123 days to go: Is it time to start thinking about Christmas?

I love Christmas! Absolutely, utterly love it. As my friends and family will tell you, I’m the guy with the Christmas countdown app on my iPhone, the colleague who hangs obscene amounts of tinsel and Christmas paraphernalia around my desk and, every year in September, start googling Christmas Market trips in Europe (last year was Brussels, which is highly recommended!)

Surprisingly, however, it isn’t the quirky number of 123 days to go which has prompted this blog. Rather, it was a recent news article on the BBC News website entitled “Forget summer, it’s time to preare for Christmas” – a link can be found here. The article is mostly about employers preparing their product range for Christmas but, from an employment law perspective, it made me think about the ways in which businesses also need to manage personnel and policies to ensure an effective, stress-free Christmas period.

I’d be missing a clear open goal if I didn’t use Santa as my example employer here. So, here we go, let’s get some pre-planning in place to get Santa ready for Christmas!

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.

European Court of Justice gives OPINION on unpaid and untaken holidays

Does a worker’s holiday entitlement continue to accrue into successive years if they do not take their annual leave because their employer will not pay them for these holidays?

The Advocate General at the European Court of Justice (ECJ) has answered ‘yes’ to this question, in a non-binding opinion.

In the case of King v The Sash Window Workshop Ltd, the Claimant, Mr King (who was a self-employed salesperson), brought an Employment Tribunal (ET) claim against the Respondent, The Sash Window Workshop, on the basis that he felt he was owed monies for annual leave that he had accrued, but not taken.  In addition, the Claimant sought compensation for annual leave that he had taken, but not been paid for during the 13 years he had been working for the Respondent – his claim for holiday pay therefore amounted to over £27,000.00.  It is of note that the contract under which Mr King was employed, provided no right to paid annual leave and that this contract was terminated in 2012, on his 65th birthday.  The Claimant also submitted a claim for age discrimination.

The claim was initially heard by the ET in August 2013.  It was ruled at first instance that Mr King was to be deemed a worker for the purposes of the Working Time Regulations 1998, and also that his discrimination claim was well founded.

The Respondent subsequently appealed against the decision of the ET in respect of the holiday pay aspect of the claim, the Employment Appeal Tribunal (EAT) allowing the appeal and remitting the holiday claim back to the ET.  Mr King then submitted an appeal to the Court of Appeal who referred the case to the European Court of Justice (ECJ).

ECJ Advocate General Evgeni Tanchev, stated that employers had to provide “adequate facilities to workers” to enable them to take their paid annual leave.  Tanchev further stated:

“A worker, like Mr King, may rely on [EU law] to secure payment in lieu of untaken leave, when no facility has been made available by the employer, for exercise of the right to paid annual leave … Upon termination of the employment relationship a worker is entitled to an allowance in lieu of paid annual leave that has not been taken up.

“I appreciate that the answers to the questions referred I am here proposing would require employers rather than workers to take all the necessary steps to ascertain whether they are bound to create an adequate facility for the exercise of the right to paid annual leave, whether those steps be the taking of legal advice, consultation with relevant unions or seeking counsel from Member State bodies that are responsible for the enforcement of labour law.

“If an employer does not take such action, it will risk having to make a payment in lieu of unpaid leave on termination of the employment relationship. However, this would be in keeping with guaranteeing the effet utile of the right to paid annual leave, a fundamental right of substantive normative weight in Member State law, EU law, and international law, and would also be consistent with the practical reality, recognised in the Court’s case-law, of the worker’s position as the weaker party in the relationship.”

Do employees have to disclose their intention to compete?

In the case of MPT Group Ltd v Peel and others [2017] EWHC 1222 (Ch), the High Court was asked to decide whether employees were under a duty to disclose their intention to compete to their employer.

The facts of the case were that Mr Peel and Mr Birtwistle were employed by MPT Group Ltd (a company that produces and supplies machinery, parts and equipment to the mattress industry) in management positions.  The employees resigned from their positions on the same date, Mr Peel giving the reason for his resignation as wanting to work from home and spend more time with his family, and Mr Birtwistle advising he had been offered a position doing ‘panel wiring’.  They denied that they were leaving to form a partnership/start up their own business in competition with MPT.

Both Peel and Birtwistle were subject to extensive confidentiality clauses and restrictive covenants within their contracts of employment, to the extent that they were prohibited from soliciting or even dealing with customers with whom they had personal contact, for six months.

After the relevant period had expired however, Peel and Birtwistle incorporated MattressTek Ltd, a company that was in direct competition with MPT, and began selling complex mattress machines.  It further transpired that prior to leaving MPT, both men had copied a large amount of company data which included client and supplier databases, price and discount lists, sales quotations and orders, machinery drawings and manuals, and other documentation crucial to MPT’s business.

MPT sought an injunction against the men based on the misuse of confidential information, breach of restrictive covenants, and also upon a breach of the duty to answer questions truthfully.  In particular they sought an interim injunction prohibiting Peel, Birtwistle and MattressTek from soliciting, dealing or contracting with MPT’s customer and suppliers, and an unlimited injunction preventing them from disclosing or using MPT’s confidential information.

