If you work in the Gig economy you should follow this case

There have been a number of recent cases looking at the precise nature of the employment status of those working for employers who like their operatives to appear to clients as their representatives but who operate a model of self-employment.

In February this year, the Court of Appeal dismissed an appeal by Pimlico Plumbers Limited against a finding that the claimant’s relationship with the company was that of a worker rather than that between an independent contractor and his client (Pimlico Plumbers Limited and Another v Smith). It has now been reported that the Supreme Court has granted Pimlico Plumbers leave to appeal against that decision.

Contact us if you would like advice on any of the issues raised in this bulletin or on any other employment law matter.



Calculation of Holiday Pay for Voluntary Overtime

We recently reported on the decision of the Employment Appeal Tribunal (EAT) in Bear Scotland Limited and Others v Fulton and Others that Article 7 of the EU Working Time Directive (WTD) should be interpreted so that payments for overtime which employees are required to work but which their employer is not obliged to offer them do count as ‘normal remuneration’ for the purposes of calculating holiday pay in respect of annual leave taken under Regulation 13 of the Working Time Regulations 1998 (WTR). Specifically, this should include ‘non-guaranteed’ overtime that is routinely worked.

In a further case on this subject, the EAT was asked to rule on whether voluntary overtime that is worked on a regular basis should also be included as normal remuneration when calculating holiday pay (Dudley Metropolitan Borough Council v Willetts and Others).

The claim was brought by 56 employees who work for Dudley Metropolitan Borough Council in a number of different roles – as electricians, plumbers, roofers, storemen, operations officers and ‘quick response operatives’. Each employee has set contractual hours, which represent their normal working hours, but they can also volunteer to carry out additional duties that their contracts of employment do not require them to perform. They can suit themselves as to whether or not they are included on the rotas ‘day by day, week by week, month by month or permanently’. The employees claimed that their holiday pay should include out-of-hours standby pay, call-out allowance, voluntary overtime and mileage or travel allowance relating to the additional hours worked.

The Council argued that for a payment to count as normal remuneration, there must be an intrinsic link between it and the performance of tasks that the worker is required to carry out under their contract of employment. The EAT rejected that argument however. Certainly, where there is an intrinsic link between the payment and the performance of tasks required under the contract, it should be included within normal remuneration. However, in the EAT’s view, the absence of such a link would not automatically exclude such a payment from counting. It held that where the pattern of work, though voluntary, extends for a sufficient period of time on a regular and/or recurring basis to justify the description ‘normal’, it is for the fact-finding tribunal to determine whether the work is sufficiently regular and settled for payments made in respect of it to amount to normal remuneration.

In this case, the EAT was satisfied that even if the intrinsic link test were required, the voluntary overtime payments would satisfy that requirement and count as normal remuneration. The arrangements would not exist without the contracts of employment and the tasks performed were those required of the employees under those contracts, even if there was a separate agreement.

Furthermore, EU law requires that normal (not contractual) remuneration must be paid in respect of the four-week period of annual leave guaranteed by Article 7. That overarching principle means that the holiday pay should ‘correspond to the normal remuneration received by the worker’ when at work in order to ensure that they do not suffer a financial disadvantage by taking leave, which might deter them from exercising this important right.

Employers are reminded that the decision only applies to the 20 days’ annual leave entitlement guaranteed under the WTD, not the additional eight days’ entitlement granted under Regulation 13A of the WTR. Whether or not it is practical to differentiate between the two is a decision for the individual employer.

If you have employees whose pay regularly includes overtime worked in addition to the normal working hours stated in their contract of employment, we can advise you of your obligations as regards the calculation of holiday pay. Contact Damian on 020 82636080 for advice on your

If you are an independent contractor you should be aware of this

Companies generally bear legal liability for misdeeds committed by their employees in the context of their work, but does the same apply to self-employed contractors? The High Court tackled that issue in a group action concerning bank workers who claimed to have been sexually abused by a doctor in the course of pre-employment health checks (Various Claimants v Barclays Bank plc).

