Incorporation of company handbooks into employment contracts

The employment contract sets out an employee’s rights, responsibilities and duties within the employment relationship. However, as an employer, you also need a set of policies complying with the ACAS code on grievance and disciplinary procedures, paid holiday and maternity and paternity leave. The general position and assumption of most employers are that policies are non contractual and therefore an employee will be prohibited from bringing a breach of contract claim in the event that their employers fail to adhere to any of their policies.

However, the above is not conclusive and the Court will often consider a number of factors in considering whether policies contained in company handbooks will be viewed as contractual. Policies that infer statutory rights such as sickness and holiday rights will be deemed contractual on the basis that the employer is obliged to provide full particulars of their employment under the Employment Rights Act 1996. However with non-statutory rights the Court will try to ascertain what the intentions of the parties were when entering into the agreement

Whether a policy is contractual became a point of contention in Sparks v Departments for Transport [2015] EWHC 181 (QB)  which concerned the contractual validity of a decision by several government agencies to tighten up their sickness absence rules by reducing the amount of time before sickness procedures were triggered.

What happens if an employment relationship ends within the initial 6 week ‘honeymoon period’?

You know when something is so awful, it’s good? Well, that describes my relationship with the Channel 4 show Married at First Sight at the moment. I know it’s car crash TV and edited to within an inch of its life (with cheesy dramatic music at regular intervals) but I can’t seem to stop watching it.

Put simply, Married at First Sight is a ‘dating’ show where six individuals are married to a stranger who they literally meet for the first time at the altar. They don’t know their future spouse’s full name or even see a picture of them beforehand. This means they must buy the dress/suit and ring on their own and then meet their partner for the first time in front of their family and friends at the altar with the accompanying vicar. Each couple are then given 6 weeks (with the TV crew continuing to trail them at every turn) to have the wedding party, go on honeymoon, rent a house together and see if their lives can fit together. At the end of that ridiculously short period, they then decide whether to stay married or seek a divorce. Cue romance, tears, fights and one woman with a fear of dogs freaking out at having to live with her new husband’s two hyperactive dogs…

Why am I talking about this? Well, it happens to be a useful link to a regular employment law issue – namely, what happens if an employee/employer ‘divorces’ (i.e. leaves) the other within the 6 week ‘honeymoon’ (or not-so-honeymoon) period.

Deliveroo makes changes to contracts for UK Couriers

Following on from my colleague Martin Malone’s article back in March, takeaway delivery Company Deliveroo have now removed the clause in their self-employed courier’s contracts (or ‘supplier agreements’), which stated that the couriers would not be permitted to challenge their self-employed status at an Employment Tribunal.

New contracts (which are now just four pages long) have been distributed to the couriers,  and confirm that they can work for other businesses and no longer need to provide two weeks’ notice to terminate their contract with Deliveroo.

Dan Warne, Deliveroo UK MD, provided the couriers with a letter by way of further explanation, which stated the following:

“We know that many riders work with other companies as well as Deliveroo, including our competitors. That is fine with us: as an independent contractor you are free to work with whoever you choose and wear whatever kit you want.

“There continues to be no requirement to wear Deliveroo branded kit while you work with us, but please make sure that whatever you wear while riding means that you are safe and visible to other road users.

“This new simple supplier agreement for riders makes it easier than ever to work with Deliveroo. It makes clear that our riders are able to log in to work with us whenever they want – allowing them to fit their work around their life rather than their life around their work.”

The changes have been made following criticism from the House of Commons Work and Pensions Committee, who advised that companies such as Deliveroo, Amazon and Uber, deprived workers of their rights with the wording of the contracts previously utilised.

The distribution of the new contracts also came less than a day after the leak of Labour’s draft manifesto, which contained a proposal for the ‘gig economy’ to assume workers are employees unless proven to the contrary.

More about zero hours contracts and other election proposals

On 29 April the Labour Party announced that, as part of its 20 point election package for workers, it would ban zero hours contracts, end unpaid internships and end the public sector pay cap. Although well-received by many, the subsequent round of interviews on the Sunday morning politics shows quickly flagged up a problem: what about those who want to be employed on zero hours contracts? It was pointed out that these contracts are convenient for many, including students who want to earn some casual income when time permits. Another problem with a ban is where the line is drawn. Would, four, six or ten hours’ contracts be permitted?

