Frontline UK Case updates - March 2019

Frontline March 2019 – Case updates

  1. Agency workers: hiring company remains responsible for its share of compensation due to agency workers for failure to pay equalised pay rates, despite agency's failure to pass on payments already received from the hiring company to the workers
  2. Suspending employees: is it reasonable and proper?
  3. Dismissal due to anticipated relationship issues was automatically unfair under TUPE
  4. National Gallery experts held to be workers and not self-employed
  5. Tribunal judgments should be published despite reputational risks

Agency workers: hiring company remains responsible for its share of compensation due to agency workers for failure to pay equalised pay rates, despite agency's failure to pass on payments already received from the hiring company to the workers

London Underground Ltd v Amissah (Court of Appeal)

The Court of Appeal has confirmed that an employment agency's failure to pass on to its workers payments which were provided by the hiring company to ensure equalised rates of payment between agency workers and the hirer's employees in compliance with the Agency Workers Regulations 2010 (the "AWR") does not absolve the hiring company from its liability to pay compensation under the AWR if the agency workers do not actually receive the payments.

The Claimants were agency workers supplied to work for London Underground Ltd (the 'Hirer') by (the "Agency"). The agency told the hirer that its workers were not entitled under the AWR to rates of pay equal to those payable to comparable employees of the hirer after 12 weeks on assignment because the workers already had a permanent contract of employment with the agency and therefore fell within the "Swedish Derogation" in the AWR (which provides an exemption from the obligation to provide equalised pay where the workers are employed by the agency on permanent contracts which provide for pay between assignments). The hirer reviewed the situation a year later and decided that the agency workers did not fall within the Swedish Derogation and were in fact entitled to equalised rates of pay.  On that basis the hirer subsequently made payments to the agency to cover arrears owed to the agency workers from the previous year.  However, the agency did not pass on the hirer's payments to the workers.  It then went into involuntary liquidation.  Following a claim by the workers for breach of the AWR, the Employment Tribunal apportioned liability equally between the hirer and the agency but held that it would not be just and equitable for the hirer to pay any compensation, in part because it had already paid the agency for the arrears.

The Court of Appeal held that even though the hirer had previously made payments to the agency so that the agency could ensure the workers were paid in compliance with the AWR, the hirer was still responsible for 50% of any compensation because the agency workers did not actually receive the payments made by the hirer to the agency. Whilst it was unfortunate that the hirer would have to effectively "pay twice", the Court stated that it would not be fair for the agency workers to be deprived of compensation through no fault of their own.

This judgment highlights the importance of correctly ascertaining as soon as possible whether the provisions of the AWR which require agency workers to equal treatment with comparable employees of the hirer (including as regards pay) apply. It also underlines that companies using agency workers should seek to ensure as far as possible that the agency actually passes on to its workers any payments intended to ensure compliance with the equal treatment provisions of the AWR.  

Suspending employees: is it reasonable and proper?

Mayor and Burgesses of the London Borough of Lambeth v Agoreyo (Court of Appeal)

The Court of Appeal has confirmed that an employee should only be suspended by an employer if it is reasonable and proper to do so, otherwise the employer risks breaching the implied contractual term of mutual trust and confidence. The decision to suspend should be considered carefully in light of each individual case and must not be a routine or knee-jerk reaction by an employer to allegations of misconduct.

The Claimant was a teacher.  She was suspended pending further investigation of allegations that she had used unreasonable force towards two children in her class, including dragging them across the classroom floor. The letter of suspension stated that the suspension was a "neutral action and not a disciplinary sanction". Following her suspension, the Claimant resigned and went on to challenge the lawfulness of her suspension, arguing that it was a repudiatory breach of the implied duty of trust and confidence owed by an employer to an employee, because the suspension had not been reasonable or necessary in order to conduct the investigation.

In the first instance, the County Court held that the school had been bound to suspend the Claimant and that they had not breached the implied term of trust and confidence by doing so. Following the Claimant's appeal, the High Court held that the suspension was a "default position" and "knee-jerk reaction" which was not reasonable or necessary and, in the circumstances, there had been a breach of the implied term of mutual trust and confidence. The school appealed to the Court of Appeal.