Under an agreement with the bank, the doctor had carried out medical assessments and examinations on prospective employees, the majority of them young women, between 1968 and 1984. He has since died, but 126 of those whom he had examined launched proceedings against the bank on the basis that he had subjected them to sexual assaults.

The bank pointed out that he was an independent contractor who had carried out the examinations at his own surgery. In ruling that the bank bore indirect – vicarious – responsibility for his actions, however, the Court noted that his alleged victims had been required to undergo the examinations prior to taking up their posts.

Although the bank was an innocent party, it had created the relevant risk when it referred its prospective employees to the doctor, and the alleged sexual assaults were inextricably interwoven with the work that the doctor had done for the bank’s benefit. The Court acknowledged that had the claims been made earlier, the doctor and his estate could have had the financial means to meet them. In the circumstances, however, taking action against the bank was the only realistic means by which the alleged victims could obtain compensation and the Court was of the view that it was fair, just and reasonable for their cases to proceed.

The decision that vicarious liability did extend to the independent contractor in these circumstances will be a matter of disquiet to those who contract with others to perform a similar function. If you are concerned at the effect this ruling could have on you  contact Damian on 020 82636080 for advice on your individual circumstances.

Tribunals Can Appoint Litigation Friends

Under Part 21 of the Civil Procedure Rules, it is possible for a person who lacks capacity to be represented in court by a litigation friend so that they can have proper access to justice. In a landmark decision that is of general public importance (Jhuti v Royal Mail Group Limited), the Employment Appeal Tribunal (EAT) has ruled that the right should be extended to proceedings before an Employment Tribunal (ET).

Ms Jhuti had succeeded in automatic unfair dismissal and whistleblowing claims against her former employer, Royal Mail. There was medical evidence that she suffered from post-traumatic stress disorder and a moderate depressive illness, triggered by traumatic experiences that she had endured during her employment.

A further hearing was due to take place before an ET at which the amount of her compensation would be assessed. However, her lawyers argued that, due to her psychiatric problems, she lacked the capacity to conduct the proceedings. The ET, however, refused to appoint a litigation friend on the basis that it was bound by the EAT’s decision in Johnson v Edwardian International Hotels Limited and had no power to do so. Concerned that Ms Jhuti did not have the mental capacity to instruct them, her solicitors submitted an application for reconsideration, but this too was turned down. A month later, a doctor’s report concluded that Ms Jhuti lacked capacity to pursue her claim.

In allowing an appeal against the ET’s decision, the EAT noted that neither the Employment Tribunals Act 1996 nor the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2013 conferred any express power to appoint a litigation friend and recognised that ETs are creatures of statute and can exercise only those powers that are conferred on them by Parliament. However, the EAT found that the 2013 Rules are wide enough, when read and interpreted in accordance with the common law duty of fairness and/or the strong interpretive obligation under Section 3 of the Human Rights Act 1998 (HRA), to permit ETs to use their case management powers to appoint a litigation friend where a person lacks the capacity to conduct ET proceedings themselves. Otherwise, a litigant who lacks capacity would have no means of accessing justice or achieving a remedy for a legal wrong.

In deciding not to follow the decision in Johnson, the EAT was satisfied that the facts and the issues here were very different from those in the earlier case. Unlike the present case, there was no evidence in that case to justify a finding of incapacity. Furthermore, Johnson was decided under the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2004, which are significantly more prescriptive than the 2013 Rules. It is not apparent that arguments based on the need to deal with parties on an equal footing were addressed in Johnson, nor was any reference made to the common law duty of fairness or the interpretive obligation in Section 3 HRA.

The case was remitted to the same ET for a litigation friend to be appointed.

Because the case raised novel issues of general public importance, the EAT took into account written representations from the Law Society and the Secretary of State for Business, Energy and Industrial Strategy in reaching its decision.

Are you an Employee, Worker or Self-Employed Contractor, or just confused?

When distinguishing between employees, workers and self-employed contractors, bargaining positions can provide a useful litmus test. That was certainly so in a further case on this topic in which an Employment Tribunal (ET) found that a bicycle courier was a worker, within the meaning of the Working Time Regulations 1998, notwithstanding that his contract specifically stated that he was not (Gascoigne v Addison Lee Limited).

