Posted by Gemma Ospedale, Partner
Employment legal update #44 | March 2021
Our Employment & HR team brings its monthly review of new legislation, guidance and case law.
In this month’s legal update, our Employment & HR team cover:
Covid-19 news: CJRS aka furlough scheme extension details
Commentary on recent employment law tribunal cases, including the Uber appeal; application of a provision, criterion or practice (PCP) guidance; and collective consultation reference period
‘Hot’ employment law topics for the year ahead
Key cases coming up for appeal
HMRC has updated its guidance on the CJRS to confirm that employees may be furloughed if they are unable to work or are working reduced hours due to caring responsibilities arising because of COVID-19. Under the amended guidance, caring responsibilities include:
- Children who are at home because of school or childcare closures
- A vulnerable individual in the household
Employees in this situation are encouraged to speak to their employer about whether they plan to furlough staff and employers should look to offer this if possible, if they have staff who are carers in the above categories.
As announced in the recent budget, the furlough scheme has been extended until September but with reduced payments by the government conditional upon increased payment by the employer as per the arrangements last year on a staggered basis.
Uber appeal dismissed
The Supreme Court has dismissed the appeal by Uber against the decisions of the Court of Appeal and the lower courts that its drivers were not workers but instead self-employed independent contractors. The judgment in Uber BV & Ors v Aslam & Ors was delivered on Friday 19 February 2021, finally bringing to an end the argument as to whether or not drivers who undertake driving duties for Uber were or were not workers and so entitled to workers’ rights such as minimum wage, holiday pay, etc.
Uber’s argument was that it was a technology platform for the drivers to use to earn a living as and when they choose to do so. Unanimously, the Supreme Court disagreed. It found that, as there was no written contract, there was no basis for the company asserting that it acted as an agent for the drivers. The correct inference was that Uber engages the drivers to carry out driving duties for the clients who commission the company for transport. Furthermore, all fares were paid directly to the company, which then deducted its own percentage before passing the balance on to the drivers.
The key aspects of the employment tribunal decision were emphasised by the Supreme Court as follows:
- It is Uber which sets the fare for the journey and the driver is not permitted to charge more.
- The contract terms on which the transport is conducted are set by Uber and the drivers have no say over these terms.
- Once a driver logs onto the Uber app, he or she is constrained by the company as to choice of rides to accept. If requests for transport are refused, after a certain number of occasions, the company will automatically log off the driver, who cannot then log on again for 10 minutes.
- Uber operates significant control over the way in which drivers provide their services. One way they do this is the requirement for the drivers to be rated and, if the rating drops below a certain level, Uber may terminate the engagement.
- Uber insists on minimum communication between the driver and passenger to avoid a relationship building up beyond the individual ride being undertaken.
All these factors were clear evidence that Uber tightly controls the way in which the drivers operate and offer their services to passengers, and the drivers were in a position of subordination to Uber with very little opportunity to improve their economic position through entrepreneurial or individual skills. As such, the drivers had rightly been found to be workers and to be entitled to benefit from the legislation applicable to workers including, vitally, minimum wage and holiday pay.
Separately, they were also found to have been working for the entirety of the period that they were logged onto the Uber app and available for work within their territory, and not just when they were actually driving customers, as argued by the company. As such, since they will now be entitled to the minimum wage, and to be paid for every hour they are logged on, Uber’s overhead costs will certainly increase considerably.
This decision is likely to have a significant effect, not just on Uber but the gig economy generally as this case follows a number of previous decisions in other gig economy cases where the individuals have as a matter of fact been found to be workers rather than self-employed and therefore entitled to the protection of legislation relating to workers. The gig economy companies function largely on the fact that they do not have the commitments of minimum wage, and holiday pay and other legislative worker rights so they can operate more cheaply.
The key point about this case from an employer/end user perspective is that the emphasis was placed on the interpretation of the statutory legislation which describes workers. If individuals fall into the category of worker as per the regulations, that is what they will be classified as, regardless of any attempts to differently interpret a contract which might purport to make the individual self-employed when, as a matter of fact and law, they are really a worker. Employers will no longer be able to dress up someone who is really a worker under the guise of a self-employed contractor by what is said in the contract because if the legislation points to them being a worker, that is what they will be deemed to be.
PCP must put women, not all employees, at a disadvantage
In Cumming v British Airways plc the EAT has given guidance on the application of a provision, criterion or practice (PCP).
British Airways plc had a policy that aircrew who took three days’ unpaid parental leave would lose one paid rest day that month. The claimant argued that the PCP was indirectly discriminatory against women, because a higher proportion of women than men would take parental leave. The correct pool for comparison was all aircrew with childcare responsibilities.
Her claim was rejected by the tribunal on the grounds that the PCP applied equally to all aircrew so there was no particular disadvantage to women.
The claimant appealed to the EAT, which held that this was wrong and the tribunal had incorrectly applied the law. The fact that the PCP affected all employees who took parental leave in the same way did not mean that there was no particular disadvantage to women in circumstances where there was evidence that more female than male aircrew took parental leave, so it stood to reason that more women would be adversely impacted by the PCP. The EAT looked at previous Supreme Court judgments where Lady Hale observed that women tended to “bear the greater responsibility for caring for the home and family than…men”.