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.

Can workers receive payment for ‘sleeping’ at work?!

The Employment Appeal Tribunal (EAT) has recently considered this question, more specifically whether workers are entitled to the national minimum wage when ‘on-call’ (or sleeping!) at work.

In the case of Focus Care Agency v Roberts, along with two other cases heard at the same time (Frudd v The Partington Group Ltd and Royal Mencap Society v Tomlinson-Blake), Mrs Justice Simler (President of the EAT) assessed whether the Tribunals had been correct in deciding whether ‘sleep-in’ time should be considered ‘time work’ for the purposes of the National Minimum Wage Regulations.

The EAT essentially concluded that it depends on the circumstances – although it disapproved of the approach taken where workers are deemed to be working simply by being present on the employer’s premises or even provided with accommodation when being on-call. The EAT decided that a multi-factorial approach was required, or in other words it depends on the facts of each case.

Employers will obviously be asking themselves at this point how you differentiate between cases where a worker is “working” throughout a sleep-in shift, being paid to be on the employer’s premises “just in case”, and those where a worker is “on call” and not deemed to be working the entire time? The EAT guidance provided is as follows:

Consider the employment contract in addition to the nature of the engagement and the work to be carried out. Does the contract provide for the period in question to be part of the employee’s working hours? Depending on the facts of the case it may be appropriate to consider whether the contract provides for pay to be calculated by reference to a shift or by reference to something else, and if so, to what; or to whether a period is directly specified during which work is to be done.
The fact that a worker has very little/nothing to do during certain hours does not mean that they are not working. A particular level of activity is not required. An individual can be working simply by being present even if they are simply required to deal with unexpected circumstances, but are otherwise entitled to sleep – this is the case even where the likelihood and frequency of an untoward matter arising is low.
No single factor is determinative and the weight each factor carries varies according to the facts of the particular case in question. Potential relevant factors in determining whether a person is working by being present include:

More news about modern working practices and the “gig economy”

Last week’s news was dominated by the Budget and the Class 4 National Insurance contributions’ increase which was announced and then, within 24 hours, kicked into the long grass. An interesting fact which emerged in the news is that the UK workforce now includes 15% who are classed a self-employed for tax purposes. However, as I have reported this month (in the Pimlico Plumbers case) many of these people are nonetheless classified as workers in the context of employment law and therefore have rights which can be pursued in employment tribunals.

On 22 February The Work and Pensions Committee heard evidence from executives from Uber, Deliveroo, Amazon and courier firm Hermes UK as part of its investigation into modern employment practices. It is estimated that there are now some five million workers in the “gig economy”, of whom some 910,000 are on zero hours contracts, an increase of 100,000 from 2015 to 2016 (ONS Labour Force Survey). UK and Ireland managing director of Deliveroo, Dan Warne, said that flexibility is important to its riders, adding:
We cannot offer that amount of flexibility to those riders if we’re forced to pay a given wage and a given hour to every single rider.
However, it emerged recently that Deliveroo had a clause in its contracts that banned workers from contesting their self-employed status in employment tribunals. Under questioning, Mr Warne acknowledged that the Company needed to “revise the contract”. He said:
This is not something that’s enforced, so there’s no need to have it in there… In practice, if they wished to contest their [self-employed] status they could do so and we wouldn’t challenge them on that.
Although the clause would almost certainly not have been enforceable, it is easy to see how it could operate as a powerful disincentive to low-paid riders with no guarantee of work.

Meanwhile, it has emerged that DPD, which deliver parcels for Marks & Spencer, John Lewis and River Island, fines their couriers £150 per day if they cannot find cover when they are ill. This has resulted in drivers being forced to work when they are sick. The fine, which is described as “liquidated damages”, means that couriers who earn on average £200 a day, lose £350 if they cannot work through illness and are unable to find a substitute. Chair of the select committee, Frank Field, commented:

The gig economy is producing wave after wave of evidence on the grim reality of life at the bottom of Britain’s labour market…A group of companies now controls the working lives of an unknown number of people, and yet evades its own responsibilities as employers and taxpayers by labelling those people as self-employed… This move [by DPD] makes the rest of the gig economy look as though it operates in the Garden of Eden.

A local example of dubious working practices came to light a few weeks ago. Mooboo Bubble Tea, a cafe chain, has a branch located in Liverpool One. New staff reported that they were being made to work a 40-hour trial shift with no pay and no guarantee of a job, apparently in direct breach of the minimum wage regulations.

Pimlico Plumbers and the definition of a “worker”

As I mentioned in last month’s newsletter, an important judgment concerning the status of workers was handed down by the Court of Appeal on 10 February, namely Pimlico Plumbers Limited and Mullins -v- Smith. The decision was regarded as significant enough to make it on to the national news bulletins and Newsnight, as well as widespread coverage in the press.

