Employment

Worker status – the plot thickens
22 February, 2017

The Court of Appeal recently handed down its judgement in the case of Pimlico Plumbers Ltd and another v Smith [2017] EWCA Civ 51.

Pimlico Plumbers, following on from the high-profile Uber and Citysprint cases, is the latest case in which the courts considered the important question of whether individuals are classed as employees, workers or self-employed individuals.

Why does it matter?

Different rights and obligations apply depending on whether an individual is classed as an employee, worker or self-employed.

Some core legal protections only apply to employees, such as the right not to be unfairly dismissed and the right to receive statutory redundancy payments; while workers are not entitled to these rights, they are entitled to minimum wage, holiday and sick pay; and, a self-employed/independent contractor’s rights are very limited since they are viewed to be operating as a business in their own right.

The Pimlico Plumber

Mr Smith was registered as a self-employed plumber (and benefitted from the associated tax breaks) and worked exclusively for Pimlico Plumbers from 2005 until 2011, when his contract was terminated. He brought a number of claims including unfair dismissal, wrongful dismissal, holiday pay and discrimination claims.

After considering the agreement between the parties and the reality of the working relationship, the Employment Tribunal (ET) found that Mr Smith was a worker rather than an employee – therefore a number of his claims were dismissed. The Employment Appeal Tribunal (EAT) upheld that decision and Pimlico Plumbers appealed.

In coming to its decision on whether Mr Smith was a worker or self-employed, the Court of Appeal (CoA) focussed on two key issues:

  1. whether Mr Smith was required to perform work personally; and
  2. whether Pimlico Plumbers was a client of Mr Smith.

The requirement to perform work personally

A requirement to personally perform services strongly indicates a worker or employee relationship. In this instance, the CoA held that whether Mr Smith undertook to perform work personally turned entirely on the terms of the contract.

The language used in the contract suggested that Mr Smith was to perform the services personally.

However, the contract permitted Mr Smith, subject to the prior approval of Pimlico Plumbers, to arrange for an external plumber to perform the work in his place and there was an informal practice of effectively swapping jobs/shifts with other Pimlico Plumbers.

The CoA concluded that this did not constitute a truly ‘unfettered right of substitution’ and as such Mr Smith had been required to perform the work personally.

Was Pimlico Plumbers a client of Mr Smith?

If Pimlico Plumbers was in fact a client of Mr Smith it would support the argument that he was acting as a business in his own right, rather than as an employee or worker of Pimlico Plumbers.

The CoA again agreed with the ET that Pimlico Plumbers was not a client of Mr Smith. Rather, Mr Smith was subordinate to, and an integral part of, Pimlico Plumbers.

Although his contract stated that there was no obligation for Pimlico Plumbers to offer work and no obligation on Mr Smith to accept work, the company’s contractual ‘manual’ provided for a minimum of 40 hours per week over 5 days and included stipulations about wearing company uniform and using a company van with Pimlico Plumbers’ logo. Also relevant was the fact that Mr Smith’s contract contained onerous restrictive covenants, including a prohibition from working as a plumber in Greater London for 3 months after termination of his contract.

The appeal was dismissed.

Advice

Although fact specific, this case highlights the difficulties faced for a business model that wants individuals to appear to the company’s clients as part of the company, but at the same time the company tries to maintain that the individuals are independent contractors rather than employees or workers of the company.

Mr Smith’s contract described him as an ‘independent contractor’ but the courts will look behind this and examine the reality of the relationship. In short, businesses need to think carefully about how they engage people if they want to avoid creating an employer/ employee or employer/worker relationship.

In light of the uncertainties posed by the ever changing labour market, the government has commissioned a review of employment practices in the modern economy.  Employment status is set to remain a hot topic for some time to come.


Workplace relationships – romantic fiction or horror story?
15 February, 2017

With good timing for St Valentine’s Day, interesting researworkplacech was published this week on the subject of workplace relationships by the employee engagement firm Perkbox.

A third of employees reported having a relationship with a work colleague at some point in their career, with a sixth of these relationships resulting in marriage or civil partnership. On the down side, one in seven employees reported that they had had to leave their jobs primarily because of a failed romance with a work colleague.

According to the study, general attitudes towards workplace relationships were broadly, but not universally, supportive. 67% of employees, and 62% of managers, believed that workplace relationships are not a problem as long as they do not interfere with work.  However a quarter of employers had policies in place discouraging romantic relationships at work, and in some cases (7%) employers sought to prohibit them in the wording of employment contracts.

