Can an employee who does not have the right to work in the United Kingdom bring a successful employment law claim?

The ‘illegality principle’ prevents a court from aiding a claimant who has based their claim on an immoral or illegal act, meaning that a tribunal or court will generally not enforce an illegal contract.

An employer of an individual working under an illegal contract can raise a defence against any employment claims the individual may bring against them. This is what is known as the ‘illegality
defence’, the basis of which is that the contract is illegal and therefore void, so the claim should not succeed.

A common example of an individual working under an ‘illegal contract’ would be an employee who is working in the UK despite not having the right to – i.e. working illegally, in breach of immigration laws.

In recent years, tribunals and civil courts have been reluctant to allow an employer to use the illegality defence to block vulnerable migrant workers’ employment tribunal claims.

An interesting Court of Appeal decision has further illustrated this. The case of Okedina v Chikale, has shown that an employer cannot always automatically rely on a breach of immigration rules to argue that an employment contract is unenforceable. The matter concerned contractual claims (including unfair dismissal) brought by a Malawian national whose leave to remain (and right to work) in the UK had expired two years before the time she was summarily dismissed.

Can the right to use a substitute be consistent with employee status?

There are around seven million carers in
the United Kingdom in 2019 – and that figure is estimated to increase by 3.4
million by 2030. That is a 60% estimated increase in just over ten years’ time.
A recent case involving a live-in carer with over three years’ service explores
the issue of determining employee status for non-traditional work relationships,
and confirms that the right to use a substitute does not always preclude an
individual from having employment status.

Historically, the law has been clear in confirming that an unfettered right to appoint a substitute is not consistent with employee status. However, Catfeild-Roberts v Phillips & Universal Aunts Limited, an Employment Appeal Tribunal judgment of this month, serves as an example of where this is not always the case.

Worker Status Confirmed for Uber Drivers

Uber’s appeal against a landmark tribunal ruling in 2016 has been unsuccessful following a judgment handed down in the Court of Appeal yesterday.

Uber drivers shall continue to be classified as workers, directly employed by the company, and will be in receipt of all the employment law protections that this affords.

The appeal was lodged by Uber to
overturn a 2016 Tribunal ruling that the hire-on-demand driver service should
treat its drivers as workers not as self-employed as argued by the firm. The
original decision was upheld after the judges reached a 2 -1 majority decision –
finding in favour of the workers.

Uber’s contention was that its
drivers should be treated as self-employed, in a similar way to that in which taxi
drivers and other private-hire vehicles are. In Britain, the self-employed are
not able to access basic employment-law protections such as for example the
right to a minimum wage, paid holidays, sick pay and rest breaks.

The above benefits carry
significant costs, which Uber’s business model has attempted to circumvent by
misclassifying drivers as self-employed when in reality, on the facts and as
re-confirmed by yesterday’s judgment they are workers. Uber has however
introduced a number of benefits to its drivers this year (for example pairing
up with insurance giant AXA to provide partner protection insurance for its
European drivers in the event of injury, sickness and family leave) and its position
is that the drivers enjoy the flexibility that the role offers, and that on
average its drivers earn much more than the minimum wage.

So why have the drivers been classified as workers?

New workplace reforms announced – take note of the requirements

At long last the Government has announced its response to the Matthew Taylor report on modern working practices, published in July 2017. Mr Taylor is a former aide to Tony Blair and is currently the chief executive of the Royal Society of Arts. He was charged by the previous Conservative government with reviewing employment law practices, with a particular emphasis on the emergence of the “gig economy”, characterised by zero hours contracts. The Government’s response and recommendations in the “Good Work Plan“, a 62 page detailed response which, commendably, lists all 53 recommendations in the Taylor Report and provides itemised responses

According to the BBC, significant changes will take effect from Monday 24 December, including an entitlement to a written statement for all workers (not just employees) of terms and conditions from the first day of a person commencing work (currently within two months). However, I am not sure that this is correct since secondary legislation will be required and, given the Government’s busy schedule, I can’t see it being fitted in in the near future. However, it makes sense to prepare for the changes and change procedures, where necessary to do so, as soon as possible.

