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Articles Employment 8th Aug 2018

Employment Review – August 2018

Welcome to the August edition of Freeths’ Employment Law Update

This month we take a look at sleep-in workers pay, the rise in tribunal claims, more on holiday pay, age discrimination at work, duty of care over references and ways for self-employed ‘gig’ economy workers to simplify their tax affairs.

 

‘Sleep in’ workers only entitled to National Minimum Wage (NMW) when they are awake for the purposes of working

Background:

Regulation 32 of the National Minimum Wage Regulations 2015 (NMWR) provides that, a worker who is not actually working may be treated as working if they are available (and are required to be available) at or near a place of work for the purpose of doing such work, with two exceptions:

  1. Where the worker’s home is at or near the place of work, time the worker is entitled to spend at home is not treated as working time.
  2. Where the worker sleeps by arrangement at or near a place of work and is provided with suitable facilities for sleeping, time during the hours they are permitted to use those facilities for the purpose of sleeping shall only be treated as working time when the worker is awake for the purpose of working.

Facts:

Royal Mencap Society v Tomlinson-Blake; Shannon v Rampersad saw the Court of Appeal determine whether the entire period of on-call time should be taken into account for the purposes of the NMWR, even if the worker was sleeping for most of it.

The issue concerned two care workers who were contractually obliged to spend the night at, or near, their workplace and were expected to sleep for most of the period but could be woken if their assistance was required. The care workers were paid a fixed sum for the sleepover shift. One was paid additional sums if called during the night and the other received free accommodation all year round in addition to the fixed sum.

The question for the Court of Appeal was whether the sleepover shifts fell within the definition of “time work” and “salaried hours work” under the NMWR, such that the NMW should be paid for the time spent on the whole sleepover shift.

While the first appeal was allowed, the second was dismissed.

It was found that the care workers, who were required to sleep at, or near, their workplace and be available to provide assistance if required, were available for work rather than actually working. Accordingly, they were only entitled to be paid the NMW for the time that they were required to be awake for the purpose of working, rather than for the entirety of the sleep-in shift.

Comment:

This judgement brings some clarity to this area, ruling that workers who sleep at a residential care home or similar place of work while “on call” for emergencies are merely available for work (and therefore not entitled to the NMW) until actually called upon. Whilst this will come as a relief to employers in the care sector (which is struggling after recent funding cuts), it will come as a disappointment to unions, who have been campaigning for improved pay and conditions in this already low-paid sector.

 

Employment tribunal cases jump 30% after fees abolished

You may recall the Supreme Court ruling in July 2017, which made charging claimants up to £1,200 in tribunal fees unlawful. One year later, the Advisory, Conciliation and Arbitration Service (ACAS) has highlighted in their annual report (printed on 18 July 2018) that, as a result of this, notifications to bring a claim have increased from 1,700 to 2,200 per week. Furthermore, there has been a 39% increase in the number of cases involving a tribunal claim.

Sir Brendan Barber of ACAS confirmed that “the number of people deciding to pursue a tribunal claim has definitely increased since the Supreme Court decision to scrap fees”.

Pay and employment conditions were the top cause of disputes, with the top three topic categories of the 783,000 calls made to ACAS being:

  1. Discipline, dismissal and grievances;
  2. Contracts; and
  3. Wages and the NMW.

As demonstrated by the figures in the report, more people are bringing claims for mistreatment at work. As a result of this, employers not only have a greater number of claims to defend but their legal costs have also increased. Thus, although the abolition of fees has ensured that employees are able to access justice regardless of their financial situation, it appears to have placed a greater financial burden on employers.

Employers can protect themselves from the risk of employees bringing actions against them, for example, by ensuring that appropriate policies and procedures are in place and are subsequently followed.

 

Voluntary overtime and shift overruns are to be included in holiday pay calculations

Background:

In Flowers v East of England Ambulance Trust (Flowers), the Employment Appeal Tribunal (EAT) had to decide whether voluntary overtime (time which the employer was not obliged to offer and the employee was under no obligation to do) should be included in the calculation of holiday pay.

Clause 13.9 in the NHS terms and conditions of service states:

“Pay during annual leave will include regularly paid supplements, including… payments for work outside normal hours… Pay is calculated on the basis of what the individual would have received had he/she been at work. This would be based on the previous three months at work or any reference period that may be locally agreed”.

Facts:

The claimants worked for the respondent’s ambulance service. They were occasionally required to work non-guaranteed overtime or shift overruns, for which they received extra payment. The tribunal concluded that a distinction was to be drawn between the two types of overtime for the purpose of clause 13.9, such that:

  • non-guaranteed overtime should be taken into account in the holiday pay calculation as it was a contractual obligation and formed part of the claimants’ pay, but
  • voluntary overtime was not a contractual obligation and therefore did not need to be included.

The claimants appealed and the respondent cross appealed.

In terms of Directive 2003/88 Article 7, the EAT had to consider whether overtime would amount to “normal remuneration” under the Directive. Since the initial decision of the Employment Tribunal in Flowers, the EAT in Dudley MBC v Willetts held that payments for voluntary overtime did fall within the concept of “normal remuneration” under the Directive if the employee was paid over a sufficient period of time.

Thus, following this decision, it is unsurprising that the claimants’ appeal was allowed and the respondents’ cross appeal was dismissed.

Decision:

The EAT reversed the original decision and agreed that non-guaranteed overtime or shift overruns and voluntary overtime payments made to ambulance staff should be regarded as part of their normal remuneration for the purposes of calculating holiday pay, provided that they work those shifts sufficiently regularly.