Mr Gascoigne worked for Addison Lee Limited, which provides a variety of transport services and has thousands of operatives. His contract stated that he was an independent contractor and that nothing in the agreement should render him an employee, worker, agent or partner of the company. He was forbidden to hold himself out as such and the contract required him to indemnify the company against costs arising from any employment-related claim.

In finding that he was nevertheless a worker – and thus entitled to holiday pay and other benefits – the ET noted that Mr Gascoigne had no choice as to the terms of the contract, which he knew he had to sign in order to carry on working for the company. It was probable that he did not read the contract, the terms of which were inconsistent with the wording of the company’s website which, amongst other things, referred to its operatives as ‘our team’.

Although Mr Gascoigne was paid a piece rate for each completed delivery and provided his own push bike, he was required to carry a company ID when working and to wear a T-shirt and carry a bag bearing the company’s logo. Working under the direction of a controller, he was not running his own business and performed his work personally and not because the company was his client or customer. In the circumstances, his claim in respect of two weeks’ holiday pay was upheld.

The recent Taylor Review of Modern Employment Practices recommended that the status of worker – i.e. those who are eligible for worker rights but who are not employees – should be retained but renamed ‘dependent contractor’, with a clearer distinction drawn between the rights of employees, dependent contractors and those who are legitimately self-employed.

The report also recommended that for employment rights claims that are dependent on an individual’s employment status, claimants should be able to obtain an authoritative determination of their status at an expedited preliminary ET hearing, without having to pay a fee. However, the Supreme Court has since ruled that ET fees are illegal, which could result in an increase in claims of this type.

Employers with personnel working under contracts similar to the one in this case are advised to review their employment status and consider whether the arrangements comply with National Minimum Wage legislation and the rules on workers’ holiday leave and pay. Contact Damian on 020 82636080 for assistance with this exercise.

Discrimination and Constructive Dismissal claim rejected

A Pentecostal Christian has failed to persuade the Employment Appeal Tribunal (EAT) that the Employment Tribunal (ET) erred in dismissing his claim that he had suffered direct and indirect discrimination on the grounds of his religious beliefs (Trayhorn v The Secretary of State for Justice).

Barry Trayhorn worked at HM Prison Littlehey as a gardener. The prison houses approximately 1,200 inmates including sex offenders and young offenders. Mr Trayhorn is an ordained Pentecostal minister and volunteered to help at services in the prison chapel. Following a complaint from a prisoner that he had said that same-sex marriage was wrong and ‘needed stopping’, he was told not to preach at services in future but was permitted to continue to lead the singing.

At a service a few weeks later, however, Mr Trayhorn spoke out forcefully on damnation and homosexuality when commenting on a passage from the Bible (1 Corinthians 6:9-11). There were further complaints about his preaching from prisoners, one objecting to the way in which he had goaded the congregation, telling them to complain about him if they didn’t like what he was saying. As a result, Mr Trayhorn was told to stop volunteering at chapel services. After being notified that he would be required to attend a disciplinary hearing, he went on sick leave and was signed off work for three months. He resigned before the disciplinary process had been completed, the outcome of which was to issue him with a final written warning.

The ET rejected Mr Trayhorn’s claims of unfair constructive dismissal and direct and indirect discrimination on the grounds of religion or belief. Firstly, his employment was terminated by his resignation, not because he was constructively dismissed. As regards his discrimination claims, the reason he was stopped from volunteering and made the subject of disciplinary proceedings was not his religious beliefs but because his sermon went far beyond mere quotation of scripture and lacked context and sensitivity of approach. The ET also found that Mr Trayhorn’s claims of indirect discrimination were without foundation. He had not produced evidence to support his contention that the prison’s Conduct and Disciplinary Policy and its Equality of Treatment for Employees Policy each amounted to a provision, criterion or practice (PCP) that put employees who were of the Christian faith and/or of the Pentecostal denomination at a particular disadvantage, either singly or as a group. His argument was that they were more likely to quote from or discuss passages from the Bible that those attending chapel services might find offensive or to make comments based on their beliefs that could be deemed to be a breach of the equality policy, but the ET observed that members of other religions and no religions hold firm views on homosexuality. Nor was there evidence to support his claim that there was an ‘unwritten practice that issues involving discussion of religion, moral condemnation of homosexual practice or any expression of Christian sexual ethics could not be mentioned or that views thereon could not be expressed in the workplace’.

