UK Employment Law case updates - November 2017

29 November 2017

Ian Hunter, Elizabeth Lang, James Froud

Latest UK Employment Law case updates - November 2017

  1. Breastfeeding worker highlights sex discrimination disparity
  2. HMRC not afraid of the Big Bad Wolff: IR35 strikes again
  3. Disciplinary decision-makers in the dark…


Breastfeeding worker highlights sex discrimination disparity

Ramos v Servicio Galego de Saude (European Court of Justice)

The ECJ has decided that where an employer fails to assess the workplace risks posed to breastfeeding workers, this may constitute direct sex discrimination. It also held that, where a pregnant or breastfeeding worker is exposed to a potential risk at work, it is not enough for employers to do a general risk assessment of the worker's role: they must instead assess the breastfeeding worker's individual circumstances in order adequately to determine whether there are specific risks to her or her child.

The case involved a question on the Pregnant Workers Directive (which has been transposed into UK law), and stemmed from a claim brought in the Spanish courts by an A&E nurse, who disagreed with her employer's argument that her job was 'risk-free' in the hospital in which she worked. This assessment was couched in general terms and was delivered without any substantiated explanation.

For UK employers, the most salient point from the decision is the statement that, if there is a failure to adequately assess the risk posed to a breastfeeding worker in accordance with the Pregnant Workers Directive, this will be regarded as less favourable treatment of a woman related to pregnancy or maternity leave, thereby constituting direct sex discrimination. This increases potential avenues of redress for UK workers, who have until now been expressly excluded from bringing direct discrimination claims for less favourable treatment on the grounds of breastfeeding under the Equality Act 2010.

The case reiterates the fact that employers have an ongoing duty, once they are informed of a worker's pregnancy, to carry out a risk assessment of their workplace. This duty continues once the employee has returned to the workplace following maternity leave. In addition, an employer must also consider the risks in respect of particular work and not just the general role or workplace: any failure to do so may bring about a direct discrimination claim.


HMRC not afraid of the Big Bad Wolff: IR35 strikes again

Big Bad Wolff v HMRC (First-tier Tribunal)

The First-tier Tax Tribunal has clarified that where individuals provide personal services through personal service companies ("PSC") and, but for their PSC, would be considered as an employee of the end-user client under applicable social security legislation, the IR35 intermediaries regime will apply for NIC purposes. This will require PSCs to account for NICs on the relevant individual's remuneration in full, deducted on a PAYE basis.

In this case, Big Bad Wolff Limited – a PSC set up by a famous actor - appealed against a HMRC decision that it was liable to pay NICs totaling £147,547 in respect of payments made to the actor, who had provided acting services to third party clients directly. He was a paid for such acting services through the PSC (of which he was a director), via a combination of a salary and dividends.

It was agreed by all parties that the actor was a self-employed contractor for the purposes of general employment law. However, the Tribunal noted that but for the existence of the PSC, the actor would have been regarded as 'employed' by the end-user client for the purposes of applicable social security legislation. The judge emphasized that the IR35 rules constitute – in effect – an anti-avoidance mechanism and that the presence of a PSC must be ignored where it (in itself) would frustrate an individual's actual or deemed employment for NIC purposes.

Although an appeal is expected from this 'test case', the decision represents a further attack on the use of PSCs, and highlights their limitations in minimising tax liabilities. Whilst the case does not directly affect issues of employment status (although Employment Tribunals could determine questions of status consistently, given the similar tests and categories employed by them and HMRC), in light of the outcome, employers may wish to revisit the tax warranties within their consultancy agreements to ensure that they cover any risk that a PSC could pursue them to recover unexpected NIC liabilities.


Disciplinary decision-makers in the dark…

Royal Mail v Jhuti (Court of Appeal)

The Court of Appeal has confirmed that, for the purposes of unfair dismissal claims, the reasonable belief to be attributed to an employer when dismissing an employee should be determined by reference to what the decision-maker actually knew at the time of dismissal, and not what they 'ought' to have known. As such, an employee was not automatically unfairly dismissed for making protected disclosures where the dismissing manager was, in reality, unaware that such disclosures had been made.

Shortly after the employee started her role with the employer, she made protected disclosures to her line manager regarding breaches of company policy in providing discounts to customers. The employee was subsequently put under great pressure by her line manager to withdraw her allegations in writing, which she did. She became the victim of bullying and harassment by her line manager, and raised a grievance. The employee was later dismissed for poor performance by a new manager, who was never provided with the disclosures as set out in the employee's grievance by the previous line manager.

In reversing the EAT's finding that this was an automatically unfair whistleblowing dismissal, the Court of Appeal confirmed that: (i) in most cases, tribunals should only consider what knowledge the person authorised to take the decision to dismiss had when dismissing the employee; and (ii) only this decision-maker's knowledge can be attributed to the employer. It held that the statutory right not to be unfairly dismissed depends on there being unfairness on the part of the employer, so even unlawful conduct on the part of individual colleagues was immaterial unless it was properly attributable to the employer in accordance with the above.

Above all, the decision confirms that provided: (i) employers undertake reasonable investigations prior to dismissing; and (ii) the actual decision-maker reaches a rational decision to dismiss based on the information available to them at the relevant time, a tribunal will find it difficult to criticise the employer's actions.