 

A rise in age discrimination in the workplace calls for Government action

Although the Equality Act 2010 made unconscious bias, casual ageism and discrimination against older workers unlawful, a recent report by the Women and Equalities Committee argues that this is far from the case as in reality, too little is being done to enforce the law.

MPs on the Women and Equalities Committee claim that the failure to enforce age discrimination laws appropriately is the reason why more than a million people aged over 50 are being locked out of the workplace. This is problematic, especially when those who want to work are not given equal access to employment. The report describes this as wasted talent as the country already faces difficulty in recruiting and retaining an experienced and skilled workforce.

Consequently, the report calls for the Government alongside the Equality and Human Rights Commission (EHRC) to take a more active approach in tackling age discrimination. Whilst it does recognise that the current strategies already in place (such as the ‘Fuller Working Lives’ programme and the ‘Industrial Strategy’) do have merit, ultimately, it concludes that these are not very well coordinated.

The report encourages the Government, employers and the EHRC to make some practical changes to avoid age discrimination in the workplace. These include:

  1. Ensuring that ‘flexible working’ is advertised as an option for employees, especially older workers who often take on a range of caring responsibilities. To assist with this, the Government should introduce a statutory entitlement to five days’ paid carer’s leave and a longer period of unpaid leave.
  2. The Government should create an employer-led mentoring service where they would work with the ‘Business Champion for Older Workers’ (Andy Briggs, CEO of Aviva UK Insurance) to ensure that businesses who genuinely do want to create suitable conditions for their age-diverse workplace are able to do so without being limited due to their size and the costs involved.
  3. Government departments should ensure that policies such as flexible working by default and mid-life career reviews become standard in the terms and conditions of employment in the sectors for which they are responsible.
  4. The EHRC must undertake urgent investigations into ways of working which are resulting in lack of retention of older workers and ensure that this not due to discriminatory practices.

Comment:

The need for Government action is clear. Not only does the retention of older workers benefit the economy and make the state pension more affordable but more importantly, it benefits the financial, health and social wellbeing of individuals. Furthermore, the next few decades will see the British labour market change dramatically as more people stay in employment for longer than before. Hopefully the Government, EHRC and employers can work together to ensure that all employees feel wanted and have a place at work, regardless of their age.

 

Supreme Court upholds decision that bank owes no duty of care to undisclosed principal for the customer reference supplied

A longstanding dispute between the parties in Banca Nazionale del Lavoro SPA v Playboy Club London Ltd and others has finally come to an end.

Banca Nazionale (bank) provided a reference for one of their customers who then used it to obtain a cheque-cashing facility with the Playboy Club (casino). The reference turned out to be inaccurate as the customer never had any funds in his account with the bank. Furthermore, the reference appeared to have been sent by an employee of the bank without actual authority. The casino brought proceedings against Banca Nazionale for the negligent reference which was provided.

High Court (2014)

In the High Court, two possible tests for liability were considered:

  1. was the negligent misstatement made with the employer’s actual or apparent authority? Or
  2. was it done in the course of the employee’s employment?

Regardless of which test applied, the High Court agreed that the bank was liable to the casino for the inaccurate reference provided.

Court of Appeal (2016)

The decision of the High Court was overturned as the Court of Appeal, applying Caparo v Dickman and distinguishing Hedley Byrne & Co Ltd v Heller Ltd, held that the bank could not be liable to the casino. This was because the court could not distinguish ‘a special relationship’ between the bank and the casino as the bank were only aware that a reference had been requested by the customer, they did not know the purpose for which the reference would be used.

The Court of Appeal therefore accepted that it would not be fair, just and reasonable to hold the bank liable.

Supreme Court (2018)

Now the Supreme Court has unanimously upheld the Court of Appeal’s decision that the bank cannot be liable to the casino for providing an inaccurate reference.

Comment:

This is an interesting case that highlights the extent to which an employer may be liable for the negligent actions of their employees. It is clear from the decision of the Court of Appeal as well as the subsequent support from the Supreme Court, that the courts are reluctant to expand the scope of persons to whom a duty of care is owed.

It is also worth noting that the bank in this case made it clear that the information provided was given in strict confidence. Therefore, in order to avoid liability to third parties, employers should make their intentions unequivocally clear when providing references.

 

The Office of Tax Simplification (OTS) recommends ways for self-employed ‘gig’ economy workers to simplify their tax affairs

With modern technology playing an important part in our everyday lives, it comes as no surprise that an increasing number of people are finding work through online platforms. Such individuals are considered as self-employed which means that they have to deal with their own tax affairs. Quite often, this can be a complex procedure, therefore the OTS have come up with ways in which self-employed workers can be provided with a more simple experience.

The OTS suggests that:

  1. The Government should consider enabling platforms to operate a system equivalent to PAYE for self-employed platform workers (without affecting their employment status).
  2. HMRC should continue to focus on the development of guidance and ensure that this is readily available and targeted – especially for those who may generate tax liabilities unknowingly.
  3. HMRC should consider how best to facilitate technology developers and others to provide reassurance to the burgeoning self-employed that digital applications are fit for purpose in submitting accurate data and returns as necessary.
  4. HMRC should consider to what extent they can play a role, in partnership with the software industry, in facilitating the creation of an app to help self-employed people manage their tax affairs.

Comment:

It is clear that the OTS are committed to closing the gap between modern technologies and the way in which businesses operate. With such potential benefits, hopefully the Government and HMRC can take on board the suggestions and empower self-employed individuals to overcome the current difficulties associated with managing their tax affairs.


The content of this page is a summary of the law in force at the present time and is not exhaustive, nor does it contain definitive advice. Specialist legal advice should be sought in relation to any queries that may arise.

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