It is no surprise that zero hours contracts have not been banned. When being interviewed on BBC Radio 4 earlier this week Mr Taylor cited the example of the trial run by McDonalds (referred to in my earlier blog posts on the topic) in which employees were offered the choice of fixed hours or zero hours contracts. Only 20% took the fixed hours option, thereby demonstrating that zero hours contracts do work for some people.

Among other notable accepted proposals, as matters stand, a break in service of one week does not affect the calculation of the qualifying period for continuous service. In future, breaks of up to four weeks will be disregarded.

Additional information in the form of a Key Facts Page will be provided to all agency workers at the start of each contract, setting out their contractual and employment rights, so that they are clearly understood from the outset.

Significantly, written statements of terms of employment (to be issued to both employees and workers from day one). Additional information required to be provided includes:

Pimlico Plumbers and other employment status news

Late last month the Supreme Court delivered its long-awaited if not altogether surprising decision in Pimlico Plumbers v Smith. It upheld the decisions of the lower courts that Mr Smith should properly be classified as a worker, with attendant rights (including discrimination rights and holiday pay), rather than being self-employed.

Gary Smith worked for Pimlico Plumbers for six years (from 2005-2011). Although he was VAT registered and paid self-employed tax, from an employment law perspective, he was nonetheless entitled to workers’ rights.

The judgment was unanimous and the lead judgment was provided by Lord Wilson. Having considered the history of the law concerning the status of workers (dating back to 1875), he considered the written agreements between Pimlico and Mr Smith (the original dated 2005 and a replacement issued in 2009), both of which he thought were confusing. However, he noted the extent of control exercised over Mr Smith including the right to dismiss him for gross misconduct, how he should provide his services, an obligation to provide advance notification of absences and the supply of tools. The second agreement included an obligation to wear Pimlico’s uniform, a minimum 40 hours’ working week, advance notice of annual leave and provision for warnings and dismissal.

He also noted that there was no provision for Mr Smith to appoint a substitute to do his work (other than by another Pimlico operative). Having considered relevant authorities, he concluded that “the dominant feature of Mr Smith’s contracts with Pimlico was an obligation of personal performance”.

There was an “umbrella contract” between Mr Smith and Pimlico whereby, if work was available to be done by him, he would be expected to do it. Nonetheless, Mr Smith correctly presented himself as self-employed for tax purposes.

DPD relaxes onerous terms imposed on its delivery drivers

A year ago I wrote about the onerous terms imposed on DPD couriers, which had come to the attention of the Work and Pensions Select Committee:

“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 Committee (and my MP) Frank Field, commented at the time:

“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.”

In February 2018 The Guardian reported the sad story of Don Lane, a DPD courier, who was fined £150 for attending a medical appointment to treat his diabetes and who, at age 53, subsequently collapsed and died for reasons connected with the disease. His widow, Ruth, disclosed that he had missed medical appointments because he felt under pressure to cover his round. He had collapsed twice, including once into a diabetic coma, while at the wheel of his DPD van. His fine was imposed when he went to see a specialist about eye damage caused by his diabetes. He collapsed in late December, having worked through illness during the Christmas rush and died in the Royal Bournemouth Hospital on 4 January.

More unrest at the BBC – now it’s about personal service contracts and a word of warning about the ostensibly self-employed

Perhaps the most surprising aspect of “employment” provided through personal service companies is that such arrangements have lasted as long as they have.

When the BBC first published the salaries of its top presenters last year there were some notable omissions. For example David Dimbleby didn’t appear on the list. Why? Because he is paid by the BBC through a separate production company. Similar arrangements are in place for Lord Alan Sugar, John Torode and Gregg Wallace.

For years the BBC has encouraged and, some have argued, mandated some of their key talent to be paid through a personal service company. The idea is that the company provides the services of, say, the presenter to the BBC and the BBC therefore pays the company for the services provided. The upshot is that the presenter benefits from the lower tax regime for limited companies (currently 20%) rather than the higher personal tax rates of 40% over £45,000 and 45% over £150,000.