The EAT held that where a tribunal is considering whether a PCP is indirectly discriminatory against women due to their greater childcare responsibilities, it should consider whether the PCP put women at a particular disadvantage, not whether the PCP applied to all employees in the pool equally.
Collective consultation reference period
In UQ v Marclean Technologies the European Court of Justice has ruled on when the reference period runs for the number of dismissals within a certain period which triggers the need for collective consultation. It has determined that the reference period is any period of either 30 or 90 consecutive days during which dismissals took place and during which the greatest number of dismissals for redundancy occurred.
The Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA) gives effect to the European Directive, which requires collective consultation to take place where an employer “is proposing to dismiss as redundant 20 or more employees at one establishment within a period of 90 days or less”.
The effect of the ruling is that if employers are considering redundancies, they must now look both backwards and forwards from an individual dismissal to determine whether there are 20 or more proposed dismissals in the 90-day reference period and, if there are, to ensure that its consultation obligations under TULRCA are met.
Hot topics for 2021
Set out below are key developments which are likely to take place during the coming year to watch out for.
The Queen’s Speech in December 2019 announced the introduction of a new Employment Bill covering a range of topics including establishing a single enforcement body for the labour market and a requirement for employers to pass on all tips and service charges to workers. The Bill’s progress has been delayed due to the pandemic but it is anticipated that it may be progressed during the course of 2021.
Also in the forthcoming Employment Bill, the Government will look to implement new entitlements proposed in March 2020 introducing statutory neonatal leave and pay for up to 12 weeks for parents of babies requiring neonatal care.
The government response is awaited on consultation to give employees who are unpaid carers one week’s unpaid leave per year for caring for those in their charge, the aim being to support those struggling to juggle provision of long-term care for others with their own employment.
Changes in the rules to address non-compliance with IR35, originally intended to be brought in for the private sector from 6 April 2020 but pushed back because of the pandemic, are expected to be implemented from 6 April 2021.
Consultation has commenced on proposals to require employers to continue paying compensation to employees for the length of a post-termination non-compete clause, and other proposals such as a statutory time limit on the length of such clauses or banning their use altogether. The consultation ended on 26th February 2021.
Another consultation has commenced regarding measures to extend the ban on exclusivity clauses in employment contracts to cover those earning under the Lower Earnings Limit, currently £120 a week. The aim is to stop employers from stopping low earning employees from working for other employers to earn a living.. This also closed on 26th February 2021.
PENP changes: the Government’s changes to the current formula for post-employment notice pay (PENP) come into effect on 6 April 2021. The aim is to avoid unfair outcomes if an employee’s pay period is defined in months, but the contractual notice period is expressed in weeks. The changes will also ensure that non-residents who receive PENP are taxed fairly.
In July 2020, the Pregnancy and Maternity (Redundancy Protection) Bill 2019-21 was reintroduced to Parliament (the second reading is on 26 March 2021). If passed, the Bill will prohibit redundancy during pregnancy and maternity leave and for six months after the end of the pregnancy or maternity leave, except in specified circumstances. This follows the Government’s response to a consultation in July 2019 that it would expand redundancy protection. It was initially anticipated that this would be introduced earlier but for various reason this has not happened.
Following our departure from the EU, the Government has confirmed that it does not intend to reduce workers’ rights introduced and implemented by EU directives. It had initially indicated that it would conduct a “review” but has decided against doing so.
Key cases watchdog
Should holiday pay take into account regularly worked overtime?
One of the most eagerly awaited decisions will be the Supreme Court ruling in Flowers and others v East of England Ambulance Trust, to be heard in June and concerning holiday pay. The specific issue is whether or not, under the Working Time Directive, holiday pay should include an amount representing regularly worked overtime. Since we have now departed from the European Union, the outcome might prove interesting as an opportunity for the Supreme Court to start departing from retained EU legislation under the relevant section in the European Union (Withdrawal) Act.
Holiday pay claims
Another holiday pay appeal with a potentially significant impact is the Supreme Court hearing, also scheduled for June, in Chief Constable of the Police Service in Northern Ireland and another v Agnew and others. The Northern Ireland Court of Appeal took a different approach to the EAT in the Bear Scotland case, determining instead that a series of deductions for the purposes of unlawful deduction from wages claims in holiday pay cases would not be broken by a gap of more than 3 months – the period within which the claim has to be lodged. Whilst the Northern Ireland Court of Appeal is not binding in Great Britain, a Supreme Court ruling on this would of course be binding throughout the UK and be very significant for holiday pay claims.
Holiday entitlement for part year workers
And yet more holiday claims come before the Supreme Court in November. The appeal is to be heard in the case of Harpur Trust v Brazel. The issue in this case is whether an employment tribunal was wrong to find that what are described as “part year workers” (essentially teachers who do not work during school holidays) should have their annual leave entitlement capped at 12.07% of annualised hours.
Royal Mencap Society v Tomlinson-Blake, concerning the rate at which workers who carry out sleep-in duties should be paid, which was heard in February 2020. The judgment has been heavily delayed for reasons beyond the Supreme Court’s control.
Comparable terms and conditions for the purposes of equal pay
Asda v Brierly is the equal pay claim which concerns whether workers in retails stores were employed under comparable terms and conditions to those working in separate distribution depots for the purposes of equal pay.
Our Employment & HR team is on hand to steer businesses through the minefield that lies ahead. Contact Partner Gemma Ospedale:
020 7842 1496 Email us
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