Bright light!

Employment Law Newsletter - July 2017


In this issue ...

  Some light summer reading...   Whistleblowing widens  
  All packed and ready for the transfers   Cruising close to home  
  Have your cake or eat it   Sailing too close to the wind  
  Reworking the figures   And holed below the waterline  

Some light summer reading...

We are accustomed to giving you, dear reader, a 'bumper' issue to occupy you while you summer in the holiday destination of your choice and impatiently await our next issue in September. Often that has been achieved through a serendipitous increase in the number of individual developments worthy of coverage. However, this year, our achievement is largely through the Taylor Review's Good Work Report (TRGWR), to the arrival of which we have alluded in passing over the last few months.

The frequent difficulty of establishing or defining a work-provider's legal status is not news – it has been there certainly for longer than this writer has been plying his trade (some 40 years). But, with the recession and the advent of the 'gig economy', zero-hours contracts (ZHCs) and associated peripheral working arrangements, the whole question of status and its currently regular corollaries - fluctuating hours, limited job protection and low pay - has been thrown into sharp focus. Hence, the various legal challenges recently undertaken by certain work-providers (see all issues from November/December 2016 to April 2017) and the apparent political interest in the topic demonstrated by Teresa May's choice to be present at the unveiling of the TRGWR. And, for such an auspicious event, the TRGWR stepped up to the plate. Its multifarious recommendations are to:

1 Keep the distinction between employees and workers, but rename workers who are not employees as 'dependent contractors' (DCs)
2 Amend the legislation, perhaps using secondary legislation, defining employees and workers/DCs to allow principles of case law to be incorporated
3 Remove the need for workers/DCs to have a contract to perform work personally
4 Put greater emphasis on the factor of control in the definition of worker/DC status
5 Consider taking account of the subtly different definitions of worker/DC in the legislation
6 Keep the requirement for personal service in employment contracts
7 Amend the National Minimum Wage (NMW) laws to make it clear that gig-economy workers allocated work through an app are undertaking a form of output work and will not be entitled to the NMW for each hour logged on when there is no work available
8 Treat workers/DCs as 'employed' for the purposes of tax status
9 Give the right to a written statement of terms to workers/DCs as well as to employees
10 Require that written statement to be issued on the first day of engagement
11 Extend the scope of the written statement to include a list of applicable statutory rights
12 Create a freestanding right to compensation if no written statement is provided
13 Consider increasing the rate of the NMW for hours that are not guaranteed by the employer
14 Maintain continuity of employment where any gap in employment is less than one month (rather than the current one week)
15 Improve the information that must be supplied to agency workers
16 Increase the reference period for calculating holiday pay, where pay is variable, from 12 weeks to 52 weeks
17 Allow 'rolled up' holiday pay
18 Give agency workers a right to request a direct contract with the end user after 12 months on an assignment
19 Give ZHC workers/DCs a right to request guaranteed hours after 12 months
20 Oblige employers to set up statutory Workplace Information and Consultation arrangements when requested by just 2% of the workforce (rather than the current 10%)
21 Require reports from larger employers on their overall workforce structure and, pursuant to 19 above, any requests from ZHC workers for regular hours
22 Abolish the law allowing agencies to avoid matching end user pay by employing agency workers in a way that provides for pay between assignments
23 Give HMRC enforcement powers on sick pay and holiday pay as well as on NMW issues
24 As a preliminary to a substantive claim, allow claimants to ask the employment tribunal (ET) to determine employment status
25 Place a burden on the employer in an ET claim to prove that the claimant is not an employee or worker/DC
26 Give the Government the power to enforce ET awards, pursuing the actual award, rather than just imposing a penalty for non-compliance
27 Allow an ET to impose aggravated penalties on an employer that fails to apply an ET ruling on employment status to similar groups of workers
28 Provide for uplifts in compensation where an employer commits subsequent breaches of employment law based on similar working arrangements to those already dealt with by an ET
29 Consider allowing flexible working requests to accommodate temporary changes in contracts as well as permanent ones
30 Reform Statutory Sick Pay to make it a proper employment right (rather than one derived from social security legislation), available to all workers/DCs accrued in line with length of service
31 Create a right to return to work after long-term sickness absence

Rarely, if ever, has such a list appeared in one of our newsletters. To examine even a few of its items now would probably drive most of you off the sunbed and into the nearest pool (or poolside bar). So, we'll forego that until some time in the coming months, when the dust has settled and the (or the next?) Government's intentions on implementation become a bit clearer. For the moment, we shall settle for the observation that, if the TRGWR's full suite of recommendations were to be brought into effect, there will need to be much suspension of or compromise on current political, economic and/or philosophical positions and much work done on the devil of detail.


All packed and ready for the transfers

Continuing that summer holiday theme, this headline introduces the ruling of the European Court of Justice (ECJ) in FNV v Smallsteps. It concerns 'pre-pack' administrations and their capacity to come within the Acquired Rights Directive (ARD) - to you and us, TUPE - or, alternatively, to fall within the exclusion covering 'insolvency proceedings ... instituted with a view to liquidation of the assets of the transferor'.

Backing up what our own Court of Appeal (CA) said several years ago (see Key2law LLP v De'Antiquitis in the February 2012 issue), the ECJ effectively decided that, subject to limited variations allowed for in the legislation, employees who are dismissed in connection with the sale of a business in administration enjoy the full protections of the ARD/TUPE. While administrators of an insolvent business will always have in mind the ultimate possibility of liquidation ('terminal' insolvency proceedings), the principal purpose of administration is to effect survival of the business or part of it.