The Court of Appeal overturned the High Court decision and held that, in the circumstances, given that the school had a duty to protect the interests of very young children, the County Court was entitled to find that the school had acted with reasonable and proper cause in suspending the Claimant. The Court of Appeal also confirmed that there is no test of "necessity" in the context of suspension. As an aside, it further noted that an employer should always communicate clearly to the employee that suspension is not a disciplinary sanction.

Notwithstanding the Court's helpful finding that there is no test of "necessity" when it comes to suspension, employers should remain cautious when it comes to suspending employees even where there is a clear contractual right to do so. It is vital that they do not suspend employees as an automatic response to allegations of misconduct but instead carefully consider whether it is reasonable and proper to do so, taking into account the specific circumstances of the case.    

Dismissal due to anticipated relationship issues was automatically unfair under TUPE

Hare Wines Ltd v Mrs Satwant Kaur, H&W Wholesale Ltd (Dissolved) (Court of Appeal)

The Court of Appeal has confirmed that an employment tribunal had been entitled to reject an employer's assertion that an employee subject to a TUPE transfer had been dismissed by reason of the cessation of a business. The Tribunal had legitimately found that the real reason for termination was the new employer's anticipation of future difficulties in the relationship between that individual and a colleague, which could be characterised as connected to the transfer of employment and therefore automatically unfair under TUPE.

In this case, the Employer had agreed to assume the business and employees of another company (the "Previous Employer") as part of a transaction to which the Transfer of Undertakings (Protection of Employment) Regulations 2006 ("TUPE") applied. The Claimant was dismissed on the date of completion, ostensibly on the grounds that the Previous Employer was ceasing to trade due to unforeseen circumstances. She claimed that, in reality, she had been automatically unfairly dismissed because the sole or principal reason for her dismissal was the TUPE transfer.

After rejecting the Employer's assertion that the Claimant had objected to the transfer due to a difficult working relationship with a colleague, the Employment Tribunal held that it was the Employer who had dismissed her and that the actual reason for this was that it foresaw future difficulties that might arise between these two individuals. In the Tribunal's view, this meant that the sole or principal reason for the dismissal was the TUPE transfer and it was therefore automatically unfair. Both the EAT and Court of Appeal rejected the Employer's appeal, confirming that the ET was entitled to prefer the Claimant's evidence to the effect that the transfer – not simply the personal relationships at play – was the real reason for the transfer. In short, the Employer did not want her to transfer to their employment.

Whilst this case does not represent a significant development in the law, it does illustrate a Tribunal's relatively broad discretion to examine all the evidence and come to its own conclusion at to the genuine reason for a dismissal in the context of TUPE, notwithstanding the contradictory assertions of all interested parties and the multiple potential reasons at play. Where dismissals are necessary in the context of a TUPE transfer, employers should consider whether the sole or principal reason for such dismissals may be justified as an economic, technical or organisational change entailing changes to the workforce; where this is the case, a termination will not be automatically unfair under TUPE.

National Gallery experts held to be workers and not self-employed

Braine and others v The National Gallery (Employment Tribunal)

The Employment Tribunal has found that art experts, when working on individual assignments for The National Gallery (some over a period of decades), were workers and not self-employed 'freelancers'.

27 Claimants had worked as so-called 'educators' for The National Gallery, some over many years. Their job was to deliver tours, talks, lectures, workshops and the like. Following a reorganisation at the gallery in 2017, many of the Claimants were let go. They subsequently brought claims against the gallery which included allegations of unfair dismissal and discrimination. Importantly, unfair dismissal can only be claimed by employees with two years' continuous service, and discrimination, by comparison, can only be relied upon if an individual is a 'worker'.