Mr Smith is a plumber who worked exclusively for Pimlico Plumbers between August 2005 and April 2011. He claims that, following a heart attack in January 2011, he was wrongfully dismissed in May 2011. According to his initial agreement with Pimlico Plumbing he was a “sub contracted employee”. The contract also stipulated that he had to wear a Pimlico Plumbers uniform, work for five days a week (a minimum of 40 hours), give notice of annual leave and be available to take on-call work. There was a ban on undertaking what was described as “private work”, breach of which would lead to instant dismissal. The contract also provided for payment of “wages”.

The initial contract was replaced with a longer and more detailed contract in 2009, which was entitled “Agreement – Self-Employed Operative”. Mr Smith was required to provide his own tools and equipment and he had to pay his own expenses. He also had to maintain adequate public liability insurance. Sub-paragraph 6.1 of the contract stated:
You are an independent contractor of the Company, in business on your own account. Nothing in this Agreement shall render you an employee, agent or partner of the Company and the termination of this Agreement (for whatever reason) shall not constitute a dismissal for any purpose.
Following the termination of the 2009 contract, Mr Smith lodged an employment tribunal claim, complaining of unfair dismissal, wrongful dismissal, entitlement to pay during medical suspension, holiday pay and arrears of pay. He also claimed direct disability discrimination, discrimination arising from disability and a failure to make reasonable adjustments on account of his disability. At a pre-hearing review Judge Corrigan determined that Mr Smith was not an employee. There were circumstances set out in the contract in which Pimlico Plumbers did not have to pay Mr Smith such as when an invoice was unpaid after six months; he had to rectify problems at his own cost; the understanding of the parties that he was self-employed, both for employment and tax purposes, and that he was VAT registered.

However, Judge Corrigan went on to find that he was a ‘worker’ within the meaning set out in section 230 of the Employment Rights Act 1996:

Uber and the “gig economy”

I have been writing about employment status since this blog started a number of years ago. One of the most widely reported cases dealing with the issue was published last week in Aslam, Farrar and others v Uber B.V., Uber London Limited and Uber Britannnia Limited. As most readers will know, Uber is a controversial transportation system which provides app based bookings for private hire taxi journeys. It operates in 66 countries and 507 cities. There are some 30,000 Uber drivers operating in the London area. Uber B.V. owns the smartphone app. Uber London Limited is a licensed private hire operator and Uber Britannia holds licenses for district councils outside London.

At a case management hearing in 2015 two “test claimants” were selected for a preliminary hearing to determine the question of their status in the context of employment law protection (the action was backed by the GMB union). They claimed that, as workers, they should receive the minimum wage and be entitled to paid holidays as well as protection from whistle-blowing. Uber contended that they were independent contractors and not workers, and therefore not entitled to the rights claimed. The preliminary hearing took place over five days between 19 July and 12 October 2016, with the decision published on 28 October. The tribunal summarised how the Uber system operates. Passengers register their information on the app, including credit or debit card details. Once registered they can request journeys by using the app. They do not have to state their destination but, if they do, they may choose to receive a fare estimate. Uber then locates the nearest available driver and notifies him of the passenger’s first name and rating (drivers and passengers can be rated on the app). He then has 10 seconds to accept the trip or it is offered to the next best matched driver. If accepted the driver is put in phone contact with the passenger to agree the pick-up location and advise about any delays but he is strongly discouraged from asking about the destination until he has picked up the passenger. Once the passenger is picked up the app specifies the route to the destination and this must be followed unless the passenger indicates otherwise. Once the journey is complete the driver confirms accordingly on the app and is then placed back in the pool of available drivers. The passenger pays via the app and the Uber software then generates what appears to be an invoice from the driver to the passenger. The driver is paid weekly based on the fares earned, less a service fee which is usually 25%.

Comparators in Equal Pay claims

In the recent case of Brierly and ors v Asda Stores Ltd, a Tribunal has ruled that Asda store workers are able to compare themselves to distribution depot workers for equal pay purposes.

The facts of this case are that a group of (mainly female) Asda employees who were employed on an ‘hourly rate’ basis, argued that they were entitled to the same rate of pay as the distribution depot employees (the majority of whom were male). They claimed that their duties had historically been thought of as ‘women’s work’ and therefore worth less than the duties carried out by the employees working in the depot.

At the preliminary hearing, the Tribunal was tasked with deciding whether the store workers were able to rely upon this comparison. Section 79 of the Equality Act 2010 states that an equal pay comparison is only valid if the claimant and comparator are both employed by the same employer and work at the same establishment; or if they are both employed by the same employer and work at different establishments but ‘common terms apply at the establishments’.

The Manchester Employment Tribunal firstly considered whether the above comparison would be allowed under EU law. It stated that although it is not enough that the Claimant and proposed comparator are employed by a single employer (there must also be a single ‘source’ i.e. a body responsible for this inequality but that could restore equal treatment), in this particular matter the single ‘source’ test had been satisfied, thus rejecting Asda’s argument that the division of the Company structure into Retail and Distribution sectors meant that pay-setting authority had been delegated to separate bodies.