Personal relationships policies

Employers which seek to introduce blanket prohibitions on personal relationships would be seen to fly in the face of reality, with the potential for adverse effect on recruitment, staff morale and retention. It could be argued, particularly where the employer is in the public sector, that such a prohibition would infringe the right to respect for private and family life under Article 8 of the Human Rights Act.  For similar reasons there has been little appetite in the UK for the implementation of “love contracts”, sometimes found in the USA, in which employees in a personal relationship are required to confirm that they have not been coerced into the relationship, with a view to the employer avoiding liability for subsequent sexual harassment claims.

The recommended approach for employers is to strike a fair balance between the protection of their business interests and a respect for the privacy of their employees, and to view workplace relationships as an issue of concern only where they have an impact on conduct at work. In particular it is common to see a relationships policy which requires employees to disclose personal relationships which present the risk of a conflict of interest or risk “pillow-talk” breaches of confidentiality.

Personal relationships between managers and their direct reports are a particular area of concern for employers, with for example the risks that these improperly affect the allocation of work duties and influence decisions about promotions and pay increases. Equally in this situation there are potentially catastrophic consequences for the line management relationship, and for the wider team, if the personal relationship between supervisor and subordinate comes to an end.

An appropriate disclosure policy will mitigate these risks, in particular enabling suitable safeguards to be introduced such as alternative reporting lines. In some contexts an absolute bar on personal relationships between managers and direct reports may be suitable.  For example in a case in 2007 such a policy operated by Hampshire Police was found to be justified in the aim of managing the risks of undue influence and favouritism affecting the integrity of the force.

It will also be appropriate for some organisations to have policies which address the risks of employees forming personal relationships with their clients/customers which conflict with their professional duties and responsibilities.

Employers must also ensure that the adoption and application of relationships policies do not create the grounds for discrimination claims. For example in 2015 Port Vale Football Club lost a sex discrimination claim after it dismissed its events sales manager over rumours of an affair with the club’s leading striker, against whom no action was taken even though the club had strict rules over player-staff workplace relationships.

Employers should have clear grievance and anti-harassment policies in place as a framework in which to address complaints of favouritism and to manage the situation where the ending of workplace relationships spills over into unwanted or disruptive conduct.

For those interested in further discussion on these issues, Radio 4’s “The Bottom Line” on Thursday 16 February is on the theme of “Managing Workplace Relationships”.


Can you summarily dismiss somebody for gross negligence?
9 February, 2017

The Court of Appeal has confirmed in Adesokan v Sainsnegligencebury’s Supermarkets Ltd [2017] EWCA Civ 22 that gross negligence can amount to gross misconduct, justifying summary dismissal.

The claimant, Mr Adesokan, had been a Regional Operations Manager at Sainsbury’s for some 26 years when he was summarily dismissed for gross misconduct after failing to take action to remedy a serious breach of the company’s Talkback Procedure (TP), a process whereby levels of staff engagement are assessed.

While the TP was being undertaken, the HR Partner sent an email to a number of store managers stating “I think you should focus predominantly on getting your most enthusiastic colleagues to fill in the survey,” which risked compromising the results.  When this came to Mr Adesokan’s attention, he instructed the HR Partner to clarify what he meant with the store managers, but Mr Adesokan didn’t follow up to make sure that the HR Partner actually did so. The HR Partner didn’t clarify and when Mr Adesokan found out, he did nothing to remedy the situation himself. As a result, Sainsbury’s decided to dismiss Mr Adesokan on the basis that his failure amounted to gross negligence tantamount to gross misconduct. Mr Adesokan sued for wrongful dismissal.

The High Court held that although Mr Adesokan hadn’t been dishonest, he had committed gross misconduct because his behaviour had undermined the trust and confidence in the employment relationship. Mr Adesokan appealed.

The appeal was dismissed. The Court of Appeal held that whether or not behaviour is dishonest doesn’t matter; the focus should be on the damage caused to the relationship between the parties.  It did however, state that courts shouldn’t easily conclude that a failure to act where there is no dishonest intention amounts to gross misconduct.  Each case will turn on the facts.   

Counsel for Mr Adesokan also argued that his actions didn’t amount to gross misconduct as defined in his contract.  The Court of Appeal disagreed because there were examples of negligent conduct in the definition of gross misconduct, e.g. a breach of health and safety rules.

In light of this decision, employers should make sure that all staff, particularly managers, are aware of their obligations and the potential consequences for failing to adhere to them.

It is also worth checking how gross misconduct is defined in your contracts and/ or policies.  It shouldn’t be limited to deliberate acts and may expressly include acts of gross negligence.