Meanwhile, McDonalds has announced that it is giving 115,000 workers on zero hours contracts (approximately 10% of the entire UK zero hours workforce) the option of moving to fixed contracts with a guaranteed number of hours per week. The move came in response to feedback from staff that they were struggling to obtain loans, mortgages and phone contracts without being able to demonstrate that they had a secure income. However, in the trial run at 23 sites, 80% of staff chose to stay on their existing contracts when offered four, eight, 16 or 35 hours per week contracts (in line with their existing typical working hours).

Other notable proposals in the Labour Party’s Promise to Workers include:

guaranteeing trade unions a right to access workplaces;
four new Bank Holidays;
full employment protection from day one (rather than, for example, the two year qualifying period for protection from unfair dismissal);
abolition of employment tribunal fees;
doubling paid paternity leave and increasing the rate payable;
strengthening protection from redundancy when the individual concerned is pregnant or on maternity leave;
reinstatement of protection against third party harassment.

The Conservative Party has announced that its manifesto will include the replacement of the Mental Health Act and “sweeping reforms” to the Equality Act 2010 “to protect those with depression and anxiety from being discriminated against at work”.

New rules and guidance for zero hours contracts

On 15 October the Department for Business Innovation and Skills published its Zero Hours Contracts: Guidance for Employers. This web-based resource is fairly brief but usefully covers the main issues. As I have mentioned before the term “zero hours contract” is not legally defined so the Government’s description is helpful:
A zero hours contract is one in which the employer does not guarantee the individual any hours of work. The employer offers the individual work when it arises, and the individual can either accept the work offered, or decide not to take up the offer of work on that occasion.
The guidance confirms that everyone employed on a zero hours contract is entitled to statutory employment rights with no exceptions.

Examples of “appropriate use” are provided including working for new businesses, seasonal work, covering for unexpected staff sickness, working at special events and testing a service. Perhaps more contentiously there is also advice concerning inappropriate use. The guidance states that “they should not be considered as an alternative to proper business planning and should not be used as a permanent arrangement if it is not justifiable”.

It is also indicated that zero hours contracts might not be appropriate if an individual work regular hours for a continuous period, e.g. someone who works 9.00 a.m. to 1.00 p.m. Mondays to Wednesdays for 12 months. It is suggested that better options for such an employee would be a permanent part time contract or a fixed term contract.

The guidance also addresses the issue of exclusivity clauses and in this regard it is unequivocal. It points out that under the Small Business, Enterprise and Employment Act the use of an exclusivity clause on a zero hours contract is prohibited so that, if such a clause is included, “the law states the individual can ignore it”. Attempts at avoidance, such as requiring permission to look for alternative employment, are similarly banned.

In fact these new rules concerning exclusivity clauses are yet to take effect but the Government has published, in draft, the Exclusivity Terms in Zero Hours Contracts (Redress) Regulations 2015.

Sports Direct backs down (but not out) over zero hours contracts

As I have pointed out in another of this month’s articles there seems to be common consent on the part of politicians that there is a need to crack down on the exploitation of employees through zero hours contracts, particularly when those contracts demand exclusivity.

Sports Direct is one of the highest profile users of zero hours contracts, no doubt because nearly 90% of its staff are employed under them.

Earlier this week details emerged of a claim brought by Zahera Gabriel-Abrahem,  a former Sports Direct worker who was employed on a zero hours contract. She brought a claim on the basis that the terms of the zero hours contracts used by Sports Direct discriminated against part time workers because they were treated less favourably than full time workers.

Back in August 2013 I attempted to establish just what is a zero hours contract since they are not legally defined. While most understand that the main characteristic is that the employer is not obliged to provide a set number of hours’ work or, for that matter, any work, there are often other drawbacks for employees lurking within the contract terms. This is the issue that was highlighted by Ms Gabriel-Abrahem. She had suffered panic attacks brought on by the lack of job and financial security that resulted from the zero hours terms. In doing so she was supported by 5000 members of the campaign group 38 Degrees who assisted with legal costs, while 125,000 people emailed the chief executive and head of retail at Sports Direct, urging them to switch to guaranteed hours contracts.