The Tribunal held that the claimant educators were workers, but not employees. This was the case, notwithstanding the terms of their written contract, since the educators had to "provide their services personally", were subject to "supervision and control exerted by" the gallery and were "to a substantial extent integrated into the gallery". However, the Tribunal considered that they were not employees since "there was no obligation between assignments to offer or accept work and that was fatal to the Claimants’ case". In light of the above, the educators' various discrimination claims could proceed, but the unfair dismissal claims failed.

It is well established that the question of employment status requires a factual enquiry which encapsulates all the circumstances. In coming to his decision, the Judge took into account (among other things) the fact that:

  • prospective educators had to undergo training to ensure they fully understood the standards, requirements and "house style" of the gallery;
  • following training they were put on a probationary period of around 6 months;they were regularly observed and given feedback on their performance;
  • they were offered standard terms that did not oblige the gallery to offer them work, but equally which permitted them to accept or reject work as they saw fit (without being penalised), and they were also, from 2005, included on the gallery's payroll system with income tax and national insurance contributions deducted from the standard fees that they were paid;
  • following successful completion of probation, they were given privileges from which other employees of the gallery benefitted, such as overnight expenses, staff canteen access, staff discounts, private viewing invitations, etc. They also wore staff uniforms and were included on staff lists, although they were not entitled to sick pay, as employees were;
  • they could not switch themselves for another educator on a given day; and
  • they were permitted to work for other galleries as they wished.

Hot on the heels of the recent "gig-economy" cases, this judgment provides another reminder that when deciding upon an individual's employment status, a Tribunal will examine how a contract for work has been performed in practice; the wording of any contract for services will not be determinative. The Tribunal was also keen to stress that not every similar educator at every gallery or museum could be considered to be a worker, and the facts in question were specific to this case alone.

Tribunal judgments should be published despite reputational risks

Ameyaw v Pricewaterhousecoopers Services Limited (Employment Appeal Tribunal)

In a case looking at the new tribunal database, the Employment Appeal Tribunal (EAT) held that tribunals don’t have the power to remove judgments from the database and, whilst they can grant anonymity, an order to this effect will only be made in very limited circumstances.

Ms Ameyaw brought tribunal proceedings against her former employer, PwC.  At the public preliminary hearing, PwC sought to have her claims struck on the basis of alleged "scandalous and vexatious conduct" at an earlier closed preliminary hearing.  Whilst the strike out application was not upheld, the employment judge found that Ms Ameyaw's behaviour at the earlier hearing had at times been "uncontrolled and unacceptable".  The decision, including full written reasons, was then published online.

A year later, Ms Ameyaw applied to have the final and preliminary hearing judgments removed from the tribunal database, or alternatively for an anonymity order to be granted.  She argued that the tribunal had breached her right to respect for private and family life under Article 8 of the European Convention of Human Rights (ECHR).  Ms Ameyaw argued that she had been unable to obtain a new role and had not been invited to interview for over a year as a result of the judgment's online publication, despite making multiple applications for suitable roles.

The ET rejected the application and the EAT similarly rejected Ms Ameyaw's appeal.  The EAT found that the ET did not have the power to remove a judgment from the database.  Tribunals do have the power to grant anonymity in some circumstances, but should carry out a balancing exercise and the ET here was entitled to find that principle of open justice and Articles 6 and 10 ECHR were not outweighed in this case.  The EAT held that Ms Ameyaw had known that the relevant hearing was public and so could not have had had any expectation of privacy.  The EAT went further, finding that even if Article 8 did apply, the fact that the record might be "painful, humiliating or deterrent" would not, of itself, mean that it should not be made public.

The case is a timely reminder that, as a starting point, that all judgments and written reasons will be available online.  The database includes a "free text" search, meaning judgments are easy to find and routinely come up as results on search engines such as Google.  Parties to litigation will need to consider the implications of this, including possible reputational damage, disclosure of sensitive commercial or personal information and the impact on employee relations, as well as the risk of victimisation claims associated with the database disclosures.  Similarly, whilst employers should not routinely be 'Google-ing' candidates, those that continue to do so need to be aware that searches will almost certainly throw up any tribunal decisions and that this may have knock on effects under both data protection and employment legislation.

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