UK Employment Law case updates - March 2018

Latest UK Employment Law case updates - March 2018

1. Package approach to agency worker equality rejected
2. TUPE or not TUPE? A case of fragmented services
3. Employee succeeds in constructive unfair dismissal without knowledge of breach
4. When should an employee be paid for time spent on stand-by?

Kocur v Angard Staffing Solutions Ltd (EAT)

Where agency workers are entitled to the 'same basic working and employment conditions' as direct recruits under the Agency Worker Regulations 2010, compliance will be assessed in relation to individual terms rather than with reference to the overall package offered. This means that certain less favourable entitlements cannot generally be offset by other benefits, such as enhanced rates of pay.

The Agency Workers Regulations 2010 ("AWR") entitle agency workers to the ‘same basic working and employment conditions’ - in relation to pay, working time and annual leave - as directly recruited employees after they have worked for 12 continuous weeks in the same role. In this case, a qualifying agency worker received less favourable annual leave and rest break entitlements than comparable direct recruits, but was paid more per hour. He argued that this enhanced rate of pay did not offset such deficiencies, which therefore breached the AWR.

The Employment Tribunal dismissed his claim at first instance, considering that the ‘package’ on offer to him as a whole, which included a compensatory rate of pay, did not infringe the principle of equal treatment underpinning the AWR. On appeal, however, the EAT disagreed. It preferred a ‘term by term’ approach to the agency worker’s AWR rights, which required individual working and employment conditions to be ‘at least’ the same as apply to direct recruits. In fact, the AWR intended to set a minimum threshold for agency worker rights, and did not prohibit more favourable terms being offered to them.

By settling (at least for now) the ‘package’ vs. ‘term by term’ debate, this decision provides much needed clarity on the AWR. Whilst organisations may often find themselves paying more for the services of agency workers to compensate for the inherent insecurity that goes with that status, this can no longer be justified as offsetting less generous working time rights, rest breaks and annual leave entitlement. Businesses should adjust policies and practices accordingly.

London Care Ltd and Carewatch Care Services Ltd v Henry and ors (EAT)

The EAT has confirmed that when assessing the potential existence of a ‘service provision change’ under TUPE, the effect of any service fragmentation should be considered at an early stage in any analysis; namely when determining whether the transferred activities will remain ‘fundamentally the same’ following the reallocation. Where fragmentation changes the nature or scope of the activities to be performed by a subsequent service provider, TUPE will not apply.

The Claimants were engaged by Sevacare, a provider of residential care services to nearly 170 end-users in the London Borough of Haringey. Sevacare terminated its service contract with the local borough Council, who reallocated the provision of in-home care packages to several new providers based on resident postcodes and capacity. Individual carers continued to work on the same rotas and with the same residents as prior to transfer, but their work was split between two or more of the new providers.

The Employment Tribunal found that these arrangements constituted a service provision change (“SPC”) – and therefore a relevant transfer under TUPE – to the new providers. On appeal, however, the EAT found that the ET had not clearly identified the scope of the ‘relevant activities’ carried out by Sevacare pre-transfer, and had not addressed whether the division of services amongst new providers prevented these activities from being ‘fundamentally the same’ in the post-transfer landscape; as is required for an SPC to exist. Whilst it had gone on to discuss the effect of fragmentation when scoping the organised grouping of employees who would transfer under TUPE, this had come too late in their analysis. The case was remitted to the ET for consideration.

TUPE analysis in the context of an SPC should follow a prescribed order. Employers must first take care to determine the scope of pre-transfer ‘activities’, before next considering how any fragmentation has affected those activities – rather than the transferring employees and/or assets – to ascertain whether such services remain fundamentally the same post-transfer. The case serves as a useful reminder that fragmentation may preclude the application of TUPE where the new allocation of services materially changes their scope.

Mwanahamisi Mruke v Saeeda Kamal Khan (Court of Appeal)

The Court of Appeal has confirmed that employees can succeed in claiming constructive unfair dismissal even when they are unaware that their rights have been breached. The fact that the claimant employee, an uneducated and illiterate Tanzanian national, had been unaware of her entitlement to the national minimum wage ("NMW") did not prevent a failure to pay it amounting to a fundamental breach of contract.

The employee was a domestic worker paid an equivalent of £0.33 per hour over a four year period, well under the NMW. The Employment Tribunal and EAT held that failure to pay NMW is a repudiatory breach of the employment contract which entitles an employee to resign and treat herself as constructively dismissed. However, in the present case, both Tribunals dismissed the claim on the basis the employee could not have resigned in response to the NMW breach because she was unaware of her rights.

The Court of Appeal reversed the decision. It concluded that, firstly, it was an error to rely on a person's ignorance of their rights as meaning that they could not have resigned in response to what was otherwise a fundamental and repudiatory breach of contract. Secondly, it found that the employee was "not being paid slightly below the minimum but shockingly so". It was also said to have been an "egregious breach and the circumstances were such that the termination of the contract by the employee must have been because of the breach notwithstanding the lack of express reasons".

Whilst this extreme factual matrix centres on the wider social issue of modern slavery (which is thankfully rare in most UK workforces), the decision potentially has far-reaching implications for the more typical constructive dismissal scenario. Depending on the facts, employers will need to be mindful that where the breach of an employee's contract is blatant, it will not necessarily be essential for an employee to demonstrate to a court that they resigned in response to that breach.

Ville de Nivelles v Matzak (Court of Justice European Union)

Stand-by time spent at home by an employee qualifies as working time in circumstances where a duty to respond to calls within a time period is short enough significantly to constrict the employee's opportunity to pursue other activities, the ECJ has held.

A firefighter in Belgium was required both to be contactable and able to report to his place of work in under eight minutes, throughout evenings and weekends, for one week every four weeks. Time spent on stand-by was unpaid, and the firefighter brought proceedings claiming that he should be paid for time spent on stand-by and that failure to do so contravened the Working Time Directive.

The CJEU held that stand-by time which a worker spends at home with the duty to respond to calls which very significantly restrict the opportunities for other activities, must be regarded as working time, and should therefore be paid as such. The judgment noted the stringent geographical and temporal constraints of the firefighter whilst on stand-by, and stated that stand-by time for a worker, who must simply be at his employer's disposal inasmuch as it must be possible to contact him, would not qualify for working time.

As a result of this judgment, employers may have difficulty in determining whether their workers should be paid for time spent on stand-by. A decision will need to be made on a case-by-case basis as to what constitutes the significant restriction of a worker's quality time. The stand-by requirements in this case were particularly strict, so it is possible that, for example, a longer response time would not trigger contravention of the Working Time Directive.