A month before the employment tribunal claim was due to be heard, Sports Direct has agreed terms for settlement of the claim. Those terms include requirements for Sports Direct to make clear in job adverts, contracts and staff rooms that it does not guarantee work, sick pay or holiday pay. However, Sports Direct have made clear that the settlement has been made without any admission of liability and, significantly, they will carry on using zero hours contracts.

However, that is not the end of the story for Sports Direct.

what do the main political parties have in mind for employment law?

With the countdown to next May’s general election well under way and the party conference season behind us, now is a good time to look at what (if anything) the main political parties have in their pre-manifestos or policy briefings concerning employment law.

Nothing to see here! Having reduced access to employment protection by reverting to the two years’ qualifying period for protection from unfair dismissal and introducing fees for employment tribunals, the only policy announcements of note concern proposals to curb industrial action and zero hours contracts. The proposals concerning industrial action appear pretty reasonable: (i) the ballot must have been recent (industrial action took place this month based on a ballot in 2011) and (ii) there should be a minimum 50% turnout. It seems to me that these requirements should not be unduly onerous to comply with and will result in industrial action having a greater impact on the basis that there is a genuinely significant mandate and that this has been obtained recently.

I have already covered the proposal to ban exclusivity in zero hours contracts and the Government is currently consulting about how to put in place suitable anti-avoidance measures. There seems to be a consensus that zero hours contracts have been used to conceal poor and exploitative working practices and I’ve written another article this month about Sports Direct and the need for openness.

Unsurprisingly, Labour has focused on inequalities in the workplace, including the need for diversity monitoring, specifically highlighting social background and equal pay for women. Public sector employers may be required to publish information concerning the social background of employees while companies with over 250 employees may be required to publish the average pay of male and female employees, regardless of whether any equal pay issues have been identified in the organisation.

There is also a plan to increase the minimum wage from the current £6.50 and hour to £8 an hour by 2020. As commentators have pointed out, although it’s a good headline, the increase is not in fact much more than would be required to keep in line with predicted inflation.

Labour intends to “do something” about Employment Tribunal fees but precisely what remains unclear. There have been suggestions of a sliding scale according to the wealth of the individual to scrapping fees completely. However there has also been an announcement that there will be wholesale reform of the employment tribunals system so the issue may be academic. What we do know is that Labour is determined that reform will ensure that “affordability is not a barrier to justice”.

There are also plans to increase the number of apprenticeship schemes with the aim that “as many young people will do apprenticeships as go to university”. Finally, in his conference speech, one part that Ed Miliband did remember was an extension of employment rights (or perhaps more accurately quasi-employment rights) to Britain’s five million self-employed. Now that would be a radical development and would undoubtedly keep employment lawyers very busy for years to come.

can an employee whose employment contract is illegal claim for discrimination?

In June 2012 I reported the decision of the Court of Appeal in Hounga v Allen. Ms Hounga had entered the UK from Nigeria on a false passport, ostensibly to visit friends, but in fact to take up work as an au pair for a Nigerian family. She was about 14 years old and was to be paid her keep plus £50 per month. There was no doubt that the parties knew that the arrangement was illegal. She was not enrolled in a school and although she was provided with bed and board she was never paid her £50 per month or any wages at all.

Following her dismissal after 18 months she made claims for unfair dismissal, breach of contract, unpaid wages, holiday pay and race discrimination. The tribunal found that Mrs Allen had inflicted serious physical abuse on Ms Hounga and had caused her extreme concern by telling her that if she left the house and was found by the police she would be sent to prison because her presence in the UK was illegal. However, all bar the discrimination claim were dismissed on the basis that the contract was illegal. The discrimination claim was successful at tribunal and the employer appealed successfully to the Employment Appeal Tribunal. Ms Hounga appealed unsuccessfully to the Court of Appeal. The somewhat surprising reasoning was that the discrimination was so closely connected to the illegality that the claim had to fail. More controversially it was suggested that her employers would not have treated her so badly had it not been for Ms Hounga’s vulnerability as an illegal worker.

The decision was appealed by Ms Hounga to the Supreme Court, with support from the Anti Trafficking and Labour Exploitation Unit.