Have your cake or eat it

If a disabled employee takes ill-health early retirement without actuarial reduction and the pension is based on the salary they were receiving immediately beforehand in a position that was part-time to accommodate their disability, can they successfully argue that not basing the pension on their earlier full-time salary is discrimination/unfavourable treatment in consequence of something arising from the disability? The short answer to that long question is, according to the CA in Trustees of Swansea University Pension & Assurance Scheme v Williams, 'no'. Having secured advantages (early pension without actuarial reduction), the failure to receive even greater advantages (pension based on the full-time salary that would have applied had the disability occurred more suddenly) is not the basis for a claim of unfavourable treatment.


Reworking the figures

In De Souza v Vinci Construction, the CA, hopefully resolving conflict in different decisions of the EAT, has held that compensation awarded by tribunals for injury to feelings for unlawful discrimination is subject to the 10% increase it applied back in 2012 to non-pecuniary damages for personal injury cases in the civil courts.

Thus, the three 'bands' of compensation for injury to feelings, from least to most serious, are £660-£6,600, £6,600-£19,800 and £19,800-£33,000.


Whistleblowing widens

Also on compensation is the decision of the Employment Appeal Tribunal (EAT) in Small v Shrewsbury & Telford Hospitals NHS Trust, a case about a post-termination 'protected disclosure' for which the former employee was subjected to a detriment, allegedly causing him difficulties in securing fresh employment. 'Stigma' damages, reflecting harm to reputation, are available in appropriate cases of whistleblowing (and of unlawful discrimination). But the employment tribunal here failed to consider them because the claimant, representing himself, did not raise the point. The EAT corrected this, stating that, without explicit pleading, stigma damages should be part and parcel of a tribunal's thought processes when considering compensation in a successful whistleblowing (or discrimination) claim.

We featured the EAT's decision in Chesterton Global v Nurmohamed in the April 2015 edition. That was to the effect that a disclosure that had self-interest/gain at its heart could still be 'in the public interest' even if only other employees similarly affected by an issue (and not a section of the wider public) stood to benefit from its resolution. While stressing that such a wide construction of 'public interest' should be used sparingly, the CA has now dismissed an appeal against the decision. And it added that a claimant's reasonable belief that his or her disclosure is in the public interest can legitimately arise after the disclosure was made.


Cruising close to home

The territorial scope of UK employment legislation cropped up in the June 2017 issue. That case (Green v SIG) was about unfair dismissal. The subject is back this month, this time in relation to collective consultation on redundancy. In Seahorse Maritime v Nautilus International, the Nautilus seafarers' union sought a protective award for failure to consult about redundancies affecting seafarers with contracts governed by English law and working on ships based in UK ports. The EAT found that, despite their worldwide voyages, these 'international commuters' had sufficient connection with the UK to come within the purview of the statutory provisions on redundancy consultation.


Sailing too close to the wind

In Simpkin v The Berkeley Group, the High Court (HC) had to consider whether information sent by an employee from his work e-mail to his private e-mail, a precursor to his forwarding it to his solicitor in divorce proceedings, attracted legal advice and litigation privilege in a separate legal dispute with his (now former) employer about a Long Term Incentive Plan (LTIP).

The HC's conclusion was that the employee could have had no reasonable expectation of privacy. The employer's IT policy, signed by him, made clear that all e-mails sent and received on the company's system were its property, both the company's IT Department and the employee's own personal assistant had full access to his e-mails and the e-mail's attachment (recording for his divorce solicitor his financial expectations under the LTIP) was generated in the course of employment using the company's IT system.

Thus the material in the e-mail and attachment could be relied on by the company to highlight the discrepancy between their former employee's witness evidence about his financial expectations under the LTIP and his earlier statement to his divorce solicitor on the same subject.


And holed below the waterline

If Mr Simpkin had a hard time with his confusion of the work-related and the private, Mr Dadi (in OCS Group v Dadi) fared even worse. Mr Dadi's employer alleged that he had sent confidential work-related material to his private e-mail address. It obtained an injunction against him, prohibiting the destruction of electronic evidence and the alerting of other parties. He nevertheless thought it a good idea to delete evidence from his computer and to warn others implicated in his activities. Did the law wring its hands and wonder how it could deal with this flagrant disregard of its majesty? No, not at all - the High Court simply sent him to prison for six weeks for contempt of court (the minimum sentence, imposed because of his later co-operation).

Even if it's not for six weeks, do enjoy your break from normal life in more benevolent surroundings!


Just a quick reminder that Collinson Grant does a lot more than advise clients in all sorts of organisations about the complexities, constraints and opportunities presented by employment law. Our consultants also provide support regularly on: employee relations, reward, restructuring, recruitment, leadership and HR strategy. And we have well-honed skills in operations: managing and reducing costs, organisational design, process improvement, procurement and managerial controls. Do ask if you would like to know more.


If you would like to discuss this or any other issue facing your organisation please speak to your usual contact at Collinson Grant or Peter Howarth on 0161 703 5600

Although care has been taken in the preparation of this Newsletter, Collinson Grant cannot accept responsibility for errors, omissions or advice given. Readers should note that only Acts of Parliament and Statutory Instruments have the force of law and only the courts can authoritatively interpret the law.