UK Employment Law case updates - November 2016

Latest UK Employment Law case updates - November 2016
  1. Uber loses out to 'workers'.
  2. How narrow should 'activities' be interpreted for TUPE transfers?
  3. Failure to implement bespoke rosters for breastfeeding women amounted to indirect sex discrimination.
  4. Court of Appeal decides that statutory holiday pay must include results-based commission.
  5. Employers must give clear consideration to amend restrictive covenants.


Uber loses out to 'workers'.

Mr Aslam, Mr Farrer & Others v Uber BV, Uber London Ltd & Uber Britannia Ltd [2016] WL 06397421

On 28 October 2016 the Employment Tribunal ruled in favour of current and former Uber drivers seeking to establish their status as 'workers'. This means that the drivers are entitled to certain rights, including national minimum wage, holiday pay and rest breaks. Uber unsuccessfully argued that their drivers are self-employed as they are entitled to choose where and when they work.

Uber has confirmed that it will be appealing this case. In the meantime, however, there is no doubt that this decision could have a significant impact on the "gig" economy whereby individuals do not have a fixed contract, but are remunerated based on the number of jobs (or "gigs") they complete. In particular, Deliveroo drivers are currently attempting to unionise in the hope that a similar claim could be brought on their behalf. It is also thought that the Uber drivers may seek to bring a claim for backdated holiday pay and wages, in light of this decision.

Tom Mintern, Associate, discusses the impact of 'worker' status and the wider implications of this decision here.

How narrow should 'activities' be interupted for TUPE transfers?

The Salvation Army Trustee Company v Bahi & Others UKEAT/0120/16

Coventry City Council provided a range of services to homeless people through contracts with numerous providers. The claimants were employed by a charity, CCL, and they worked with the Council to provide 'accommodation based support' for men and women. The Council decided to get rid of the separate contracts and merge the provision of homelessness and ex-offender support through a single point of access. The Salvation Army Trustee Company (SAT) were awarded the contract.

The question here was whether the activities that had been carried out by the claimants before the service provision change were fundamentally the same as after. SAT argued that there were many differences, for example SAT used two large hostels whereas CCL had 'dispersed accommodation' in ten houses in multiple locations. The Employment judge found that the activities were fundamentally the same and therefore TUPE applied.

SAT appealed, however it was dismissed with the judge concluding that 'activities' should be given their ordinary, everyday meaning but avoiding too narrow a focus in deciding what the activities were. In this case the activities were the provision of accommodation based support for homeless men and women.

This case is another example of the broad interpretation that courts tend to adopt when considering the application of TUPE. It demonstrates their reluctance to become too technical and preference for a purposive approach. The decision is consistent with our experience of the Tribunal's approach in recent years and it is not easy to sidestep the TUPE net.

Failure to implement bespoke rosters for breastfeeding women amounted to indirect sex discrimination.

McFarlane and another v EasyJet Airline Company Ltd ET/1401496/15 & ET/3401933/15

EasyJet's failure to accommodate women who were breastfeeding by limiting their shifts to eight hours amounted to indirect sex discrimination.

According to medical advice, breastfeeding mothers are at risk of developing mastitis if they are not able to express breast milk regularly. Both Claimants were breastfeeding their babies and were not able to confirm how long they intended to breastfeed for.

EasyJet operated a general prohibition on individual rostering arrangements for crew members. This was found to be a provision, criterion or practice ("PCP") that was applied to all crew members. Further, the ET held that this PCP placed breastfeeding women at a disadvantage because they were either forced to work a normal roster, at the risk of developing mastitis, or to continue breastfeeding but suffer pecuniary disadvantage.

EasyJet argued that this failure to accommodate the Claimants' requests served legitimate business needs, in particular, to avoid flight delays and cancellations and to comply with various legal and regulatory requirements. Further, EasyJet asserted that these measures were proportionate for numerous reasons, notably because of the regular disruption to flying schedules, which often causes crew members' duties to be extended.

The ET rejected EasyJet's arguments on proportionality. It found that the evidence provided by EasyJet was unconvincing, as only two relevant examples were given of a flight being cancelled due to a bespoke roster. In addition, there was evidence that EasyJet had created a bespoke rostering arrangement for a cabin crew member suffering from thrombosis, which had not created insuperable difficulties. Thus, the PCP was found to be indirectly discriminatory.

Employers should consider any policies on employees' shift lengths in light of this judgment as it is possible that disproportionate inflexibility could amount to indirect sex discrimination. It should also be noted that the ET, unsurprisingly, found that it was unreasonable for EasyJet to ask the Claimants how long they intended to breastfeed for.

Court of Appeal decides that statutory holiday pay must include the contractual results-based commission.

British Gas Trading Ltd v Lock and another [2016]

This is an important case in the evolving field of holiday pay and variable remuneration. The Court of Appeal confirmed the Employment Appeal Tribunal's position that holiday pay should include compensation for contractual results-based commission which the employee usually earns. 

The claimant was employed by British Gas Trading Ltd as a sales consultant. The claimant's salary was made up of two parts: a basic salary and a commission. The claimant's commission typically accounted for 60% of his salary and was a results-based commission which was not dependant on the number of hours worked. When the claimant was on holiday, he did not make any sales generating a commission. Consequently, the claimant's pay in the month after taking annual leave was always substantially lower due to a lack of commission. 

The case was referred to the European Court of Justice ("ECJ"), who considered that workers should receive their "normal remuneration" during their statutory holiday. The Court of Appeal interpreted the Working Time Regulations 1998 to make them comply with the ECJ's ruling and confirmed that the claimant's commission should be included in holiday pay calculations. 

Employers who operate commission-based businesses need to be aware that holiday pay should be calculated to include an element for commission so that employees are not financially disadvantaged by taking holiday. Note: it is understood that British Gas will appeal to the Supreme Court and so it may be some time before there is certainty on this point.

Employers must give clear consideration to amend restrictive covenants.

Decorus Ltd v Daniel Penfold & Procure Store Ltd [2016] EWHC 1421 (QB)

This case highlights the importance of providing consideration to employees when introducing or amending post-termination restrictive covenants once employment has commenced.

In 2013 Decorus Ltd amended Mr Penfold's employment contract reducing the period of post termination non-compete and non-solicitation restrictions from nine months to six months. When Decorus subsequently looked to enforce the covenants, Mr Penfold challenged their applicability on the ground that consideration had not been given and therefore no contract could have been concluded (an unusual feature of the case is that Mr Penfold was effectively arguing for the more onerous 9 month restrictions under his old contract, on the basis he believed them too onerous to be enforced). The court found in favour of Decorus, who argued that consideration had been given in the form of a pay rise (even though there was a gap between introducing the new contract and pay rise) and continued employment.

This is another in a line of decisions concerning adequate consideration for restrictions. Regrettably, the authorities do not provide a consistent picture and have been determined on their specific facts. The clear message to employers, however, is that when introducing new covenants, they should leave no room for ambiguity. The associated benefit (consideration) should be clearly associated and better still made expressly conditional upon the acceptance of the amended terms.

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