The tribunal had found that the circumstances of dismissal were that one evening Mrs Allen was angry when she discovered that the children had not eaten the supper which Ms Hounga had been told to prepare for them. Mrs Allen smacked and hit Ms Hounga. After the children went to bed Mrs Allen attacked Ms Hounga again, threw her out of the house and poured water over her. Mr Allen let her back into the house but then changed his mind and said that Mrs Allen could do whatever she liked to her. Mrs Allen then opened the door, told Ms Hounga to leave and pushed her out. As a result Ms Hounga slept in the garden in wet clothes. She made her way to a supermarket and was then taken in by social services.

Vince Cable announces end of exclusivity clauses in zero hours contracts

As I’ve mentioned in numerous recent posts, zero hours contracts have attracted a good deal of attention over the last few months, not least because they are in much more widespread use than many had thought.

Both the government and opposition have had them in their sights, not from the point of view of banning them (or at least not any more), but with a view to eliminating the abuses which are believed by many to accompany them.

One particularly iniquitous aspect of some existing contracts is the requirement to work exclusively for the employer, even though there is no guarantee that work will be provided. It is estimated that some 125,000 people are currently tied to such contracts. The government’s conclusion on completion of its consultation is that this restriction will no longer be permitted.

Announcing the reform, Vince Cable said:
Zero hours contracts have a place in today’s labour market. They offer valuable flexible working opportunities for students, older people and other people looking to top up their income and find work that suits their personal circumstances.

But it has become clear that some unscrupulous employers abuse the flexibility that these contracts offer to the detriment of their workers. Today (25 June 2014), we are legislating to clamp down on abuses to ensure people get a fair deal.

Last December (2013), I launched a consultation into this issue. Following overwhelming evidence we are now banning the use of exclusivity in zero hours contracts and committing to increase the availability of information for employees on these contracts. We will also work with unions and business to develop a best practice code of conduct aimed at employers who wish to use zero hours contracts as part of their workforce.

Parliamentary committee renews attack on zero hours contracts

As I have reported during the last few months zero hours contracts have attracted a good deal of attention, mainly since it came to light that there are probably far more people employed subject to them than was previously thought.

While some employees have welcomed the flexibility they provide, others appear to have had little choice other than to accept the terms on offer or none at all. This has been particularly significant for benefits claimants who run the risk of having unreasonably refused a reasonable offer of employment and thereby losing their entitlement to benefits.

The issue has been considered by the Scottish Affairs Committee and its conclusion is that, on balance, they are a bad thing and “in the majority of cases” they should not be used at all. The Committee, in its interim report, noted an “alarming” increase in the use of casual labour and frequent breaches of the Minimum Wage Regulations.

Evidence to the Committee showed that:

– 20% of workers on zero hours contracts are paid less than their permanent equivalents doing the same job
– 5% are paid less than the national minimum wage although this is illegal
– thousands of social care workers are illegally denied payment for time spent travelling between appointments
– 40% receive no notice of employment
– 6% turn up for work – having paid for childcare, travel etc. – to find none available
– thousands of others’ employers evade the provision of basic employment rights
– zero hours workers are entitled to limited employment rights but a significant proportion of employers are either ignorant of those rights or are wilfully blocking access to them

Its recommendations are that:

– Zero hours contracts must only be used where the employer can objectively justify it
– The Government must do more to protect workers who wish to challenge unfair, unsafe or unlawful conditions of employment
– Workers should be told from the outset of their employment what type of contract they are on and a written contract setting out the terms and conditions must follow within two months
– There should be a minimum notice period of work and workers should not be punished for turning down offers of work made within that period
– Where workers arrive for work but find none available then the employer should compensate them for the inconvenience
– Travel time between appointments should be paid and pay for zero hours workers should accurately reflect the number of hours that are worked to fulfil contracted duties
– An employer-led Code of Practice is unlikely to help workers who are exploited – in fact it may serve to embed a form of employment that in most circumstances is hard to justify
– If a Code is produced it should only be as a stepping stone to, or following, legislative change aimed at reducing the use of zero hours contracts and ensuring workers receive the income, rights and protections to which they are entitled