Unsurprisingly, HMRC have been chipping away at such arrangements for a number of years and, as far as the BBC is concerned, matters recently came to a head with a victory in the High Court against BBC Look North presenter Christa Ackroyd. Ms Ackroyd was sacked by the BBC in 2013 after HMRC demanded unpaid taxes from her on the basis that she was, in reality, an employee of the BBC and therefore required to be taxed under Schedule E. Her HMRC appeal was unsuccessful and she is now facing a bill for £419,151 in back taxes, plus undisclosed legal costs. An HMRC spokesman reiterated their long held view that “employment status is never a matter of choice…It is always dictated by the facts and when the wrong tax is being paid we put things right”.

You may take the view that Ms Ackroyd had tried it on and been caught out but, as is so often the case, it is by no means that straightforward and the BBC is very much under scrutiny as a result of its actions.

Compensation for post-termination losses, even though lawfully expelled from partnership

The status of professional partners in the context of employment law has exercised the courts on many occasions. Are they employees, workers, or employers or, in some cases, none of the above. Is there a difference between self-employed salaried partners and employed salaried partners? From an employment perspective, probably not. Of course, the employment rights available vary from none to most, depending on which type of employment status (if any) applies.

The same issue arises in the case of members of an LLP (or limited liability partnership), who are often referred to as partners. One such member was a solicitor who worked for Wilsons Solicitors LLP and whose claim was recently considered by the Court of Appeal.

Mr Wilson became a member of the LLP in May 2008. He held the post of managing partner, as well as being the firm’s COLP (Compliance Officer for Legal Practice) and COFA (Compliance Officer for Finance and Administration).

In July 2014 the board of the LLP received a complaint of bullying made against the senior partner, Mr Nisbet. Mr Wilson investigated the complaint, reported his findings to the board and produced a report on 7 October 2014. On 21 October the board was supposed to meet to discuss the report. However, a majority of the members refused to attend the meeting. Instead, the following month, they demanded that Mr Wilson should resign. They then voted to remove him from his post. They also removed him from the posts of COLP and COFA before he was able to submit his report.

In January 2015 Mr Wilson wrote to the other members and claimed that they had repudiated the terms of the members’ agreement by their actions and he accepted the repudiatory breaches. He gave one month’s notice of his intention to leave the membership of the LLP on the basis that their actions had made continued membership intolerable.

Important ECJ decision opens up the possibility of valuable retrospective holiday claims

I have written in this blog on many occasions about the importance of getting it right if you are going to treat all or part of your workforce as self-employed, rather than as fully fledged workers or employees. As you may recall, the Pimlico Plumbers case earlier this year ruled in favour of the claimants, finding that they were workers rather than being “fully” self-employed and therefore entitled to holiday pay and other benefits. The issue has been a hot topic throughout 2017 with the Uber and Addison Lee cases for example showing a willingness on the part of the courts to find that there was an employment relationship where, previously, there was assumed not to be.

But what basis should be applied for calculating losses if an entitlement to retrospective holiday pay or other benefits is established. The normal cut off point for calculations is six years, since this is the time limit for claims based on breach of contract. However, the entitlement to paid holidays arises under the EU Working Time Directive and this has a statutory footing.

This issue was recently considered by the Court of Justice of the European Union (CJEU/ECJ) and judgment was delivered in the case of King v The Sash Window Workshop Limited and Dollar on 29 November. Mr King had started working for Sash Window Workshop (“the Company”) in June 1999 on a “self-employed commission only contract”. He continued to work for the Company until his retirement in 2012. He took numerous holidays during the 13 years that he worked for the Company, but was not paid for them. Following his retirement he asked to be paid all his holiday pay for the entire period of his engagement. Unsurprisingly, the Company refused.

Mr King took his claim to an employment tribunal which held that there were in effect three types of holiday claims: (i) holiday pay for 2012-13 accrued but untaken when he left, (ii) holiday pay for leave actually taken but in respect of which no payment was made and (iii) pay in lieu covering accrued but untaken leave (amounting to a further 24.15 weeks). The tribunal found that Mr King was a worker (within the meaning of the statutory definition – see the Pimlico case) and therefore ruled in his favour in respect of all three.

The Company appealed to the Employment Appeal Tribunal.

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)…