What’s in store for employment law in 2017?
3 February, 2017

A brief summary of the year to come.

Brexit

Despite the recent Supreme Court ruling, Theresa May still hopes to trigger Article 50 in March. This won’t result in any immediate changes to employment law because the Government plans to transpose EU law into domestic law initially, to ensure a smooth transition. 

The gig economy

‘Gig economy’ was the buzz phrase of 2016 referring to the trend for short term, on-demand work where people would get paid for the ‘gigs’ that they do. In October, an employment tribunal found that Uber’s drivers are actually ‘workers’ entitled to minimum wage, holiday and sick pay. Uber has appealed the decision so the future of the ‘gig economy’ will remain in focus in 2017.

National Minimum Wage and National Living Wage

The national minimum wage will increase as follows from 1 April:

  • 16-17 years old           £4.05
  • 18-20 years old           £5.60
  • 21-24 years old           £7.05

The National Living Wage, which is the rate set for those aged 25 and over, will go up to £7.50 per hour.

Apprenticeship levy

From 6 April this year businesses with an annual pay bill of over £3m will be required to invest in apprenticeships by contributing 0.5% of that pay bill by way of an apprenticeship levy (less an annual allowance of £15,000). The Government will also be introducing changes to the way that apprenticeships are funded from 1 May onwards, by introducing a co-investment scheme for smaller employers.

Gender pay gap reporting

6 April also sees the introduction of the requirement for employers with 250 or more employees to publish information about their gender pay gap. Data must be published no later than 4 April 2018 but will need to be gathered in 2017. 

Pension auto enrolment

Most smaller businesses will be due to start auto enrolling staff in workplace pensions this year. The minimum levels of contributions will be phased, but full contributions will have to be made from 1 October 2018. 

Salary sacrifice schemes

Under salary sacrifice schemes, employees receive non-cash benefits such as company cars and gym memberships in exchange for part of their salary. As a result, the employee pays less tax. The Government will be clamping down from April when such schemes will loose their tax relief status. Certain benefits will be unaffected, including cycle to work and childcare schemes.  

Tax-free childcare

Under a new Government scheme, which is expected to launch early this year, parents can expect to receive 20% off their childcare costs, subject to a cap of £2,000 per child, per year. Parents will need to earn between £115 per week and £100,000 per year to be eligible.


Could your dress code be discriminatory?
26 January, 2017

In December 2015 Nicola Thorp was sent home from work without pay for refusing to wear high heels. She launched a petition, which attracted 152,420 signatories, prompting a joint inquiry by the Petitions Committee and Women and Equalities Committee, and their findings were published yesterday.

It’s clear that Nicola Thorp’s case was not an isolated incident. The Committees heard from women who were asked to wear shorter skirts, unbutton blouses and constantly re-apply their makeup. They found that discriminatory dress codes are widespread, that employers often fail to take complaints seriously and that employees often feel too insecure at work to challenge discriminatory dress codes.

The existing law on the matter can be found in the Equality Act 2010, which prohibits discrimination on the basis of certain protected characteristics, one of which is sex. It specifies that “Person (A) discriminates against another (B) if, because of a protected characteristic, A treats B less favourably than A treats or would treat others.” So the question is whether females are treated less favourably by the dress code.

Yesterday’s report concluded that the existing law is “not yet fully effective” and recommended that it be reviewed. One of its recommendations was for a substantial increase in the financial penalties available to employment tribunals to award against employers found to have discriminatory policies.

What should employers do now?

  • If you are considering implementing a dress code, consider whether or not it is genuinely needed and make sure you can justify it. Requirements should be reasonable, e.g. a requirement that hair should be tied up when preparing food would be acceptable for hygiene reasons.
  • Ensure that dress codes apply equally to men and women. Any dress code that leads to a detriment for one will be discriminatory. Note that the College of Podiatrists provided written evidence to the Committees that there is a “direct causative relationship” between wearing high heels for extended periods and serious conditions including stress fractures, bunions and enduring balance problems. A requirement for women to wear heels would most likely lead to a successful discrimination claim.  
  • Also bear in mind that some employees may dress in a certain way for religious reasons. Try to facilitate that unless there is a genuine business or health and safety reason for prohibiting it.  
  • If possible, consult with employees and take on board their views at the outset.
  • If you already have a dress policy in place, now is the time to review and update it.

 

If you would like further advice on the issues discussed in this article or any aspect of employment law, contact Erica Dennett at erica.dennett@cripps.co.uk or on 01732 224 026.

Related article: The do’s and don’ts of workplace dress codes  


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