-consuming to manage and, after a long term sickness absence, he was eventually dismissed.

Decision:

An employment tribunal (with the EAT upholding its reasoning) held that Mr P’s disclosures were not the reason for his dismissal (or other detrimental treatment).  Rather than the disclosures themselves, it was the way in which the employee pursued his disclosures (i.e. his campaign and his employer’s increasing frustration) which lead to the employer treating him in the manner that it did.  Although these events were related to the disclosures, they were distinct from the disclosures.

What this means for employers:

The way in which Mr P continued to blow the whistle in this case was not acceptable to the employer and it meant that the continual noise was separated from the initial toot drawing the employer’s attention to a matter of concern.  However, this is a fact specific case and it will be rare that an employee’s subsequent actions will be capable of being separated from the initial disclosure (in that they are “in no sense whatsoever connected with the public interest disclosures”, as the employment tribunal had found in this case).  In this case, events occurred over a number of years and the employment tribunal commented “the actions of the claimant were sufficient to try and to exhaust the patience of any organisation”.

Employers should also bear in mind that police officers do not have a statutory right not to be unfairly dismissed and it may well have been that the dismissal of another employee in these circumstances would have been unfair, even if it was not by reason of the employee making protected disclosures.

This is an area where employers should tread carefully and seek advice if they think that an employee has blown the whistle but may subsequently be behaving unreasonably.  An initial investigation into the whistleblowing allegations should always be carried out.

Contact Details

For more details about whistleblowing please contact:

fgmedia@fgsolicitors.co.uk

+44 (0) 1604 871143

This update is for general guidance only and does not constitute definitive advice.