Mr Trayhorn took his case to the EAT and lost. In the EAT’s view, the ET had applied the correct tests for direct and indirect discrimination. His employer did not object because he had quoted from the Bible – a manifestation of his belief – but because of the way in which he had addressed the congregation. Nor did the EAT support Mr Trayhorn’s argument that the ET had erred in relying on ‘group disadvantage’ (Section 19(2)(b) of the Equality Act 2010) as a necessary condition for him to establish indirect discrimination or that doing so was incompatible with his rights under Article 9 of the European Convention on Human Rights, which protects freedom of thought, conscience and religion. Although the ET had referred to group disadvantage, it had not reached its decision on that basis. On the facts, it had not been satisfied that the two PCPs put Mr Trayhorn at a disadvantage because of his religious beliefs or that other Christians, whether singly or as a group, were disadvantaged.

Lastly, the ET had found no evidence that the prison’s discipline and equality policies had disproportionately restrained Mr Trayhorn’s manifestation of his religious beliefs. In the circumstances, his employer had established that the application of the policies was a proportionate means of achieving the legitimate aim of protecting order and security within the prison.

Contact Damian on 020 82636080 for advice on any aspect of discrimination law.

Air Transport Company Fined After Worker Crushed in Hangar Door Accident

A passenger air transport firm has been fined after a worker suffered brain damage when she was crushed by hangar doors at Luton Airport.

Signature Flight Support operates a worldwide network of ‘fixed base operations’, delivering support to business and private aviation at more than 200 locations. The services provided include refuelling, hangar storage, maintenance, repair and overhaul.

Suzi Dorbon was employed as an aircraft mover by Signature Flight Support London Luton Limited. She was working on her own, opening the mechanically operated doors of Hangar 219 at Luton Airport in order to move aircraft inside. Each door was made up of three very large sections which could be moved along tracks and were operated using a handheld control panel. On moving one of the doors, she became trapped and suffered crushing injuries that resulted in severe brain damage. She remains in a persistent vegetative state and will require 24-hour care for the rest of her life.

An investigation into the incident was carried out by the Health and Safety Executive (HSE). This found that the company had failed to carry out adequate planning or provide adequate training, written instructions or supervision for the task. The company’s formal risk assessment document did not identify the potential risk of someone becoming trapped in the doors.

Signature Flight Support London Luton Limited pleaded guilty to breaching Section 2 of the Health and Safety at Work etc. Act 1974. It has been fined £250,000 and ordered to pay costs of £19,483.50.

Speaking after the hearing, HSE inspector Andrew McGill said, “The injured person’s family have been left devastated after this incident. Her husband gave up work to care for her daily and has been diagnosed with post-traumatic stress disorder.

“Employers must provide suitable systems of work, training, information and supervision to ensure safety. If a safe system of work had been in place prior to this incident, it could have prevented the life-changing injuries sustained by the employee.”

The HSE provides general guidance and tools to help businesses assess and control risks in the workplace. See http://www.hse.gov.uk/risk/ for further information. For specific advice on any health and safety matter, please contact  Damian on 020 82636080

Acas Publishes Research Into Flexible Working

The Advisory, Conciliation and Arbitration Service (Acas) has published the results of research it commissioned from Alliance Manchester Business School, University of Manchester. The research paper, entitled ‘Flexibility in the Workplace: Implications of flexible work arrangements for individuals, teams and organisations’, sets out to identify both advantages and disadvantages of flexible working and provide best practice guidance for the implementation of flexible working arrangements (FWAs).

The paper contains a review of relevant literature, and case studies based on interviews with managers and employees in two organisations, one public and one private. It then goes on to make recommendations (pages 33 and 34) to those implementing flexible working, stressing the need to ensure that flexible working is carefully managed in order to achieve positive benefits for team effectiveness and organisational productivity. The recommendations are:

Ensure clear communications, including setting boundaries and managing expectations;
Make formalised arrangements, but ensure that both parties maintain a willingness to be ‘flexible with flexibility’;
Implement consistent practices across teams to ensure perceived fairness;
Consider requests for flexible working on an individual basis. Managers should be open to requests for flexible working, and consider each request on its merits, using consistent principles;
Encourage managers to work flexibly themselves, so that they act as role models.

The research paper can be found at http://www.acas.org.uk/media/pdf/o/7/Flexibility-in-the-Workplace.pdf.

The Acas blog also has an article by Tom Neil, Senior Guidance Editor, sharing his experience of FWAs. This is entitled ‘Being Flexible with Flexibility’ and can be found at http://www.acas.org.uk/index.aspx?articleid=6038.

Acas guidance on handling requests for flexible working and on homeworking can be found at http://www.acas.org.uk/index.aspx?articleid=1616.

Calculating injury to feelings in discrimination claims-a Government change

When a compensation award is made to the victim of an accident, the actual amount of the settlement is adjusted to take into account the interest the claimant can expect to earn by investing it. This is achieved by applying a ‘discount rate’, or ‘Ogden rate’ to the sum awarded. Traditionally, the percentage rate applied has been linked to returns on lowest-risk investments – typically index-linked gilts. The lower the rate, the higher the compensation award.

The rate also applies to compensation awards by way of damages made by an Employment Tribunal for personal injury where a claimant is found to have suffered ill health – physical or psychological – as a result of unlawful discrimination or detriment. Such an award is often in the form of a compensation payment for long-term loss of earnings.

The discount rate had remained unchanged at 2.5 per cent since 2001. However, in light of the low interest rates available to investors, a new discount rate of minus 0.75 per cent was introduced with effect from 20 March 2017 in an attempt to ensure fairness to those receiving compensation. The move was heavily criticised by the insurance industry, however, and a sharp increase in motor insurance premiums followed. The Government also had to make available additional sums to cope with the knock-on effect of the change on public services with large personal injury liabilities – particularly the NHS.

Following a consultation on this issue, the Lord Chancellor and Justice Secretary, David Lidington, has announced the Government’s intention to revise the way the discount rate is calculated. The proposal is that the rate should be based on ‘low risk’ rather than ‘very low risk’ investments. In addition, advice will be taken from a panel of experts and the rate will be reviewed at least every three years, with changes made when necessary.

If the proposals are approved by Parliament, the revised discount rate is likely to be somewhere between 0 per cent and 1 per cent.

If you are being docked money for being late for work you should read this

Paying the National Minimum Wage (NMW) is a strict legal requirement and employers that fail to do so can be hit with punitive penalties. In one case, an employment agency that laid on thousands of underpaid workers at a warehouse received a six-figure fine.

Following an investigation by HM Revenue and Customs (HMRC), it emerged that workers who clocked on one minute late to work were docked a full quarter of an hour. After clocking off at the end of their shifts, they were also required to queue for an average of 11 minutes for security checks.

The agency accepted that, as a result of those unpaid periods, workers had not received the NMW. To make up the difference, it paid almost £470,000 to affected workers. It was also required to pay a total of £263,628 in respect of 13 penalty notices raised by HMRC. It was, however, permitted to pay half the penalties – £131,814 – because it remitted the sum promptly, within 14 days.

After the agency appealed against the penalties to an Employment Tribunal (ET), HMRC acknowledged that the notices were defective in that they did not include certain information, particularly the names of individual workers concerned and the amounts by which they had been underpaid.

In dismissing the agency’s appeal, however, the ET found that the notices were nevertheless valid. The agency knew precisely the figures on which the notices were based, did not dispute that workers had been underpaid and had agreed how much was owed to them. The penalties were designed to have a deterrent effect on others and HMRC had been entitled to issue multiple notices.